Climate risk and vulnerability assessment methodology: an investigation into the improvement of Northvolt’s existing methodology

Abstract

The increasing frequency, duration and intensity of climate hazards is causing organisations and their assets to become more exposed and vulnerable to climate change. Numerous regulations, legislations and policies have emerged, mandating that organisations include climate risk and vulnerability assessments into their business operations. In response, various methodologies have emerged from the common practices to advise organisations on how to conduct these assessments. However, academic research has found that given the rapid emergence of regulations, legislation and policies, climate risk and vulnerability assessments often diverge in requirements, standards, and practices. Therefore, the research project conducted a literature review of the common practices to confirm the difference and highlight the commonalities. A review of Northvolt's existing methodology found a gap and misalignment when compared to the common practices. The gap analysis guided the creation of a proposed methodology to improve Northvolt's existing methodology and align it with the common practices. The proposed methodology was validated by applying it to a real-life case study, Northvolt Ett. Finally, the application case study highlighted the opportunities to implement climate change adaptation solutions, to ensure its resilience to climate change in the future.

Popular Abstract

The research project investigated the improvement of the existing climate risk and vulnerability assessment methodology for the Swedish battery manufacturing company, Northvolt. With the increasing frequency, duration and intensity of climate hazards projected to occur with climate change, commercial businesses, financial institutions, and industrial organisations have acknowledged the need to analyse their exposure to climate change to ensure they are resilient and adapted to the future climate conditions. This is reflected by the emerging regulations, legalisations and policies mandating that organisations include a climate risk and vulnerability assessment in their business operations. However, academic research has found that given the rapid development of regulations, policies and legislation, the emerging methodologies guiding organisations to conduct climate risk and vulnerability assessments lack common standards, terminology, and practices. Therefore, the research project explored the research question what are the gaps in Northvolt’s existing climate risk and vulnerability assessment methodology compared to common practices? Following, the research project investigated the research question how can a proposed climate risk and vulnerability assessment methodology address these gaps? Finally, the research project applied the proposed methodology through the research question what climate change adaptation solutions can Northvolt implement to reduce the exposure of their industrial facilities to the identified climate risks?
The research project began by conducting a literature review to analyse the common practices. The practices align on many standards, especially for establishing the project context and assessing how climate change adaptation solutions can address climate risks. However, the literature review found that the common practices diverge on how exactly to conduct climate risk assessment. Some approaches take a qualitative approach and describe the climate risks through descriptive impact chains. In contrast, alternative methodologies adopt a quantitative approach and evaluate climate risks through probability and impact assessments. The research project reviewed Northvolt’s existing climate and vulnerability assessment methodology and compared it to the reviewed common practices. The gap analysis found that Northvolt’s methodology has numerous gaps, such as not separating the facility into system elements, not conducting a sensitivity analysis, not assessing the adaptive capacity, not including a probability and impact assessment, and not assessing additional climate change adaptation solutions, thus, answering the first research question.
By highlighting the gaps in Northvolt’s existing methodology, the research project designed a proposed methodology that improved Northvolt’s existing methodology and included numerous standards of common practices, while also trying to align the common practices. The proposed methodology added numerous practices to Northvolt’s existing methodology, such as separating the facility into system element, including an exposure and sensitivity analysis, a quantitative probability and impact assessment, an adaptive capacity assessment, and an assessment of additional climate change adaptation solutions, thus, answering the second research question.
The proposed methodology was applied to Northvolt's primary battery manufacturing facility, Northvolt Ett. The application case found that the methodology can reliably screen the climate hazards in or out of the risk assessment using the exposure and sensitivity analysis. The risk assessment found that the probability assessment can use historical data and expert opinion to estimate the probability of climate hazards occurring now and in the future. However, a degree of uncertainty lies in the estimation of probabilities, which must be acknowledged as a limitation. Additionally, the proposed methodology found that the adaptive capacity assessment can feasibly identify the system elements adaptive capacity capabilities to cope with the identified climate hazards. The adaptive capacity assessment can then be used to guide the estimation of the impact on the system elements if the climate hazards were to materialise. Finally, the results from the climate risk assessment be used to assess the opportunities for climate change adaptation solutions that can reduce climate risks and ensure resilience to future climate conditions, thus, answer the third research question.

• author: Fegan, Christopher
• supervisor: Marcus Abrahamsson
• organization: Division of Risk Management and Societal Safety
• course: VBRM15 20231
• year: 2023
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: Risk, hazard, exposure, sensitivity, vulnerably, risk assessment, climate risk assessment, vulnerability assessment, climate change adaptation, methodology
• language: English
• id: 9132306
• date added to LUP: 2023-08-10 09:14:44
• date last changed: 2023-08-10 09:14:44