Using systems thinking and causal loop diagrams to identify cascading climate change impacts on bioenergy supply systems

Abstract

Increased use of bioenergy, driven by ambitious climate and energy policies, has led to an upsurge in international bioenergy trade. Simultaneously, it is evident that every node of the bioenergy supply chain, from cultivation of energy crops to production of electricity and heat, is vulnerable to climate change impacts. However, climate change assessments of bioenergy supply chains neither account for the global nature of the bioenergy market, nor the complexity and dynamic interconnectivity between and within different sub-systems in which the bioenergy supply chain is embedded, thereby neglecting potential compounding and cascading impacts of climate change. In this paper, systems thinking is utilised to develop an analytical framework to address this gap, and aided by causal loop diagrams, cascading impacts of climate change are identified for a case study concerning imports of wood pellets from the United States to the European Union. The findings illustrate how the complexity and interconnectivity of the wood pellet supply system predispose the supply chain to various cascading climate change impacts stemming from environmental, social, political and economic domains, and highlight the value of using system-based analysis tools for studying such complex and dynamic systems.

Climate risks to the renewable energy sector: Assessment and adaptation within energy companies

“…However, the climate change risk literature is currently expanding to also consider risks arising from indirect sources, in addition to direct impacts. According to this new strand of literature, climate change creates systemic, cascading and cross‐border risks in physical and ecological systems, the economy and society, and these are often interconnected, creating the conditions for irreversible threshold exceedance at multiple scales (Groundstroem & Juhola, 2021). While studies stress the importance of systemic risks caused by climate change, these studies provide little support regarding the identification or assessment of these types of risks (Hui Min et al, 2021).…”

“…Climate risks are increasingly being regarded as complex phenomena that are shaped by the interactions of multiple stressors, compounding effects and nonlinear responses (Carter et al, 2021; Simpson et al, 2021), resulting in different types of indirect risks, such as systemic and cascading risks (Table 1) (Sillmann et al, 2022). Indirect risks can affect different sectors and regions in unpredictable ways through cross‐sectoral and cross‐border interactions (Groundstroem & Juhola, 2021; Hui Min et al, 2021). For instance, climate change‐induced loss of income, reduced access to capital as investors become more climate risk aware and increased insurance premiums due to higher exposure to risk, may result in reduced financial performance of companies (Steeves et al, 2016; van Benthem et al, 2022).…”

“…For instance, climate change‐induced loss of income, reduced access to capital as investors become more climate risk aware and increased insurance premiums due to higher exposure to risk, may result in reduced financial performance of companies (Steeves et al, 2016; van Benthem et al, 2022). Overall, the global interconnectedness of the energy market—acutely highlighted, for example, by the Russian invasion of Ukraine in February 2022—predisposes energy companies to various cross‐border and systemic impacts of climate change that may be difficult to foresee and prepare for (Groundstroem & Juhola, 2021).…”

“…Indirect risks can affect different sectors and regions in unpredictable ways through cross-sectoral and cross-border interactions (Groundstroem & Juhola, 2021;Hui Min et al, 2021). For instance, climate change-induced loss of income, reduced access to capital as investors become more climate risk aware and increased insurance premiums due to higher exposure to risk, may result in reduced financial performance of companies (Steeves et al, 2016;van Benthem et al, 2022).…”

Understanding Climate Change Cascading Risks: Different Visions of the Future

“…Systems Dynamics (Sterman, 2000) is a framework commonly used to make sense of complexity in cascading phenomena involving adaptive systems (Cradock-Henry et al, 2020;Duvat et al, 2021;Groundstroem & Juhola, 2021). This approach places the focus on systems' behaviourhow systems change and generate events and patterns of eventsand as such pays particular attention to feedback mechanisms because these largely determine 9 Self-organising functional groups made of diverse parts connected by flows and producing nonlinear behaviours (dynamism) (See also Holland, 1995in Levin, 1998 behaviour.…”