Driving CO2 emissions to zero (and beyond) with carbon capture, use, and storage

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Any pathway to mitigate climate change requires the rapid reduction of CO2 emissions and negative-emissions technologies to cut atmospheric concentrations. Technology and regulation will be the key.

Growing concerns about climate change are intensifying interest in advanced technologies to reduce emissions in hard-to-abate sectors, such as cement, and also to draw down CO2 levels in the atmosphere. High on the list is carbon capture, use, and storage (CCUS), the term for a family of technologies and techniques that do exactly what they say: they capture CO2 and use or store it to prevent its release into the atmosphere. Through direct air capture (DAC) or bioenergy with carbon capture and storage (BECCS), CCUS can actually draw down CO2 concentrations in the atmosphere—“negative emissions,” as this is called. In some cases, that CO2 can be used to create products ranging from cement to synthetic fuels.

To better understand the possible role of CCUS, we looked at current technologies, reviewed current developments that could accelerate CCUS adoption, and assessed the economics of a range of use and storage scenarios. The short- to medium-term technical potential for CCUS is significant (Exhibit 1). CCUS doesn’t diminish the need to continue reducing CO2 emissions in other ways—for instance, by using more renewable energy, such as wind and solar power. But it offers considerable potential for reducing emissions in particularly hard-to-abate sectors, such as cement and steel production. What’s more, CCUS, along with natural carbon capture achieved through reforestation, would be a necessary step on the pathway to limiting warming to 1.5 degrees Celsius above preindustrial levels.

However, to reach CCUS’s potential, commercial-scale1 projects must become economically viable. In the short to medium term, CCUS could continue to struggle unless three important conditions are met: (1) capture costs fall, (2) regulatory frameworks provide incentives to account for CCUS costs, and (3) technology and innovation make CO2 a valuable feedstock for existing or new products. This article surveys the state of a portfolio of CCUS technologies, the underlying economics, and the changes needed to accelerate progress.

The value chain of carbon capture, use, and storage

The potential of CCUS can be tracked along an intuitive value chain. Many industrial processes generate CO2, most prominently when hydrocarbons are burned to generate power, but also less obviously—for example, when limestone is heated to produce cement. Driving your car or heating your home also releases CO2. Carbon dioxide can be captured at the source of the emissions, such as power plants or refineries, or even from the air itself.

A range of technologies—some using membranes, others using solvents—can perform the capture step of the process. Once captured, concentrated CO2 can be transported (most economically by pipeline) to places where it can be used as an input—for example, cured in concrete or as a feedstock to make synthetic jet fuel—or simply stored underground.

While these options all help stabilize levels of CO2 in the atmosphere, the challenge is economics. Storage would seem the obvious choice, as the geologic-storage-reservoir potential is vast, and the technology involved is mature. But storing CO2 at scale is a pure cost, and related investments have (understandably) been limited, given the absence of regulatory incentives to defray the installation of capture technology and a storage infrastructure. There are also tricky legal issues, such as liability for potential leaks and the jurisdictional complexities associated with underground property use.


The economics of CCUS

To clarify these dynamics, we modeled the expected alternative CO2 uses in 2030—from the already proven technologies, such as enhanced oil recovery (EOR), to more speculative ones, such as CO2-derived substitutes for carbon fiber. We also included an estimate for CO2 storage.


From now to 2030, our research and modeling suggest, CCUS could expand from 50 million tons of CO2 abatement per year (Mtpa) today, mostly for enhanced oil recovery and beverage carbonation,2 to at least 500 Mtpa (0.5 gigatons a year, or Gtpa)—just over 1 percent of today’s annual emissions (41 Gtpa). Such an expansion would be possible only with a supportive regulatory environment. Exhibit 2 offers a view of where the economic payoff is close and where more incentives would be needed to enable CCUS technologies to scale and reach their full potential. (For additional background on the relationship between CCUS and climate-abatement potential, see sidebar, “For further reading.”)

High potential

Despite the challenging economics, there is a wave of creative energy gathering around a number of CCUS bets.

Today’s leader: Enhanced oil recovery

Among CO2 uses by industry, enhanced oil recovery leads the field. It accounts for around 90 percent of all CO2 usage today (mostly in the United States)3 and benefits from a clear business case with associated revenues. Typical recovery processes leave anywhere from 40 to more than 80 percent of oil unrecovered, depending on factors such as reservoir depth, porosity, and type of oil. In some cases, the additional oil recovered is substantial (5 to more than 15 percent), and, if a nearby industrial source of CO2 can be found (say, a power plant or refinery), the use of emitted CO2 could be economically attractive. Our model estimates that by 2030, CO2 usage for EOR could account for more than 80 Mtpa4 of CO2 annually across conventional reservoirs, residual oil zones (ROZ), and unconventional oil fields5 —an enabling step along the journey to reduced emissions through CCUS.

Cementing in CO2 for the ages

New processes could lock up CO2 permanently in concrete, “storing” CO2 in buildings, sidewalks, or anywhere else concrete is used. This could represent a significant decarbonization opportunity (see “Laying the foundation for zero-carbon cement.”) For example, consider precast structural concrete slabs and blocks. They could potentially be made with new types of cement that, when cured in a CO2-rich environment, produce concrete that is around 25 percent CO2 by weight. There’s a CO2 bonus available here as well: cement used in this curing process has a lower limestone content. That’s significant, since baking limestone (calcination) to make conventional Portland cement releases around 7 percent of all industrial CO2 emissions globally. A second concrete process involves combining the aggregates with cement to make concrete (think cement mixers). Synthetic CO2-absorbing aggregates (combining industrial waste and carbon curing) can be formed to produce this type of concrete, which is 44 percent CO2 by weight. We estimate that by 2030, new concrete formulations could use at least 150 Mtpa of CO2.

