Weather and Climate Risk Management in the Energy Sector

Abstract

W eather and climate considerations within the context of both climate change adaptation and mitigation are becoming important elements in policy and strategic planning for the energy sector. Corporate energy markets and operations are progressively factoring impacts of climate change into their management and planning, recognizing that climate is a significant component of risk management. Information from weather forecasts is routinely employed in the energy sector (by producers, traders, and regulators) to assist in decision making. Such information is used for several purposes, from the direct pricing of energy to the trading of energy and financial contracts. The energy decision process is now turning to other climate information, such as seasonal, decadal, and climate change forecasts. The need for more and better weather/climate information will grow as decision makers address an array of issues, from extreme events to emerging climate change regulations. In addition, weather and climate information is a key element in the development and use of renewable energy resources such as wind and solar power as well as hydropower. An improved understanding of what climate information can and cannot provide, how it might be used in context, and how communication can be made more effective will certainly help the interaction between climate scientists and energy experts. The North Atlantic Treaty Organization (NATO) Advanced Research Workshop created an opportunity to bring together experts in these fields to address the outstanding issues not only with the use of weather and climate information by the energy industry but also with communication between the two sectors. About 20 presentations covering fundamentals, practices, needs, and impediments in the use of NATO AdvANced ReseARch WORkshOp