Ep.32 Climate change in Asia with South Pole

Hello, and welcome to Engineering Reimagined, a podcast series in which we explore how, like engineers, people from all walks of life are reimagining the future and their leadership roles in it. What can we learn from their compelling and inspiring stories to help us reimagine engineering, to lead the world to a better place?

The impacts of climate change are being felt around the world, but even more so in areas of Asia where the threat of rising sea levels, soaring temperatures, severe hurricanes and crippling droughts are becoming increasingly problematic for both low-lying agrarian communities and populous cities.

What can we learn from Asia’s experiences as governments and organisations start to implement adaptation and mitigation responses? Carbon financing and sponge cities are just some of the initiatives being explored and implemented, which might just provide some answers on how to respond to the global threat of climate change.

In this episode, Aurecon's Coastal & Climate Change Director for Asia, Stéphanie Groen together with Renat Heuberger, Founding Partner and CEO of South Pole, talk about the new narrative we need to adopt for climate change, to inspire governments, organisations and individuals to focus on the solutions, rather than the problem. What actions are Asian countries taking to mitigate and alleviate the effects of climate change, and, in the face of these threats, will it be the scientists and engineers who play a pivotal role in uncovering the answers to our global climate change challenge? Let’s find out.

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Stephanie Groen: Thank you Renat for coming into our podcast today. I am really looking forward to discussing how the Asia region is responding to one of the greatest challenges facing our earth today, which is climate change. Now, I am not an Asian local, I originally hail from the Netherlands. But I've been lucky enough to call Singapore my home for the last 19 years. I was personally inspired to work in this field because of my involvement in marine and environmental impacts in Asia, that is mainly related to land reclamation and coastal development. So Renat, can you please share what inspired you to work in this area of climate change mitigation?

Renat Heuberger: Well, first of all, thanks a lot for having me. I highly appreciate this opportunity to talk here. So what inspired me really, I'm an environmental scientist. And we started back in the 90s at the Swiss Federal Institute of Technology in Zurich. And, you know, back then, science was already very clear. You could read the books and you could see climate change is happening and then we looked at our calendar at the university and there was no class on climate, there was all kinds of classes on all kinds of other topics, but not the climate, and so we discussed with the professors and they said, 'Look, if you want to do something big, you do climate because it's the big topic that is oncoming, the science is clear. And not many people are doing that.

So, we thought, absolutely, that's us, we're going to do that. What we did not expect back then was that it would take over 20 years, until finally kids are marching on the streets asking for climate justice, asking for net zero. That was too long. I blame it partly on us, we were not good at communicating the message. But I'm very happy that finally, the signs which have been clear for decades, are now being taken seriously. And companies, governments, people finally start acting. That's very encouraging.

Stephanie Groen: So, what do you think, makes the Asian region more susceptible to the physical risk of climate change compared to maybe other parts of the world?

Renat Heuberger: If you look at the Asian cities, think of places like Jakarta, where I'm currently right now, is a few meters below sea level. And we talking about 23 million people here, and you go to Bangladesh, you go to India, you go to all kinds of other places, we have a lot of very, very big cities, which are at the coasts. With sea level rise, that could pose major threats. And it is already in Bangladesh, for example, shrimp farming is under pressure, because those shrimp farms are constantly flooded by saltwater. And it creates big problems for the farmers. So, Asia in particular, this very high population density is particularly vulnerable to even small changes in the climate. And I think that is why finally, the science has arrived. And I can see governments but also companies and individuals starting to realise it and starting to act against the problem.

Stephanie Groen: So, with so many areas at risk, and so many issues to deal with, how do you feel governments and businesses choose or know what to prioritise?

