Climate Risk Screening Tools for Low-Emission Energy Development

Fortunately, various tools have been developed to determine whether and to what extent climate variability and change may impact investments. This paper introduces climate risk screening tools for new or existing energy programs and projects that can be applied by LED planners, project investors, and developers to gain a preliminary indication of climate risks. Energy investments are frequently highly capitalized, irreversible engineered structures that will experience shifting climate conditions over their long service lifetimes. The application of climate risk screening to energy sector programs and projects helps safeguard the targeted development objectives of these investments, ensuring that objectives such as increasing energy access and security, meeting LED objectives, and ensuring service reliability will be sustained over time. Climate risk screening is increasingly becoming a due diligence requirement for new investments, with development banks and agencies such as the World Bank, Asian Development Bank, and African Development Bank requiring projects to be screened for climate risks. Climate-resilient LED strategies, designed to advance a decarbonized energy system through increased distributed generation and renewable resources, carry new benefits and challenges to both greenhouse gas (GHG) mitigation and climate adaptation. While low-carbon energy strategies shift exposure to climate hazards away from fossil fuel resources, renewable energy resources can also be at risk to climate impacts, in part due to their reliance on climate-sensitive natural resources. For example, a climate risk screening of power system assets may identify potential hydrologic changes that would undermine the intended benefits of hydropower, or temperature increases that may curtail bio-fuel crop productivity or reduce solar power efficiency. Climate risk screening provides planners with a high-level understanding of the current and potential future climate risks to existing and planned programs and project investments in energy infrastructure and services. Climate risk screening typically constitutes a first step in the hierarchy of risk assessment, to 'raise the flag' during strategic program design, to give an indication of the type and significance of climate risk during the project conceptualization stage, and to indicate whether more in-depth climate risk analysis or adjustments in program or project design are warranted. Climate risk screening is not typically combined with GHG emissions screening processes; the screening is often undertaken in parallel. However, some risk screening tools do include the identification of potential GHG mitigation options. There are various approaches to climate risk screening, including the use of simplified energy models, GIS tools, and detailed, site-specific energy models. The World Bank's Hydropower Sector Resilience Guidelines employs a decision tree approach to climate risk management, which allows planners to exit the climate risk assessment process at certain points if the level of climate sensitivity is deemed minimal, or to conduct more detailed assessment(s) as needed. Climate risk screening and deeper dive climate risk assessments are both often coupled with steps for climate risk management, such as identifying and evaluating adaptation measures to address the identified risks. The end goal is to efficiently guide practitioners towards targeted and effective adaptation strategies.