A weakening response to climate change: good news for ABB?
'Most of the technology required to make better use of energy and thus cut CO2 emissions, is available now.'
In last week’s blog, I was asking whether we are moving towards a world where adaptation – where the focus is on countering the effects of climate change – would overtake efforts on abatement: stopping the cause of climate change.
I shared some thoughts on whether we were looking at a world where building sea defenses would largely replace efforts to halt a rise in sea levels through cuts in carbon dioxide emissions in order to fix the root cause of climate change. And some data from the World Bank seems to support this. They report lending on adaptation doubled from 2011 to 2012 versus abatement financing which, while higher in cash terms, grew at a negligible rate in the same period.
But what does this mean for ABB?
As a professional cynic, I might say that at first sight, it doesn’t matter at all whether we make business from adaptation or abatement. Surely a buck is a buck, however you make it?
ABB’s balanced portfolio should mean that there will always be demand for our products and systems – whether they are part of a planned, strategic investment to upgrade infrastructure, or simply an emergency fix to replace damaged or defunct equipment. Other business portfolios aren’t quite so well balanced: for much of the mid-20th century, my grandfather was director of a life insurance company – which paid out on the death of the policy-holder – and his best friend ran an undertaker business / funeral director. They apparently once agreed – as a matter of principle – that one of them could have a good month, but not both.
So surely things look good for a company like ABB that can create electrical infrastructure, whether that investment is driven by harnessing new renewable sources of energy, or if it comes from repairing or replacing storm-wrecked infrastructure.
Or does it look that good?
The effects of climate change are not confined to two-day extreme weather events in New York, covered minute-by-minute on CNN and other rolling news channels. There are the creeping, almost imperceptible changes in sea levels and acidity, and falling crop yields. There are reduced aquifer and ‘fossil water’ levels, less and less water in already dry areas and increased water levels and more flooding in areas that have ‘enough’ water.
A warmer world may (I think will) result in more instability, driven by generally less productive land and sea resources, resulting in less affordable food.
A growing population is one challenge, but it has a series of knock-on effects. Equal access for all these people to plentiful and affordable food, water and power is unlikely. This increases pressure on reducing water, food and fuel supplies. Crop yields fall because of increased heat and drought in some areas and flooding of fertile delta regions which currently act as ‘food baskets’ for some of the world’s more precarious countries. Boost this challenge by vector-borne diseases (like malaria and Dengue Fever) appearing in new places, putting additional strain on health services, stability and productivity.
These factors combined could result in the displacement of people – forced to leave marginal and subsistence farming areas to seek food, water and shelter. Countries and communities taking action to secure access to food, water or fuel sources could also have the same effect. Specifically, countries and regions may retrench into protectionism; energy security could become THE driving factor for energy policy and therefore could put a road block on the route to a low carbon energy mix.
Taking an ABB perspective, these issues don’t look like they will create a more stable world.
The increasing income and well-being gap between those with education and the ability to earn a living – versus those who cannot – could cause serious and widespread unrest in certain parts of the world. Our engineers already operate in challenging countries and regions – it would make life more difficult and more expensive to secure our operations if things became more unpredictable. It may also have a bearing on where we decide to build factories.
But this route to a warmer, more unpredictable world, although well signposted, is not the only road to take. ABB’s development and deployment of supply and demand side energy-efficient technologies and products (like grid systems to harness renewables and motors and drives in industry) are key contributions that ABB can make to keeping climate change manageable. As one of my colleagues said once – only half-joking: “Energy efficiency is one of the only ways we can buy time to limit global warming and climate change. People should be marching in the streets for variable speed drives.” And this link is good too!
Now all we need to do is to convince more governments and regulators that ‘EE’ is a good idea from a ‘saving the world’ and a ‘competitiveness’ perspective. If they need some ideas, the International Energy Agency (IEA) has published a handy (clickable) guide to their top 25 energy efficiency policy recommendations. While useful and generous, this also implies that that some of the solutions that are available are not being used.
Most of the technology required to make better use of energy and thus cut CO2 emissions, is available now. So I believe ABB has at least some of the keys to mitigating the climate challenge. Our energy efficiency solutions (and our grid and smart grid solutions to integrate low CO2 renewable energy sources) have the potential to make a huge difference.
Oh, and by the way, this week sees the conclusion of the latest UN Climate Change conference in Doha, Qatar. Let’s see how that goes and as an outcome, what role there is for businesses like ABB.
Image credit: go_greener_oz on Flickr