TSKB Economic Research Highlights the Impacts of Heat Waves with the 8th Issue of the “Climate Review”
TSKB Economic Research
Highlights the Impacts of Heat Waves with the 8th Issue of the “Climate Review”
TSKB Economic Research tackles the impacts of heat waves on production, energy and natural capital in the eighth issue of the “Climate Review”, published as part of the TSKB Green Swan Platform. Pointing out that the IMF expects an increase in heat wave-related disasters by 2100, the study draws attention to the fact that this increase will be experienced the most severely in developing countries.
TSKB Economic Research focuses on the impacts of climate change on production, energy and natural capital in the eighth issue of the quarterly “Climate Review”, published as part of the TSKB Green Swan Platform. Pointing out that the adverse effects of heat waves, which are expected to intensify in this century according to IMF data, will be experienced much more severely in developing countries, the study draws attention to the energy sector's inability to keep up with the additional demand created by the increased cooling need caused by extreme heat. It underscores that the energy sector will be among the most adversely affected sectors due to the decrease in the amount of electricity generation as a result of heat waves.
Higher natural gas prices accelerate the integration of green transformation into the system
The study indicates that the extreme heat experienced this summer caused hydroelectricity generation capacity in the Szechuan region of China to decrease by half, while heat waves led to hydroelectric power plant reservoirs in Norway to fall to their lowest level in 25 years and electricity generation to drop by 40% in Italy and 44% in Spain.
Under the Climate Finance heading of the "Climate Review", it is revealed that natural gas prices in the European Union, which have been hovering around 10 times the average of the previous 10 years, accelerated the integration of green transformation in the energy sector, while EU carbon prices declined from their peak level of around EUR 100 in July.
In the study, which also assesses heat waves in terms of natural capital, it is highlighted that many natural resources such as fresh water, forests, soil and oceans, which are vital to humanity, are under threat. On the other hand, the study also points to the unfavorable consequences of the loss of agricultural production due to the increase in droughts and floods. It is also noted that deforestation due to the increasing number of wildfires and the loss of life due to the increase in sea water temperature are accelerating, all due to the effects of heat waves.
The 1,5oC target requires developing countries to take an active role in the fight against climate change
The study, which features the World Bank's research on climate change, mentions the prediction that the frequency of heat waves will increase by 5, 8.5 and 14 times in scenarios of 1.1oC, 1.5oC and 2oC increase in global average temperatures, respectively. Different perspectives between developed and developing countries in the fight against global warming are expected to be one of the most prominent items on the United Nations Conference of the Parties on Climate Change (COP27) agenda, which will be held in Sharm el Sheikh, Egypt in November. The study also discusses these differences in approach to the climate struggle. According to a report published by the Brookings Institute titled "Why Developing Country Voices Will Shape the Global Climate Agenda", the impacts of climate change on developing countries are far more severe, but without their active participation in the fight against climate change, the "aspirations" of developed countries to limit global warming to 1.5°C have little chance at succeeding. The study draws attention to possible disagreements on this basis at the upcoming COP27.
Other highlights from the study are as follows:
• The US Inflation Reduction Act, passed in August, aims to inject USD 369 billion into the clean energy sector through tax cuts, loans and grants. The act aims to make climate-friendly technologies more accessible to the US public through subsidies and incentives.
• On September 14, the European Union proposed new measures aiming to reduce the burden on consumers and energy companies. The Commission’s proposal rests on three main pillars:
1. Taxing producers that do not generate electricity with natural gas at higher rates than current rates,
2. Companies that use fossil fuel contributing to the "tax on surplus profits" on energy sales to other companies,
3. Member countries reducing their electricity consumption (during peak hours) by at least 5%.
• The International Energy Agency (IEA) states that the use of air conditioners and electric fans accounts for 20% of total electricity consumption in buildings and 10% of overall global electricity consumption. By 2050, two thirds of households around the world are expected to have air conditioning units. This rate that is predicted to rise even higher due to the increasing use of air conditioning units.
• The European Central Bank (ECB) is incorporating climate change into its operational framework to contribute to mitigating climate change-related financial risks and the green transformation. The July announcement indicates that the ECB will take carbon emissions into account in its framework for corporate bond purchases and collateralized bonds.
• The Australian Parliament has passed a new climate legislation that targets a reduction of 43% in emissions by 2030, compared to 2005 figures.
You can access the report in its entirety from the link below:
Turkish:
https://www.tskb.com.tr/uploads/file/iklime-dair-tr-2022-3.pdf
English:
https://www.tskb.com.tr/uploads/file/iklime-dair-eng-2022-4rev.pdf