Renat Heuberger: Yeah, that's a very complex question, which, frankly, nobody has completely figured out. What we can do, we can run our climate models that we have, and run them through a two degree scenario, three, four or five degree scenario, and see what the probability of disasters, what is the change probabilities, that allows you to at least get heat maps, so you can see, where is the potential problem really big. And where is it perhaps not that big yet, and that allows you to start prioritising. Of course, the issue still is that the majority of climate risks even if we see typhoons, today, we see floods today. The big risks are relatively mid to long term risks.

And unfortunately, there is still a tendency of some CEOs and some governments to say look, you know what, that's going to be beyond my time, when that happens, I'm gonna be in pension age or whatever. And they have to change that behaviour because especially if you look at infrastructure projects, typically it was like a new harbour, a new airport, toll roads or a big shopping mall, that is infrastructure you're building with a long term time horizon. So, you will experience the damage right there. So, the very important topic is, especially for infrastructure, but also for city planning, regional planning, you should always do climate scenarios, and you should find out how could that perform in different levels of damage?

Stephanie Groen: I mean, it could sometimes feel all very doom and gloom, right. But you mentioned it already. In terms of your scenario, climate models, your heat maps, there are some incredible advancements happening at the moment. So, what do you feel the role of climate data and analytics play in some of the developments and advancements in this space?

Renat Heuberger: It’s hard to under stress how important that is, when we started back in the in the 90s. Even with climate, one of the big problems was you can't see CO₂, we can't even smell it. It's invisible. So, you need other data to find out what's going on. Climate is one of the most complex topics you can think about. Everything is related to everything, oceans, forests, cities, temperature, pressure, everything and little changes can trigger other changes that you might not even have seen. So, it's not only that the data is missing. It's also that even if you have the data, that doesn't necessarily mean that you can now make an exact prediction. So, we are dealing with a very complex problem.

But on the positive side, It's not all doom and gloom, we have made massive advances in the past couple of years as to data quality, we have bigger computers, faster computers, which can actually predict these heat maps quite well. So, the decision making on government becomes easier because you can do much better fact-based decisions based on what we have right now. And my last point on this one will be even if you don't have the perfect answer, that is okay. Forget about being 100 per cent accurate, it's never going to happen. If you're 75 to 80 per cent accurate, do a decision, don't wait.

Stephanie Groen: So, on that note, I noticed that it's really exciting that South Pole has developed Asia's first digital carbon platform, it's called Shift. I understand that Shift is aimed to use carbon finance, and then to propel transformation change, where it then brings together private and public stakeholders to advance green mobility and clean energy infrastructure. So Renat could you tell us a little bit more about what carbon finance is, and how it will benefit organisations, individuals, and especially also our environment?

Renat Heuberger: Absolutely. So, carbon finance, that is something very simple. If you pollute the air with CO2, you should pay a price. But if you reduce CO₂, you should get a price. And so carbon finance goes to places where people are able to reduce emissions. And electric vehicle is one of these examples. Very obviously, if you replace and we have this problem in Bangkok, in Thailand, you replace Tuk Tuk Taxi, you take it from street, put it in the repair shop, and it comes out with an electric engine. From that moment onwards, it does no longer burn gasoline. With every mile it drives, you actually save CO₂ compared to the baseline. And there is money for that.

So, how is that going to be possible? The Paris Agreement establishes a mechanism where governments pledge to reduce emissions. But governments can as well cooperate with other governments to reduce emissions abroad. And there is now a cooperation being ramped up. In South Pole, my company is essentially establishing that between Switzerland and Thailand, where the Swiss government, as part of its own Paris commitment, would support the Thais with funds to essentially subsidise electric vehicles until they are profitable on their own. And basically, the subsidy is no longer needed. So, with this, the Paris Agreement very directly helps accelerate the transition in Thailand, from gasoline powered vehicles to electric powered vehicles. And that is just an example. These examples now happen everywhere in the world all the time. And in this sense, we use the forces of market mechanisms to accelerate the transition. And that I think is very powerful.

