NEW YORK (Dow Jones) -- A report sponsored by International Business Machines Corp. (IBM) says that 90% of utilities around the world know they are at risk from climate change but fewer than a third said they have performed any financial review of the possible impacts on their business.

Utilities face a variety of potential problems from climate change, including shortages of water to cool plants, increased generation demand from hotter summers and power outages from more frequent severe weather, according to the report. They also face challenges as society tries to address the need to curb carbon emissions with new technologies like electric vehicles, which will increase electricity demand.
IBM's Global Industry Leader, Energy and Utilities Consultant Michael Valocchi said in an interview with Clean Technology Insight that there are a variety of reasons that these utilities have stalled on factoring the financial impact of climate change into their business models.
“There is a high level of uncertainly around what the exact impacts would be,” making it difficult for utilities to know exactly how to respond,” he said.
Other factors include uncertainty about the timing of climate change results and a lack of a standard financial model for factoring these changes into a business model, Valocchi said.
The report said 48% of respondent utilities say they manage their climate risk by curbing emissions or using other methods to prevent emissions in the future, but very few of those utilities have plans to adapt to climate change that is likely to result from greenhouse gasses already emitted.
IBM said in the report that prevention of emissions has been the main focus of the industry so far, but adaptation to inevitable changes due to past emissions needs more attention.
“There are many good examples of the work underway here, with investment to reduce emissions from existing infrastructure, the development of new technologies such as wind and solar, and the deployment of smart grids and smart meters,” the company wrote. “But there is much still to do and it is vital that these efforts intensify without delay. Adaptation, according to the analysis in this report, has not had the same focus and we ignore this at our peril.”
Valocchi said IBM sponsored this report because the company has taken an interest in climate change for years and it also makes a variety of smart-grid and other related products.
“Energy and utilities is one of the highest growth industries for IBM as a company,” Valocchi said.
The report said utilities should be prepared for climate change as much as possible, and Valocchi said it makes good businesses sense.
“The energy and utility industry has taken a leadership role on climate change and I think what this report points to is some suggestions on how they can remain in this leadership role and take even more of a role in the future,” he said.
Nottinghamshire, UK-based risk management consulting company Acclimatise and the London-based non-profit carbon-reporting group Carbon Disclosure Project authored the report based on the survey conducted in the first half of 2009. The report was based on a study that surveyed 219 utilities worldwide that participate in the Carbon Disclosure Project, which collects emissions information from businesses and organizations. The report didn't name the participating utilities.