Nearly one-fifth of the power lines around the world are at severe risk from sea level rise, severe storms, and wildfires, and U.S. utilities alone could face US$4.1 billion per year in climate impacts, according to new analysis released this week by BloombergNEF.
“Climate hazards have been responsible for more than $2 trillion in global economic losses over the past two decades, with the energy sector bearing the brunt,” Bloomberg Green reports, citing the BNEF data. “The largest storms have caused more than $20 billion in damage to the U.S. grid over the past five years and adaptation could cost a few million dollars per mile.”
The report lands less than a month after a separate team of analysts concluded that 40% of the world’s oil and gas reserves face severe climate risk. Earlier this week, the Keystone pipeline had to shut down for unplanned maintenance due to severe cold in parts of western Canada, Reuters writes, and the flow of fracked oil from the Bakken region in North Dakota was also slowed down, Bloomberg says.
Bloomberg Green points to the vast scale of the power utility infrastructure at risk, and the reaction grid operators are already seeing from ratings agencies and insurance companies.
“In the U.S. alone, 700,000 kilometres (435,000 miles) of power grids are vulnerable to physical climate hazards—just shy of the distance to the moon and back,” the news agency writes. “Rating agencies have downgraded at least nine energy companies due to physical climate risks over the past three years,” and California utility PG&E “was forced into bankruptcy because of escalating wildfire risks.
That was before California investigators concluded this week that a PG&E power line sparked the Dixie Fire, the second-largest wildfire in state history, in 2021.
“Hurricanes have caused billions of dollars in damage to the U.S. power grid in the past decade,” said report author and BNEF technology analyst Kathy Gao. “Building a more decentralized grid, such as microgrids and behind-the-meter resources, could increase resiliency.”