A global phenomenon, climate change

As a global phenomenon, climate change has a significant impact on the economy. High temperatures, or the change in the structure of precipitation, affect not only agriculture and fisheries, but also other industries, such as energy, tourism, construction and financial institutions. The effects of the manifestation of climate risk are already being identified, although it is the distant future that is usually indicated as the period of the impact of climate change on the economy. The severity of that manifestation causes serious financial losses that amount to billions of USD each year. Hence, there is a growing interest concerning the economic side of climate change, not only from climatologists, but also from companies surprised by unprecedented disasters and regulatory changes. Increasing climate risk exposure, resulting from advancing climate change, creates also a significant challenge for the future structure of the core activities of power companies. To stop climate change, OECD countries should eliminate greenhouse gas emissions by 2035, the rest of the world should follow by 2040. Climate risk fundamentally affects all aspects of the power sector, starting with power production and consumption, to transmission and distribution. Hence, power companies introducing “climate risk reaction instruments” should change their energy mix, moving away from fossil fuels and towards renewable energy sources (hereinafter: RES), green hydrogen and power storage. They must support energy efficiency of customers and flexible demand-side management. It is also necessary to adapt power grids to the new requirements of bi-directional electricity transmission, serving numerous input sources that produce electricity. The change of the core activities of power companies must meet the goals of green transformation, that is, the process of creating such an economic system that operates in a manner friendly to the natural environment, ensuring its sustainable development, thanks to the development of production methods based on energy efficiency and zero-emission technologies.