Stephanie Groen: There are so many initiatives right now that are being driven throughout this Asia region, as governments and businesses work to mitigate these physical risks as well. So, one country particularly vulnerable to rising sea levels is of course Singapore. And currently the Singapore coast is being protected from erosion, through construction of walls and stone revetments, which cover at the moment about 80% of Singapore's coastline. So, the use of natural habitats are currently being researched, the likes of using seagrass or mangroves, basically to work as a way of capturing carbon. So, what are your thoughts on the benefits or the use of natural habitats in relation to the impact of climate change and in relation to the capture of CO₂?

Renat Heuberger: For decades, mangroves around the world have been cut down, because they're not very helpful, right, they're there, you can't build a hotel on that beach. And people haven't really seen the value of mangroves. And that's a problem because as we know, mangroves are a massively important habitat for fish and for all kinds of life in seas. It's very valuable in vulnerable ecosystems. Now, two things happened, which are again, encouraging and hopefully will be big, big news for mangroves. On the one side, we have now much better data on what the level of biodiversity is in mangroves. In a way, as a follow up to the Paris agreement on climate, there is also a UN Convention on biodiversity. And my company and others are working on mechanisms and tools to better quantify and better understand positive biodiversity impacts.

So, that topic can come into investment decisions. But on top of that, mangroves are also an interesting and big sink of CO₂. So back to my mechanism before, if, of course, I can now get $20 for every tonne of CO₂ sequestered with mangroves, that all of a sudden creates a business case, all of a sudden planting mangroves, protecting mangroves becomes a business. And that is interesting because if there is no economic rationale for keeping the mangrove where it is, always vulnerable, somebody might always come and cut it down and build a hotel. And so, in this sense, it is carbon finance on top of biodiversity considerations are actually creating a business case for not only protecting, but actually restoring mangroves.

Stephanie Groen: Yeah, I fully agree with you. I mean, there is much more data available about biodiversity, as well as how much mangroves can actually capture in terms of CO2. And I think what we see as well is a shift in this value of natural capital. So how do we create more value from natural habitats like mangroves, like sea grasses, how that can be embedded or incorporated in future infrastructure, which I think is really, really exciting.

Renat Heuberger: Absolutely.

Stephanie Groen: So, one of the other projects of interest that we've been following is China's sponge city project. What's happening there?

Renat Heuberger: I’m actually surprised that this didn't happen before. That's, in a way such a no brainer. So, what's the point of putting concrete into every city and essentially, the idea is, why wouldn't you create your cities in a way that water can sink in and be kept back by the soil. Again, an example here from Jakarta, where I'm currently based. Over the past decades, nearly 100 per cent of the soil here is sealed. What happens then? Rain falls, typically in February, the water can't go anywhere, and the city floods, and people are stuck in water every year, the same thing. That wasn't the case 30, 40 years ago, and the reason is that, again, the water can't go anywhere. So, sponge cities are simply, the only difference is that the water is now basically allowed to infiltrate into the soil, you reduce mass flood risk. But on top of that, you also create reservoirs of groundwater, which you can then pump out again for drinking water. It's a real no brainer. And it's a surprise that this idea really gets online so late, it makes complete sense.

Stephanie Groen: So, have you seen in other cities or other countries, any other tangible examples of climate adaptation and resilience, especially against either sea level rise or rising temperatures?

Renat Heuberger: So, there's many, many examples, but one, which I found quite interesting as well, it's better for big cities, is buildings. Back 10, 15 years ago, you looked at buildings, you were an architect, and the only thing you cared was, what is the optimal way to maximise the floor plan in my building. And what design can I do there, that was more or less it. That has changed dramatically, not only because we have new certification standards, which put a cap on the amount of CO₂ you're allowed to emit, per square meter of office space, and so on. But also, people have realised that if you just put a little bit of brainpower into how you build your buildings, you can just make a big difference. Bangkok, where they built so called wind channels, the only thing they did was they put a little hole from the ground floor up to the 15^th floor, which allows the wind to flow upward. It just creates a constant circulation. There's no engine involved. It's just like, a physical thing in the building, which constantly cools the building by circulating air. So simple, so efficient. Which brings me to my last point, often, adaptation and mitigation of climate change are two sides of the same coin.