Carbon-neutral fuels for jets and more

Technically, CO2 could be used to create virtually any type of fuel. Through a chemical reaction, CO2 captured from industry can be combined with hydrogen to create synthetic gasoline, jet fuel, and diesel. The key would be to produce ample amounts of hydrogen sustainably. One segment keen on seeing synthetics take off is the aviation industry, which consumes a lot of fuel and whose airborne emissions are otherwise hard to abate. By 2030, we estimate, this technology could abate roughly 15 Mtpa of CO2.

Turning the dial negative?

Other interesting applications seem further out. While several are novel enough to be worth keeping an eye on, their abatement potential is often uncertain. Estimating their cost and scalability is also difficult.

Capturing CO2 from ambient air—anywhere

Direct air capture (DAC) could push CO2 emissions into negative territory in a big way. DAC does exactly what it suggests—capture CO2 directly from the atmosphere, where it exists in very small ambient concentrations (400 parts per million, or 0.04 percent by volume). It has been put there in a variety of ways, including both industrial point sources and more diffuse emissions, such as those from vehicles, airplanes, ships, buildings, and agriculture. DAC facilities could be located at storage or industrial-use locations, bypassing the need for an expensive CO2-pipeline infrastructure. The challenge is that it takes a lot of energy—and money—to capture CO2 at very low atmospheric concentrations. Costs are high, running more than $500 per ton of CO2 captured—five to ten times the cost of capturing CO2 from industrial or power-plant sources. There are plans to scale this technology and reduce unit costs substantially, but the pathway to competitive economics remains unclear.

The biomass-energy cycle: CO2 neutral or even negative

Bioenergy with carbon capture and storage relies on nature to remove CO2 from the atmosphere for use elsewhere. Using sustainably harvested wood as a fuel renders the combustion process carbon neutral. (Other CO2-rich biomass sources, such as algae, could be harvested, as well.) Biomass fuel combustion could become carbon negative if the resulting CO2 emissions were then stored underground or used as inputs for industrial products, such as concrete and synthetic fuel. The degree to which BECCS can yield negative emissions, however, depends on a number of intermediate factors across the life cycle. These factors include how the biomass is grown, transported, and processed—all of which may “leak” CO2. (For more on the role of forests in sequestering CO2, see “Climate math, what a 1.5-degree pathway would take.”)


Next horizons

Three other opportunities to capture and use carbon—in carbon fiber, plastics, and agricultural “biochar”—are also worth watching.

Carbon fiber

Superstrong, superlight carbon fiber is used to make products from airplane wings to wind-turbine blades, and its market is booming. The price of the component carbon is high ($20,000 a ton), so manufacturers would love to have a cheaper, CO2-derived substitute. Moreover, the volume of CO2 used could become significant if cost-effective carbon fiber could be used widely to reinforce building materials. A number of pilot projects in the works focus on cracking the tough chemistry involved, but a commercially viable process appears to be perhaps a decade or more away. By 2030, we believe, the contribution to CO2 abatement would be 0.1 Mtpa of CO2.

Storing carbon in your mattress?

CO2 could substitute for fossil fuel–based inputs in plastics production. The combination of technical feasibility and high interest from environmentally aware consumers has attracted the attention of major chemical companies, which are testing a range of CO2-based plastics for widespread use. Green polyurethane—used in products such as textiles, flooring for sports centers, and, yes, mattresses—is in the early stages of commercial rollout. Storing carbon in green plastics would sequester it indefinitely. By 2030, we estimate, plastics could abate a modest but growing 10 Mtpa of CO2.


Biochar, anyone?

Farms produce enormous amounts of biomass waste. When this is heated in an oxygen-poor environment, it creates what’s called “biochar”—a charcoal-like soil amendment that today is used by a modest number of small farmers and gardeners, mostly in the United States. Producing biochar captures 50 percent of the CO2 that would otherwise escape during waste decomposition—and retains most of it for up to 100 years. We estimate that biochar technology is more than a decade away from the point when it could start having a real impact: by 2030, it could sequester roughly 2 Mtpa of CO2.

The road ahead: Obstacles and enablers

Moving toward an economy where CCUS plays a meaningful role would require overcoming challenges across three areas of the value chain, as well as changes in the regulatory environment to expand incentives.



About half of CO2 emissions are generated by factories, refineries, power plants, and the like. Some emissions, such as those from ethanol plants, are purer than others and can be captured relatively cheaply, for around $25 to $30 a ton. For less pure sources (such as emissions from cement and steel-making facilities or coal and natural-gas power plants), the costs get steeper, ranging from $60 to more than $150 a ton.6 What remains, of course, is the other half of CO2 emissions—widely dispersed or mobile. A look at four tiers of CO2 sources in the United States offers a perspective on the challenges of scaling CO2 capture (Exhibit 3).

CO2 transportation

Today, CO2 transportation—a necessity for CCUS to scale—is a weak link in the value chain. In the United States, some 5,000 miles of pipeline transport CO2, compared with 300,000 miles of natural-gas pipelines. Outside the United States, pipelines for moving CO2 are rare.


