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The Topic: Resilience UTILITY WEEK | 12TH - 18TH FEBRUARY 2016 | 11 COP21 The Paris agreement is a historic turning point on climate change. A total of 195 governments adopted the Paris Agree- ment on 12 December 2015. This is seen as a major turning point in the fight against climate change and for attempts to limit the average global tem- perature increase to below 2C. That 2C target is important because climatologists predict that level of warming is the most the Earth can tolerate without risking catastrophic changes to food production, sea levels, fish- ing, wildlife, deserts and water reserves. The Paris agreement sets out global efforts to limit the temperature increase to 1.5 C above pre-industrial levels. The signatories also agreed to a review mechanism that will help ratchet up efforts every five years from 2018, as well as a floor for financial flows to developing countries. Climate Change Commit- tee chief executive Matthew Bell told Utility Week that the agreement, with the efforts to limit global warming to 1.5C, was "more than we anticipated" when the member states first met. The World Economic Forum (WEF) said the deal was "send- ing unmistakable signals to the global markets that governments are willing to put aside their differences and do their part in tackling this biggest of global challenges". Both Bell and the WEF also agree that the five-year review mechanism, set to start in 2018, is an important part of the agree- ment. The fallout from the deal is that trillions of dollars will be economies and organisations, from climate change and the impact of extreme weather events to the threat of breakdowns in criti- cal infrastructure, mass involuntary migra- tion, deflation, asset bubbles and more. Crucially, it also measures the imminence of these risks by plotting impact against likeli- hood, and identifies how risks are related to one another and how they might "cascade" to multiply their individual potential impacts and likelihoods. The macro-perspective in the Global Risks Report would be useful to any business in any year, but in 2016 (for the report's 11th iteration) the relevance to the challenges faced by utilities is especially marked. As storms and floods continue to cause misery to thousands of people in the north of England and Scotland, the WEF says the perceived risk of a global failure to mitigate and adapt to climate change (a risk that has been in the top five for three years) now tops the pile as the most pressing concern across all contributors to its research. Furthermore, water crises and the risk of a severe energy price shock also fea- ture in the top five perceived risks for 2016. These risks are also closely connected to the slightly lower rated risks of failure of critical infrastructure, failure of urban planning and the risk of an asset bubble – not to mention biodiversity and ecosystem collapse. All of these risks place mounting expectation and responsibility on utilities to decarbonise the energy system and promote better water governance. Potentially hampering their ability to do so, however, is another set of risks. For 2016, the WEF notes the growing vulnerability of organisations to cyber attack and the poten- tial unintended consequences of the advance of the "fourth industrial revolution", which can broadly be understood to be a trend for digitisation – something operations, asset management and customer service leaders alike will recognise as a hot topic. The 11th Global Risks Report paints a picture of a fragile ecosystem of business, economics and policy and its connection to the natural world which is highly relevant to utilities leaders. The list of cascading and interconnect- ing risks which could derail business plans is both mesmerising and daunting, but its identification at least puts executives in a position to make informed strategic deci- sions – and to forecast, with some degree of accuracy, the likely consequences of those decisions on a range of fronts. In short, it provides a model that could be valuably replicated and learned from within utility businesses to help them respond to and exceed the growing expectation of reg- ulators – and customers – that they have a deep, long-term view of their evolving vul- nerabilities, a plan to mitigate them, and are clear about what this plan will mean for the delivery of core services. JG unlocked and invested into low carbon and carbon neutral tech- nologies to put the world on to a climate-safe pathway. This will help to build resilient energy and water systems, not only in the UK, but globally. However, as things currently stand, the climate action plans submitted by more than 180 nations would have the effect of limiting global warming only to 2.7C above pre-industrial levels, missing the accepted 2C ceiling, and falling way short of the 1.5C ambition. Bell, and WEF, state that more needs to be done, but the Paris agreement is a strong foundation on which to build, plus the intention has been made to lower carbon emissions. Progress on this front is already being made. In 2014, renewables made up over half of total energy investment, while the cost of solar panels has fallen by 75 per cent, and the cost of batteries for electric vehicles by half since 2009. Wind-generated electricity in over 50 countries is now at grid parity. Moving into the latter part of this decade, and into the next, attention will turn towards delivering what the WEF calls "a low-carbon, climate-resilient world". In order to get to that point, there needs to be a focus on policy frameworks and incen- tives that will deliver these. The UK has the 2008 Climate Change Act, which legally binds it to reducing its carbon emis- sions by 80 per cent compared with 1990 levels, and the fih carbon budget will keep the UK on track to meet that, accord- ing to the Climate Change Committee The result of achieving this will be more flexible, dynamic, and ultimately more resilient energy and water sectors, because the impact of climate change will have been mini- mised. Failure could see costs spiral and a system less able to cope as pressures and chal- lenges increase. MB KEY POINTS OF COP21 Keeping tempera- ture rises below 1.5C. Pledges to curb emissions from more than 180 countries. Long-term global goal for net zero emissions. A five-yearly re- view mechanism. A loss and damage mechanism to ad- dress the financial losses vulner- able countries face from climate impacts. A total of $100bn a year will be pro- vided to help de- veloping countries cope with climate change. 1880 1900 1940 1980 2020 Global land-ocean temperature index Temperature anomaly 1.0 0.5 0.0 -0.5 Annual mean Five-year mean