Stephanie Groen: I fully agree with you on the building side as well. Especially in Asia, there's still not enough use, I think of double or triple layered glass for building isolation. And you can manage your temperature with that really, really well if you want to. And of course, with the rising temperatures, cooling of buildings and designing them in a way that they are manageable and that they are cooling down by themselves is becoming more and more important, I think in the future. So, totally with you there. I'd like to touch a bit more on the social aspects and the people aspects. You already mentioned your example for shrimp farming. Given that especially in Asia, many populations are concentrated around the coastlines, we may see a bit of a shift in the spread and urbanisation to soar more central country areas rather than the coastline. So, how will people's adaptation influence the current options to retreat or defend against this rising sea level? So, for example, how will this affect their livelihoods? How would, for example a fishing family, adapt to a farming lifestyle? And will this cause conflict and distress over time? What is your view on that? How will that change?

Renat Heuberger: That's a complex one. So, for your last part of the question, there is going to be a significant risk of conflict, if we are not acting pretty fast, because we're talking about a lot of people, and pressure will increase. And you see it already. Now in Europe, for example, what few people know, many people have observed that the war in Sudan and Darfur, and 1 million people killed. It was a war for resources. It was essentially settlers against nomads, who were fighting for the last bits of grassland. And that is just one example. And it might not occur to us. But climate change already creates massive conflicts right now.

In Europe, the refugee situation might get really bad if that continues, because if in Northern Africa, some of our simulations show that in certain places, Northern Africa, you might have 75 degrees Celsius in summer. Now, you're not gonna stay there, you're gonna die. So, you're gonna go somewhere. So, we have to be realistic that it's happening already. On the positive side, I also have examples where that shift actually happens. And one example I recently came across, was Bali. The farmers have farmed since 200 years the same way. But with the prolonged drought periods, those guys who are not in the dairy where their paddy fields are constantly watered, they are out of water.

And so, there is a farm level movement where farmers want to learn new practices, how to farm differently. That is not some European or American or Australian NGO telling them what to do. That is a Balinese farming association trying actively to find new ways to farm. More regenerative farming, less monocultures, more diverse farming. And that's very encouraging, if that's profitable, that works. And if they are successful, this is the model, it could spill over and ripple across Bali, Indonesia, and perhaps other countries. So, I think summing up, the judgement is still out, there will be conflicts. But I can also see a couple of very interesting initiatives that are being taken up right now by the populations themselves, to actually fight back. And I guess companies like South Pole and others with climate finance, our role is to try to accelerate financially good examples and make them scale faster and scale better.

Stephanie Groen: To you, what does success look like? Is there a perfect answer for Asia?

Renat Heuberger: Well, I would say what we should be very careful, is we should not make this like a football match, which you either win or lose. And that's what I see a lot with people and this caused by climate change, it's a lot of focus on the two degrees target then it's the 1.5 degrees target, it's the x, y, z target. And then people start having endless debates on whether the target should be minus 40 per cent or 30 per cent. So, what I'm trying to encourage, yes, we of course need ambitious targets. But what we should be careful is, that we are not spending all our time debating targets and not actually getting to action, start implementing. So instead of answering, what does success look like, my biggest ask is, let's have a target. But then let's start actually doing things. And let's measure our impact. So, we can compare what has worked and what hasn't worked.

Stephanie Groen: So how can we as an individual, approach this work as well, and contribute and help with this move?