The challenges for CO2 storage are primarily nontechnical—a function of economic, legal, and regulatory challenges. By some estimates, the United States could geologically store 500 years of its current rate of CO2 emissions; globally, the number is around 300 years. This potential is constrained by the fact that carbon storage (without use) is largely a cost, as we have noted, and thus attracts relatively little project investment and innovation, particularly in the absence of regulatory support or incentives. Moreover, there are also complex legal issues that must be resolved, such as liability for potential leaks, as well as the jurisdictional complexities associated with underground property ownership and use. Still, by 2030 we estimate that storage could account for 200 Mtpa of CO2 abatement—a small but meaningful slice of the full potential for storage.


Anywhere you look in the CCUS value chain, projects to jump-start progress are costly. One avenue of government support is tax credits. In the United States, a tax credit (Internal Revenue Code, Section 45Q) offers $35 a ton for CO2 use and $50 a ton for geologic storage (the higher incentive accounts for the lack of revenue potential). An alternative would be a market price for carbon.

In some sense, the CCUS opportunity is a natural extension of something that occurs every day in the global economy: the collection and disposal of waste and the transformation of some of it into higher-value products and materials. For a wide variety of players in the oil, gas, and chemical industries, this also represents a natural extension of core capabilities—such as operating pipelines, managing reservoirs, and synthesizing new materials—and could therefore be a major opportunity. To make the economics work and to encourage further technological innovation, incentives and supportive regulatory frameworks will be necessary. If they come, CCUS can help support the transition to a low-carbon economy. Without CCUS, the transition would become much more challenging—because every scenario to stabilize the climate depends on investment in negative-emissions technologies.

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Climate risk and response: Physical hazards and socioeconomic impacts

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Can coastal cities turn the tide on rising flood risk?

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A Mediterranean basin without a Mediterranean climate?

Climate risk and response: Physical hazards and socioeconomic impacts

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After more than 10,000 years of relative stability—the full span of human civilization—the Earth’s climate is changing. As average temperatures rise, climate science finds that acute hazards such as heat waves and floods grow in frequency and severity, and chronic hazards, such as drought and rising sea levels, intensify (Exhibit 1). In this report, we focus on understanding the nature and extent of physical risk from a changing climate over the next one to three decades, exploring physical risk as it is the basis of both transition and liability risks.

We estimate inherent physical risk, absent adaptation and mitigation, to assess the magnitude of the challenge and highlight the case for action. Climate science makes extensive use of scenarios ranging from lower (Representative Concentration Pathway 2.6) to higher (RCP 8.5) CO2 concentrations. We have chosen to focus on RCP 8.5, because the higher-emission scenario it portrays enables us to assess physical risk in the absence of further decarbonization. (For more details click on “Our research methodology”). In this report, we link climate models with economic projections to examine nine cases that illustrate exposure to climate change extremes and proximity to physical thresholds. A separate geospatial assessment examines six indicators to assess potential socioeconomic impact in 105 countries. We also provide decision makers with a new framework and methodology to estimate risks in their own specific context.

Seven characteristics of physical climate risk stand out

We find that physical risk from a changing climate is already present and growing. Seven characteristics stand out. Physical climate risk is:

Increasing: In each of our nine cases, the level of physical climate risk increases by 2030 and further by 2050. Across our cases, we find increases in socioeconomic impact of between roughly two and 20 times by 2050 versus today’s levels. We also find physical climate risks are increasing across our global country analysis even as some countries find some benefits (such as expected increase in agricultural yields in countries such as Canada).

Spatial: Climate hazards manifest locally. The direct impacts of physical climate risk thus need to be understood in the context of a geographically defined area. There are variations between countries and within countries.

Warming is “locked in” for the next decade because of physical inertia in the geophysical system.

Non-stationary: As the Earth continues to warm, physical climate risk is ever-changing or non-stationary. Further warming is “locked in” for the next decade because of physical inertia in the geophysical system. Climate science tells us that further warming and risk increase can only be stopped by achieving zero net greenhouse gas emissions. Furthermore, given the thermal inertia of the earth system, some amount of warming will also likely occur after net-zero emissions are reached.

Nonlinear: Socioeconomic impacts are likely to propagate in a nonlinear way as hazards reach thresholds beyond which the affected physiological, human-made, or ecological systems work less well or break down and stop working altogether. This is because such systems have evolved or been optimized over time for historical climates (Exhibit 2).

Systemic: While the direct impact from climate change is local, it can have knock-on effects across regions and sectors, through interconnected socioeconomic and financial systems.

Regressive: The poorest communities and populations within each of our cases typically are the most vulnerable. Climate risk creates spatial inequality, as it may simultaneously benefit some regions while hurting others.

Under-prepared: While companies and communities have been adapting to reduce climate risk, the pace and scale of adaptation are likely to need to significantly increase to manage rising levels of physical climate risk. Adaptation is likely to entail rising costs and tough choices that may include whether to invest in hardening or relocate people and assets.

Climate change is already having substantial physical impacts in regions across the world

The planet’s temperature has risen by about 1.1 degrees Celsius on average since the 1880s. This has been confirmed by both satellite measurements and by the analysis of hundreds of thousands of independent weather station observations from across the globe. Scientists find that the rapid decline in the planet’s surface ice cover provides further evidence. This rate of warming is at least an order of magnitude faster than any found in the past 65 million years of paleoclimate records.

