This brief aims to enhance awareness and highlight the importance of integrating weather and climate-related risks into the planning stages of energy infrastructure development. As countries are developing long-term low-carbon development strategies and pursue mitigation measures as part of their Nationally Determined Contributions (NDCs), it is essential to increase understanding about the need to identify and assess climate-related risks when appraising new energy projects or managing infrastructure portfolios.
Climate change presents both opportunities and risks for the energy sector. There will be a growing demand for low-emission energy infrastructure that helps achieve national greenhouse gas (GHG) emission targets in countries' NDCs. Similarly, financial institutions are increasingly interested in investing in sustainable and efficient energy infrastructure. However, the increased frequency and severity of extreme weather events may disrupt supply, alter demand patterns, and potentially damage energy infrastructure. The energy sector will be exposed to several climate-related risks that arise from increasing temperatures, variability in rainfall patterns, and increased frequency of extreme events.
Managing climate risks for more resilient energy systems is essential. Building resilience into energy systems can be addressed through a combination of different strategies and approaches:
- Climate vulnerability risk assessments;
- Technological strategies;
- Green infrastructures strategies;
- Behavioral strategies; and
- Financial strategies.
Conducting comprehensive risk analyses and designing a combination of risk mitigation strategies will ensure:
- Improved robustness, resourcefulness, and recovery capacities of energy systems to the risks of climate change;
- Full restoration of energy systems' operational capacity after a disturbance;
- Financial viability of projects that are able to attract investments from the lending community; and
- Improved overall ability and effectiveness of the energy sector to respond to and deal with climate-related risks.