Renat Heuberger: So, you would now probably expect me to start with the obvious, namely, you know, start small, recycle, and so on. So, I'll skip that, because that's obvious, you should of course, walk the talk, and do your bit. But my bigger point here, and I really mean this very seriously, we have a choice to make. There's two camps. I would say there's one camp, which says, Oh, you know, climate change, it's complex, it's difficult. And it's gonna be all doom and gloom. The other camp says climate change is a big problem. But we have solutions. And if we get our act together, we can actually do it. We can inspire investors, we can inspire customers, we can inspire employees, we can inspire governments, and we need people to make a choice. And they have to join that second team. And that's very important. We have absolutely no more time for people who are pessimistic, who are not basically action driven.

Of course, it's sometimes hard and I can see, look at Australia, look at the bushfires and so on. It is not looking very nice. But we have to basically tell the climate story differently in the future. We have tried for 20 years. We have seen Al Gore with the Inconvenient Truth; we have seen all these glaciers melting. Well, it's all true. But human psychology doesn't work that way. If you give humans too much bad news, they will stop listening. There's different studies about that which actually look, I have read a few books about that. It's against human nature. So, we have to start talking differently about climate, it has to be positive narrative, it has to be a narrative of transformation.

For example, it is proven over and over that lower levels of emissions caused projects and technologies to emerge that tends to advance the poor. So climate action will also lead to climate justice, will lead to job opportunities for the less privileged, so this is a story that we have to tell and we need people to join that march, that positive and optimistic march towards climate action. And that is my biggest ask to all the listeners her. Next time you hear climate change, yes, think five seconds about the problem. And then think two minutes about the solutions, the technologies and investments you would like to do next.

Stephanie Groen: I fully agree with you, we basically have no time for a climate change naysayer anymore. And I think it's great to see that we want to inspire investors and employees and customers and move towards that positive transformation. You mentioned on the social aspect that lower levels of emissions actually help the poor. Could you elaborate a little bit on that?

Renat Heuberger: Simple example. And we can start in America, what do you think creates more jobs? One big coal fired power plant right here, or 10,000 decentralised solar power plants on every roof. It's of course, the second one, because for the second one, we will have job generation in all kinds of small cities around America, while the few jobs of the coal fired plant were all centralised in one place. Another example is farming. Farming in a monoculture is tougher, it's less interesting jobs, and it's fewer jobs. Farming in a regenerative way, creates more jobs. So, if we are able to get climate finance to make regenerative farming more profitable, will create not only jobs, but actually good jobs on the ground, in areas that currently, there is not too much to do. You can go on and on about energy efficiency buildings, transport, there is a clear tendency that the new technologies that we bring about, they come with jobs, and they come with interesting jobs, with jobs that create also a good life.

Stephanie Groen: Has COVID-19 had any impact on how countries are currently responding to the physical risks created by climate change?

Renat Heuberger: With COVID, we have seen how vulnerable global supply chains are. But it is very clear COVID is not the only threat to supply chains. A few years back, there was a big flood in Thailand, and so the world's largest car wiper factories were flooded. And nearly all wipers come out of the Thai factory, or a big chunk of it. And through that floods, car manufacturers around the world had no more wipers. And nobody was aware that this was happening. And then we have a lot of these examples, which are now exposed by COVID, the hard way. But of course, climate change, arguably puts even more threat in the long term to those supply chains. But I would say there is at least two more effects that COVID has on the climate debate. And one is that specifically companies, but also some governments, have realised that if you are not resilient, that if you're not prepared to global risks, you could run into a big problem, or in other words, if you are prepared, you might have an advantage to your competition to survive this crisis. And so, in a way, COVID was the last warning shots, before climate comes.

We have seen at South Pole, as a result of this, we have a lot of requests from companies who now want to seriously understand their exposure to climate change, because they now see what happens. And the second and last point on that, a very simple one. I honestly believe that COVID has helped people to win back trust in science. And that has been a problem all along in climate. We had the science, as I said before, it's clear since the 90s. And yet, until a few years back, I had to constantly argue on panels. Well, you know, is climate change real or not? Because there were so many people who simply decided to ignore scientific facts. And I think COVID shows that yes, of course, you can ignore science, and you can just go by the millions and meet up even if you shouldn’t, but that does not necessarily extend your life expectancy. And I think people have come to realise that so I can see that. And it's good that trust in science has come back. And that's good for the climate debate.