The average conceals more dramatic changes at the extremes. In statistical terms, distributions of temperature are shifting to the right (towards warmer temperatures) and broadening. That means the average day in many locations is now hotter (“shifting means”), and extremely hot days are becoming more likely (“fattening tails”). For example, the evolution of the distribution of observed average summer temperatures for each 100-by-100-kilometer square in the Northern Hemisphere shows that the mean summer temperature has increased over time (Exhibit 3). The share of the Northern Hemisphere (in square kilometers) that experiences an extremely hot summer—three-standard-deviation hotter average temperature in a given summer—has increased from zero to half a percent.

Averages also conceal wide spatial disparities. Over the same period that the Earth globally has warmed by 1.1 degrees, in southern parts of Africa and in the Arctic, average temperatures have risen by 0.2 and 0.5 degrees Celsius and by 4 to 4.3 degrees Celsius, respectively. In general, the land surface has warmed faster than the 1.1-degree global average, and the oceans, which have a higher heat capacity, have warmed less.

The affected regions will grow in number and size

Looking forward, climate science tells us that further warming is unavoidable over the next decade at least, and in all likelihood beyond. With increases in global average temperatures, climate models indicate a rise in climate hazards globally. These models find that further warming will continue to increase the frequency and/or severity of acute climate hazards and further intensify chronic hazards (Exhibit 4).Socioeconomic impacts will likely be nonlinear and have knock-on effects.

Climate change affects human life as well as the factors of production on which our economic activity is based. We measure the impact of climate change by the extent to which it could disrupt or destroy human life, as well as physical and natural capital.

Climate change is already having a measurable socioeconomic impact and we group these impacts in a five-systems framework. This impact framework is our best effort to capture the range of socioeconomic impacts from physical climate hazards and includes:

  • Livability and workability. Hazards like heat stress could affect the ability of human beings to work outdoors or, in extreme cases, could put human lives at risk. Increased temperatures could also shift disease vectors and thus affect human health.

  • Food systems. Food production could be disrupted as drought conditions, extreme temperatures, or floods affect land and crops, though a changing climate could improve food system performance in some regions.

  • Physical assets. Physical assets like buildings could be damaged or destroyed by extreme precipitation, tidal flooding, forest fires, and other hazards.

  • Infrastructure services. Infrastructure assets are a particular type of physical asset that could be destroyed or disrupted in their functioning, leading to a decline in the services they provide or a rise in the cost of these services. This in turn can have knock-on effects on other sectors that rely on these infrastructure assets.

  • Natural capital. Climate change is shifting ecosystems and destroying forms of natural capital such as glaciers, forests, and ocean ecosystems, which provide important services to human communities. This in turn imperils the human habitat and economic activity.


The nine distinct cases of physical climate risk in various geographies and sectors that we examine, including direct impact and knock-on effects, as well as adaptation costs and strategies, help illustrate the specific socioeconomic impact of the different physical climate hazards on the examined human, physical, or natural system (Exhibit 5). Our cases cover each of the five systems across geographies and include multiple climate hazards, sometimes occurring at the same location. Overall, our cases highlight a wide range of vulnerabilities to the changing climate.


Why a stable climate is important for our businesses and our lives

Specifically, we looked at the impact of climate change on livability and workability in India and the Mediterranean; disruption of food systems through looking at global breadbaskets and African agriculture; physical asset destruction in residential real estate in Florida and in supply chains for semiconductors and heavy rare earth metals; disruption of five types of infrastructure services and, in particular, the threat of flooding to urban areas; and destruction of natural capital through impacts on glaciers, oceans, and forests.

Our case studies indicate that physical climate risk is growing, often in nonlinear ways. Physical climate impacts are spreading across regions, even as the hazards and their impacts grow more intense within regions. Most of the increase in direct impact from climate hazards to date has come from greater exposure to hazards rather than from increases in the mean and tail intensity of hazards. In the future, hazard intensification will likely assume a greater role. Key findings from our cases include:

Most of the increase in direct impact from climate hazards to date has come from greater exposure to hazards rather than from increases in the mean and tail intensity of hazards. In the future, hazard intensification will likely assume a greater role.

  • Societies and systems most at risk are ones already close to physical and biological thresholds. For example, as heat and humidity increase in India, by 2030 under an RCP 8.5 scenario, between 160 million and 200 million people could live in regions with a 5 percent average annual probability of experiencing a heat wave that exceeds the survivability threshold for a healthy human being, absent an adaptation response. (The technical threshold we employed is a three-day heatwave with wet-bulb temperatures of 34 degrees Celsius. At that point, the urban heat island effect could increase the wet-bulb temperature to 35 degrees Celsius. All our lethal heatwave projections are subject to uncertainty related to the future behavior of atmospheric aerosols and urban heat island or cooling island effects). Outdoor labor productivity is also expected to be impacted, reducing the effective number of hours that can be worked outdoors. By 2030, the average number of lost daylight working hours in India could increase to the point where between 2.5 and 4.5 percent of GDP could be at risk annually, according to our estimates.

  • Economic and financial systems have been designed and optimized for a certain level of risk and increasing hazards may mean that such systems are vulnerable when they reach systemic thresholds. For example, supply chains are often designed for efficiency over resiliency, by concentrating production in certain locations and maintaining low inventory levels. Food production is also heavily concentrated; just five regional “breadbasket” areas account for about 60 percent of global grain production. Rising climate hazards might therefore cause such systems to fail, for example if key production hubs are affected.

