Taking on the mounting challenge of climate change

The latest report from the Intergovernmental Panel on Climate Change (IPCC) compiled by the world’s leading climate scientists has warned there is only 12 years left to keep global temperature increases to a maximum of 1½ degrees above pre-industrial levels and avoid catastrophic environmental breakdown. The authors said urgent and unprecedented changes are needed to reach the target.

"This was the real story of the past month," says KPMG global head of renewables Mike Hayes. "This is the single biggest issue that has ever arisen in my professional and personal life. What they are saying is the time for talking is over. We've got to act now or else it will be too late. The question is if we are going to do anything different in response and, if we are, what?"

He believes the situation is far from hopeless. “If we take action in a few key areas we can succeed,” he says. “The first is government policy. This is at the crux of the whole issue. Ultimately, the whole approach of criticising governments for inaction is not the way forward – collaboration between stakeholders is now the recurring theme. Governments respond to electorates, so it is up to citizens, the business community and other organisations to drive change and make their views known.”

He points to relatively simple actions which governments can take to encourage greater investment in, and use of, renewables. These include favourable subsidy and tariff regimes for renewable energy and the removal of barriers in the planning system. An increase in carbon tax is now becoming a priority not just here in Ireland but globally.

The Irish question

Sources like offshore wind still face challenges in Ireland while the rest of the world moves ahead, he notes. "Taiwan now has a viable offshore wind industry having started only a few years ago. Japan, the US, and South Korea are also investing in it. Ireland has the best conditions in the world for offshore wind, yet we are lagging behind. We have to address that."

Hayes was involved in setting up a new grouping which represents all strands of the renewables generating sector as well as consumers and various other stakeholders. Recap (Renewable Energy Consumers and Producers) was established to help influence the renewable agenda in Ireland.

“The great thing about Recap is that it is completely technology neutral,” he says. “It represents all strands of the industry as well as consumers. It is only by bringing all sides together that we will achieve the required results and the group is now working with government in a collaborative manner.”

The next area to address is the mobilisation of capital to deal with climate change. “It’s not just renewables, it’s energy efficiency, it’s fossil fuel companies investing in low carbon technologies,” he notes. “There is more than sufficient capital available it’s just a question of figuring out how to mobilise it for this purpose.”

Progress is being made on this and the announcement of a green bond in last week’s budget was a significant step forward for Ireland. “Ireland is doing a lot of work on this,” says Hayes. “Sustainable Nation held an event in London recently where people from the green finance sectors in Britain and Ireland got together to discuss the issue and explore solutions.”

The third key area is innovation. “One thing is absolutely clear,” he says. “We don’t have nearly enough innovation in the climate change area. If you compare it to digital and look at the unbelievable impact innovation has had on our lives in recent years you can see how far we have to go in the sustainable energy space. The problem is that the innovators are not being supported. We need to have the right funding structures and incentives in place for the innovators.”

KPMG is playing an active role in developing solutions to this issue. “We have taken on the challenge of solving the innovation conundrum. We are working as part of a coalition with the World Economic Forum and Mission Innovation on the issue. ”

What of renewable energy?

While the challenge presented by climate change is enormous, he is heartened by some recent developments.

"A really interesting phenomenon at the moment is how global corporations like Facebook and numerous others are committed to transitioning to 100 per cent renewable energy. I'm optimistic that there is a growing coalition across the world to tackle the problem. There is no choice now that the problem has become so serious and we are going to see policy changes at global, EU, and national level.

“We will see higher carbon taxes. There will be increased investment in renewables. The millennial generation will create greater pressure from consumers to accelerate the transformation to a low-carbon economy. The cost of renewable solutions keeps falling and we are very close to grid parity where there will no longer be any need for subsidies or incentives. But we still need to drive change in the areas of government policy, mobilisation of capital, and innovation if we are to succeed in meeting the goals set by the IPCC.”