Our Scariest Power & Utilities Risk – Climate Change Regulation

Scariest Risks

Scariest Risks
This summer, sea ice in the Arctic was recorded at its lowest ever level, prompting renewed fears of accelerating climate change.

The power generation sector is a significant source of carbon emissions, which governments around the world are trying to reduce through subsidies and incentives for low carbon energy production (such as the carbon tax introduced in Australia this year) and setting targets for energy from renewable sources.

However, recent developments have not been promising. Last year the world’s consumption of coal grew by 5.4%, with China up 9.7%, as energy demand increases in developing countries which, for perfectly understandable economic reasons, want to use the cheapest available fuel to power their growth.

In the UK, there are fears that a new ‘dash for gas’ could make it impossible to meet the obligation under the 2008 Climate Change Act to reduce the country’s carbon emissions by 80% by 2050.

Meanwhile, the Fukushima nuclear meltdown last year, prompted Germany and Switzerland to phase out their nuclear plants (jeopardising, in turn, the revival of nuclear power in the UK, as the German giants RWE and E.On abandoned their planned investment), and recently Japan and France announced plans to move away from nuclear power.

Although opinion on nuclear power is divided among environmentalists, some believe that “without nuclear, the battle against global warming is as good as lost”.

This post was part of the special feature about Our Scariest Risks, published October 29, 2012. The feature also included these other risks:

About David Reynolds

David is an Executive Director in Willis' Global Markets International in London, where he advises large national a…
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