  • Financial markets could bring forward risk recognition in affected regions, with consequences for capital allocation and insurance cost and availability. Risk recognition could trigger capital reallocation and asset repricing and indicates the presence of systemic risk. In Florida, for example, estimates based on past trends suggest that losses from flooding could devalue exposed homes by $30 to $80 billion, or 15 to 35 percent, by 2050, all else being equal. Rough estimates suggest that this in turn could impact property tax revenue in some of the most affected counties by 15 to 30 percent (though impacts across the state could be less, up to 2 to 5 percent).

  • Large knock-on impacts can occur when thresholds are breached. These systemic risks come about in particular when the people and assets affected are central to local economies and those local economies are tied into other economic and financial systems. In Ho Chi Minh City, direct infrastructure asset damage from a 100-year flood could rise from about $200—$300 million today to $500 million to $1 billion in 2050, while knock-on costs to the economy could rise from $100—$400 million to between $1.5 billion and $8.5 billion. In another case, ocean warming could reduce fish catches, for example, affecting the livelihoods of 650 million to 800 million people who rely on fishing revenue.

  • Climate change could create inequality—simultaneously benefiting some regions while hurting others. For example, rising temperatures may boost tourism in areas of northern Europe while reducing the economic vitality of southern European resorts. Within regions, the poorest communities and populations within each of our cases typically are the most vulnerable to climate events. They often lack financial means as well as support from public or private agencies. For example, climate events could trigger harvest failure in multiple breadbasket locations—that is, significantly lower-than-average yields in two or more key production regions for rice, wheat, corn, and soy. This could lead to rising food prices, particularly hurting the poorest communities, including the 750 million people living below the international poverty line.

Global socioeconomic impacts could be substantial

While our case studies illustrate the localized impacts of a changing climate, rising temperatures are a global trend and we assess how physical climate hazards could evolve in 105 countries.

In our assessment of inherent risk, we find that all 105 countries are expected to experience an increase in at least one major type of impact on their stock of human, physical, and natural capital by 2030. Intensifying climate hazards could put millions of lives at risk, as well as trillions of dollars of economic activity and physical capital, and the world’s stock of natural capital. The intensification of climate hazards across regions will bring areas hitherto unexposed to impacts into new risk territory. In particular:

  • By 2050, under an RCP 8.5 scenario, the number of people living in areas with a nonzero chance of lethal heat waves would rise from zero today to between 700 million and 1.2 billion (not factoring in air conditioner penetration). Urban areas in India and Pakistan may be the first places in the world to experience such lethal heatwaves (Exhibit 6). For the people living in these regions, the average annual likelihood of experiencing such a heat wave is projected to rise to 14 percent by 2050. The average share of effective annual outdoor working hours lost due to extreme heat in exposed regions globally could increase from 10 percent today to 10 to 15 percent by 2030 and 15 to 20 percent by 2050.

  • Food systems are projected to see an increase in global agricultural yield volatility that skews toward worse outcomes. For example, by 2050, the annual probability of a 10 percent or more reduction in yields for wheat, corn, soy, and rice in a given year is projected to increase from 6 percent to 20 percent. The annual probability of a 10 percent or more increase in yield in a given year is expected to rise from 1 percent to 6 percent.

  • Assets can be destroyed or services from infrastructure assets disrupted from a variety of hazards, including flooding, forest fires, hurricanes, and heat. Statistically expected damage to capital stock from riverine flooding could double by 2030 from today’s levels and quadruple by 2050.

  • In parts of the world, the biome, the naturally occurring community of flora and fauna inhabiting a particular region, is expected to shift. Today, about 25 percent of the Earth’s land area has already experienced a shift in climate classification compared with the 1901–25 period. By 2050, that number is projected to increase to about 45 percent. Almost every country will see some risk of biome shift by 2050, affecting ecosystem services, local livelihoods, and species’ habitat (Exhibit 7).

Countries with lower GDP per capita levels are generally more exposed

While all countries are affected by climate change, we find that the poorest countries could be more exposed, as they often have climates closer to dangerous physical thresholds. They also rely more on outdoor work and natural capital and have less financial means to adapt quickly. The risk associated with the impact on workability from rising heat and humidity is one example of how poorer countries could be more vulnerable to climate hazards. When looking at the workability indicator (that is, the share of effective annual outdoor working hours lost to extreme heat and humidity), the top quartile of countries (based on GDP per capita) have an average increase in risk by 2050 of approximately 1 to 3 percentage points, whereas the bottom quartile faces an average increase in risk of about 5 to 10 percentage points. Lethal heat waves show less of a correlation with per capita GDP, but it is important to note that several of the most affected countries—Bangladesh, India, and Pakistan, to name a few—have relatively low per capita GDP levels.

What can decision makers do?

In the face of these challenges, policy makers and business leaders will need to put in place the right tools, analytics, processes, and governance to properly assess climate risk, adapt to risk that is locked in, and decarbonize to reduce the further buildup of risk.

Much as thinking about information systems and cyber-risks has become integrated into corporate and public-sector decision making, climate change will also need to feature as a major factor in decisions. For companies, this will mean taking climate considerations into account when looking at capital allocation, development of products or services, and supply chain management, among others. For cities, a climate focus will become essential for urban planning decisions. Financial institutions could consider the risk in their portfolios.


