Hurricane Sandy shows that energy companies will need to invest to prepare for the effects of a changing climate.
When people think about climate change and energy, they naturally are drawn to thinking about clean technology, carbon capture, or emissions. We're thinking about mitigation, in other words.
However, as Sandy showed, our energy infrastructure is at high risk to the effects of climate change as well. There is a need to adapt to the effects of a changed climate.
A Climate Central report from earlier this year highlighted the amount of energy infrastructure around the country that is close to sea level. Louisiana, of course, comes across as the clearest example of energy infrastructure at risk to rising seas, with 163 major energy facilities at five feet above sea level or less. Surprisingly, New Jersey and New York are ranked 5th and 6th in the country, respectively, for the amount of infrastructure that is within 5 feet of sea level.
This proved to be a severe vulnerability when Sandy's storm surge - at 13 feet in New York Harbor - pushed in. The results were predictable, and disastrous.
In Manhattan, a ConEd substation exploded, leaving lower Manhattan without power. About 70% of the region's refineries are shuttered. About 20 nuclear reactors were in the path of Sandy. Two shut down because of high water. Importantly, however - America's nuclear power plants are designed to withstand hurricanes and they performed as expected, with no danger. Other energy assets, like power plants (coal, natural gas, hydro) as well as transmission lines - were at risk as well.
Here in the DC area, Sandy's effects on our energy infrastructure (measured mostly in power outages) are far more muted than in the New York and New Jersey area. Undoubtedly, that is because the storm's effects were far worse up there than here. Another factor, however, was the derecho storm of July 1 of this year. That storm acted as a wakeup call to local utilities to trim trees and make their systems more resilient. It also had the ironic effect of culling the most at-risk trees. Those that survived that storm were likely strong enough to withstand Sandy's 80 mile per hour winds.
As Eli Hinckley says, there could be new investments going from clean tech into adaptation - presumably out of a desire to more effectively address climate change. I think the clear need of energy companies to prepare for super-charged extreme weather, as well as more 'normal' effects of climate change (like reduced water levels, droughts, or higher temperatures) will be a major investment from energy companies as we go forward.
– This article is a modified version of a story in Energy Trends Insider, a free subscriber-only newsletter that identifies and analyzes financial trends in the energy sector. It's published by Consumer Energy Report.