Developing a robust quantitative understanding is complex and will also require the use of new tools, metrics, and analytics. At the same time, opportunities from a changing climate will emerge and require consideration. These could arise from a change in the physical environment, such as new places for agricultural production, or for sectors like tourism, as well as through the use of new technologies and approaches to manage risk in a changing climate. One of the biggest challenges could stem from using the wrong models to quantify risk. These range from financial models used to make capital allocation decisions to engineering models used to design structures. For example, current models may not sufficiently take into account geospatial dimensions or assumptions could be based on historical precedent that no longer applies.

How businesses are already impacted by climate change

Societies have been adapting to the changing climate, but the pace and scale of adaptation will likely need to increase significantly. Key adaptation measures include protecting people and assets, building resilience, reducing exposure, and ensuring that appropriate financing and insurance are in place. Implementing adaptation measures could be challenging for many reasons. The economics of adaptation could worsen in some geographies over time, for example, those exposed to rising sea levels. Adaptation may face technical or other limits. In other instances, there could be hard trade-offs that need to be assessed, including who and what to protect and who and what to relocate.


While adaptation is now urgent and there are many adaptation opportunities, climate science shows us that the risk from further warming can only be stopped by achieving zero net greenhouse gas emissions. Decarbonization is not the focus of this research, however, decarbonization investments will need to be considered in parallel with adaptation investments, particularly in the transition to renewable energy. Stakeholders should consider assessing their decarbonization potential and opportunities from decarbonization.

Can coastal cities turn the tide on rising flood risk?

Image by Jonathan Ford

Climate change is increasing the destructive power of flooding from extreme rain and rising seas and rivers. Many cities around the world are exposed. Strong winds during storms and hurricanes can drive coastal flooding through storm surge. As hurricanes and storms become more severe, surge height increases. Changing hurricane paths may shift risk to new areas. Sea-level rise amplifies storm surge and brings in additional chronic threats of tidal flooding. Pluvial and riverine flooding becomes more severe with increases in heavy precipitation. Floods of different types can combine to create more severe events known as compound flooding. With warming of 1.5 degrees Celsius, 11 percent of the global land area is projected to experience a significant increase in flooding, while warming of 2.0 degrees almost doubles the area at risk.

When cities flood, in addition to often devastating human costs, real estate is destroyed, infrastructure systems fail, and entire populations can be left without critical services such as power, transportation, and communications. In this case study we simulate floods at the most granular level (up to two-by-two-meter resolution) and explore how flood risk may evolve for Ho Chi Minh City (HCMC) and Bristol ( “An overview of the case study analysis”). Our aim is to illustrate the changing extent of flooding, the landscape of human exposure, and the magnitude of societal and economic impacts.

We chose these cities for the contrasting perspectives they offer: Ho Chi Minh City in an emerging economy, Bristol in a mature economy; Ho Chi Minh City in a regular flood area, Bristol in an area developing a significant flood risk for the first time in a generation.

We find the metropolis of Ho Chi Minh City can survive its flood risk today, but its plans for rapid infrastructure expansion and continued economic growth could be incompatible with an increase in risk. The city has a wide range of adaptation options at its disposal but no silver bullet.

In the much smaller city of Bristol, we find a risk of flood damages growing from the millions to the billions, driven by high levels of exposure. The city has fewer adaptation options at its disposal, and its biggest challenge may be building political and financial support for change.

How significant are the flood risks facing Ho Chi Minh City and what can the city do?

What to know about flood risk in Ho Chi Minh City, Vietnam

Flooding is a common part of life in Ho Chi Minh City. This includes flooding from monsoonal rains, which account for about 90 percent of annual rainfall, tidal floods and storm surge from typhoons and other weather events. Of the city’s 322 communes and wards, about half have a history of regular flooding with 40 to 45 percent of land in the city less than one meter above sea level.

In our analysis, we quantify the possible impact on the city as floods hit real estate and infrastructure assets.1 We simulate possible 1 percent probability flooding scenarios for the city for three periods: today, 2050, and a longer-term scenario of 180 centimeters of sea-level rise, which some infrastructure assets built by 2050 may experience as a worse-case in their lifetime (Exhibit 1).

  • Today: We estimate that 23 percent of the city could flood, and a range of existing assets would be taken offline; infrastructure damage may total $200 million to $300 million. Knock-on effects would be significant, and we estimate could total a further $100 million to $400 million. Real estate damage may total $1.5 billion.

  • 2050: A flood with the same probability in 30 years’ time would likely do three times the physical damage and deliver 20 times the knock-on effects. We estimate that 36 percent of the city becomes flooded. In addition, many of the 200 new infrastructure assets are planned to be built in flooded areas. As a result, the damage bill would grow, totaling $500 million to $1 billion. Increased economic reliance on assets would amplify knock-on effects, leading to an estimated $1.5 billion to $8.5 billion in losses. An additional $8.5 billion in real estate damages could occur.

  • A 180 centimeters sea-level rise scenario: A 1 percent probability flood in this scenario may bring three times the extent of flood area. About 66 percent of the city would be underwater, driven by a large western area that suddenly pass an elevation threshold. Under this scenario, damage is critical and widespread, totaling an estimated $3.8 billion to $7.3 billion. Much of the city’s functionality may be shut down, with knock-on effects costing $6.4 billion to $45.1 billion. Real estate damage could total $18 billion.


While “tail” events may suddenly break systems and cause extraordinary impact, extreme floods will be infrequent. Intensifying chronic events are more likely to have a greater effect on the economy, with a mounting annual burden over time. We estimate that intensifying regular floods may rise from about 2 percent today to about 3 percent of Ho Chi Minh City’s GDP annually by 2050 (Exhibit 2).

Ho Chi Minh City has time to adapt, and the city has many options to avert impacts because it is relatively early in its development journey. As less than half of the city’s major infrastructure needed for 2050 exists today, many of the potential adaptation options could be highly effective. We outline three key steps:

  1. Better planning to reduce exposure and risk

  2. Investing in adaptation through hardening and resilience

  3. Financial mobilization to mitigate impacts on lower-income populations

Could Bristol’s flood risk grow from a problem to a crisis by 2065?

Could Bristol’s flood risk grow from a problem to a crisis by 2065?

Bristol is facing a new flood risk. The river Avon, which runs through the city, has the second largest tidal range in the world, yet it has not caused a major flood since 1968, when sea levels were lower, and the city was smaller and less developed. During very high tides, the Avon becomes “tide locked” and limits/restricts land drainage in the lower reaches of river catchment area. As a result, the city is vulnerable to combined tidal and pluvial floods, which are sensitive to both sea-level rise and precipitation increase. Both are expected to climb with climate change. While Bristol is generally hilly and most of the urban area is far from the river, the most economically valuable areas of the city center and port regions are on comparatively low-lying land.

With the city’s support, we have modeled the socioeconomic impacts of 200-year (0.5 percent probability) combined tidal and fluvial flood risk, for today and for 2065. This considers the flood defenses in existence today; some of these were built after the 1968 flood, and many assumed a static climate would exist for their lifetime (Exhibit 3).

We find:

  • Today: The consequences of a major flood today in Bristol would be small but are still material. We find that the flood area would be relatively minor, with small overflows on the edges of the port area and isolated floods in the center of the city. Our model estimates that damage to the city’s infrastructure could amount to $10 million to $25 million, real estate damage to $15 million to $20 million, and knock-on effects of $20 million to $150 million.

  • 2065: In contrast, by 2065, an extreme flood event could be devastating. Water would exceed the city’s flood defenses at multiple locations, hitting some of its most expensive real estate, damaging arterial transportation infrastructure, and destroying sensitive critical energy assets. Our model estimates that damages to the city’s infrastructure could amount to between $180 million and $390 million. It may also cause $160 million to $240 million of property damage. Overall, considering economic growth, knock-on effects could total $500 million to $2.8 billion, and disruptions could last weeks or months (Exhibit 4).


Unlike many small and medium-size cities, Bristol has invested in understanding this risk. It has undertaken a detailed review of how the scale of flooding in the city will change in the future under different climate scenarios. This improved understanding of the risks is an example that other cities could learn from.


However, adaptation is unlikely to be straightforward. It is difficult to imagine Bristol’s infrastructure assets being in a position more exposed to the city’s flood risk. Yet the center of the city, formed in the 1400s, cannot be shifted overnight, nor would its leafy reputation be the same today if the city had not oriented the growth of the past 20 years to harness its existing Edwardian and Victorian architecture. Unlike in Ho Chi Minh City, most of the infrastructure the city plans to have in place in 2065 has already been built.

In the immediate future, Bristol’s hands are likely largely tied, and hard adaptation may be the most viable short-term solution. In the medium term, however, Bristol may be able to act to improve resilience through measures such as investing in sustainable urban drainage that may reduce the depth and duration of an extreme flood event.

Bristol is already taking a proactive approach to adaptation. A $130 million floodwall for the defense of Avonmouth was planned to begin in late 2019. The city is still scoping out a range of options to protect the city. As an outside-in estimate, based on scaling costs to build the Thames Barrier in 1982, plus additional localized measures that might be needed, protecting the city to 2065 may cost $250 million to $500 million (roughly 0.5 to 1.5 percent of Bristol’s GVA today compared to the possible flood impact we calculate of between 2 to 9 percent of the city’s GVA in 2065). However, the actual costs will largely depend on the final approach. 

Bristol has gotten ahead of the game by improving its own understanding of risk. Many other small cities are at risk of entering unawares into a new climatic band for which they and their urban areas are ill prepared. While global flood risk is concentrated in major coastal metropolises, a long tail of other cities may be equally exposed, less prepared, and less likely to bounce back.

A Mediterranean basin without a Mediterranean climate?

Image by Kelly Sikkema

Year-round, millions of visitors from all over the world flock to enjoy the mild climate, wine and food, and stunning scenery. However, climate change may harshen the Mediterranean climate and disrupt vital industries such as tourism and agriculture. The mean temperature in the Mediterranean basin has increased 1.4 degrees Celsius since the late 19th century, compared with the global average of 1.1 degrees—and absent targeted decarbonization, temperatures are projected to increase by an additional 1.5 degrees by 2050. Rising temperatures are expected to raise hydrological variability, increasing the risk of drought, water stress, wildfires, and floods, and noticeably change the Mediterranean climate.

In this case study, we examine the consequences of a changing climate for Mediterranean communities and economies (see sidebar, “An overview of the case study analysis”). We focus on heat- and precipitation-related aspects of climate change, although coastal flooding will also have an impact.

How the Mediterranean climate may become harsher

The Mediterranean climate could change in multiple ways as temperatures rise, water stress increases, and precipitation becomes more volatile, in turn creating multiple knock-on effects from wildfires to the spread of disease (Exhibit 1).

Heat: Climate projections indicate that the number of days with a maximum temperature above 37 degrees will increase everywhere in the Mediterranean region, with a doubling in northern Africa, southern Spain, and Turkey from 30 to 60 by 2050.

Drought: In Italy, Portugal, Spain, and parts of Greece and Turkey, rainfall during the warm, dry season of April through September is projected to decrease by as much as 10 percent by 2030 and as much as 20 percent by 2050. By 2050, drought conditions could prevail for at least six months out of every year in these areas. 

Water stress: Many basins could see a decline of approximately 10 percent in water supplies by 2030 and of up to 25 percent by 2050. Water stress is already high in most countries in the Mediterranean and extremely high in Morocco and Libya. The decline in supply is projected to heighten water stress in all Mediterranean countries between now and 2050, with the greatest increases in Greece, Morocco, and Spain.

Wildfires: Increased levels of heat and dryness are projected to cause larger areas—up to double the current areas on the Iberian Peninsula—to burn from wildfires.

Disease: High summer temperatures have also been linked with the increasing incidence of West Nile fever in Europe. The summer of 2019 saw the first reported case of West Nile virus infection as far north as Germany. Researchers have already projected that the West Nile virus is likely to spread by 2025 and to spread further by 2050.

How would a harsher climate affect agriculture?

Nearly half of the Mediterranean region’s agricultural production value comes from four crops: grapes (14 percent), wheat, tomatoes, and olives (9 percent each) (Exhibit 2). Of the last three, Mediterranean countries produce about 90 percent of the total global supply. We focus on how climate change is likely to alter the production of grapes and wine in the period to 2050.

Production from traditional winemaking regions could diminish as the Mediterranean climate changes, since grapevines are highly sensitive to fluctuations in temperature and precipitation and can also be impacted by water stress and hail damage. Researchers have forecast a wide range of possible effects of climate change on grape yields. Some studies project that the Mediterranean area suitable for viticulture could fall by up to 70 percent at the high end of their range, though considerable debate surrounds these predictions, as others do not see negative impacts at all. As the Mediterranean region becomes warmer, it is also likely that specific grape varieties will no longer grow where they do now (for example, Merlot in Bordeaux), while at the same time the opportunity to plant new varieties may rise. Certain growing areas in Italy, Portugal, and Spain could experience large declines in production or even collapse.

Some researchers anticipate that the warming projected to occur throughout Europe could make it possible to grow wine grapes in regions farther to the north. In effect, Europe’s grape growing belt would shift. But the characteristics of Mediterranean vineyards and wineries cannot be replicated instantaneously. Indeed, they might never be matched, because gaining similar levels of experience in new winemaking regions may take generations.

What impact could a harsher climate have on travel and tourism?

Travel and tourism, including indirect and induced impacts, generate about 15 percent of the GDP of Mediterranean countries on average. In certain areas, the local economy depends much more on tourism and we analyze several of these cities. For example: Antalya, a beach and resort city of two million people on Turkey’s southern coast, attracts more than ten million visitors each year, some 30 percent of all tourists who visit the country. The city is projected to experience a significant increase in the number of summer (June to August) days above 37 degrees: about 15 days each summer by 2030, and approximately 30 days (10 days per month) in 2050. These months are crucial to the tourism industry. They generate 40 percent of each year’s visits and account for tourist spending of some $4.5 billion, as well as about 20 percent of Antalya’s GDP and about 2 percent of Turkey’s.

How can tourism and agricultural industries adapt?

Mediterranean destinations could adapt to climate change in a number of ways. Tourist destinations could extend their shoulder seasons as the Mediterranean climate changes. However, this may not be as simple as offering discounts. Large discounts already give tourists an incentive to travel outside the summer months, yet the summer tourist visit peaks have remained stable over the past ten years. One reason for this is that many tourists are restricted to traveling during school or work holiday periods. Tourist destinations may also offer year-round activities to increase the flow of tourists during the months now considered shoulder or off-season or target different markets such as those convening for meetings and conferences.

Wine growers already take measures to manage variations in production quantity and quality; these actions include cultivating grape varieties that ripen more slowly or require less water. Various hardening measures can help them cope with increased heat and drought. These include: harvesting earlier, reducing sunlight on grapes, irrigating vineyards. Wine growers can increase their resilience by planting different crops or moving to new locations, including higher altitudes and slopes other than the conventional south-facing ones.

Most regions in the Mediterranean will need to invest in adaptation. For example, forests can be made more resilient to wildfire risk by planting fire-resistant trees, reducing the amount of easily burning fuel available (such as leaf litter and brush), and even prescribed and controlled burning. These adaptation costs will likely need to be borne across the continent but will be particularly intense in the Mediterranean basin.

About this case study:

In January 2020, the The Jeeranont Global Institute published Climate risk and response: Physical hazards and socioeconomic impacts. In that report, we measured the impact of climate change by the extent to which it could affect human beings, human-made physical assets, and the natural world over the next three decades. In order to link physical climate risk to socioeconomic impact, we investigated nine specific cases that illustrated exposure to climate change extremes and proximity to physical thresholds.

The Jeeranont

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