Stephanie Groen: So, is this going to be the era of the engineers and the scientists?

Renat Heuberger: Look, we scientists will always be conservative. But I do believe that, not everybody will follow. But I think we have a solid majority these days in the world of people who say, look, there's people who have studied many, many years, climate science. And we are aware that they do make mistakes. Climate science is super, super complex. There's always an exception somewhere. It's heating up everywhere, but it's cooling down somewhere else. That absolutely happens. That is normal. But I hope and I believe that more and more people are willing to accept that science and specifically climate science are not exact sciences, it's probabilities. But I give you an example. I mean, if I tell you, your house will burn down with a probability of 50 per cent. Next month, would you buy insurance coverage or not?

Stephanie Groen: 48:36 I would, I definitely would buy insurance.

Renat Heuberger: Or is it that we have a probability of nearly 90 per cent that climate change is very soon, creating big damage, and we are not buying insurance coverage. That's the most craziest thing to do.

Stephanie Groen: I like that topic. I mean, I think if COVID-19 has also taught me one thing, is that people have been forced to become very resilient and adapt to the current situation. And I like the idea that now people get their trust back into climate science and into engineering solutions, because that is basically a fact of how, where we can add value is key to this whole topic. You see very often that organisations are now taking up sustainability and sustainable development as one of their key services. Part of this is likely due to organisations realising the business implications. So, in your view, what change have you seen in the recent years, as more businesses realise the importance of taking action, and what more businesses are trying to incorporate sustainability and climate change as part of the services?

Renat Heuberger: The big shift clearly, when I compare right now, is that 15 years ago, sustainability was, let's say, next door to the philanthropy department of the company. That was the guys in the back of the office, with little budgets to do some good things. But the real guys are sitting in the front office, doing business and doing deals. And that has changed. And that is good. We are now talking to companies, we typically talk to boards, to CEOs to CFOs, because the whole sustainability topic has moved from being kind of a gimmick and a nice to have and social responsibility to be core business. It is important that as a company, you are learning scenarios, and you are finding out which parts of your business might be at risk, in what kind of parameters but also turn it around what opportunities you might have.

Let's just a small example, if you're a high tech company, and we had this very concrete case, with Dow Chemicals which is a client of ours. Dow Chemicals is in the business of doing building insulation material, and we ran scenarios, at what current price level would a new line of insulation actually become the most profitable alternative. And that, now enforces the decision making on product design. Because if they know this is a product that currently has no market, it's too expensive. But with the current price of $20, it's becoming the world's leading insulation, they will go out and produce it. So, these scenarios are not only important to calculate climate risks, but then also important for companies to actually start new business lines, which may have some time to develop. But under a scenario where carbon has a price, all of a sudden, you are the market leader. So the fight against climate change is not only a risk, but it's also an opportunity and it should absolutely interest the CEO.

Stephanie Groen: So, climate change is not a risk, it is also mainly an opportunity. And I'd love to focus on our younger audience right now, because we just mentioned that this is going to be the era of the engineers and the scientists and the advisors. So as a newly fresh grad, or as a new scientist, what role do you feel they can play in mitigating the risks and effect of climate change in the future within the organisations?

Renat Heuberger: Yes, so first of all, there's a massive global shortage in people who have these skills, just to be clear. So first thing to do, go to university and get courses in the environmental realm topic, engineering, data science, modelling, advisory on that level, systems thinker, all that, we need more of these people, it's a complete shortage in most places in the world of those people. And currently, like 18 years, think about your career, that is a no regret move to do that.

Now, for those of you who are already in companies, it's very important that we are able to tell this climate story in a simple way, so it's appealing to CFOs. And this is a problem we engineers and scientists have, we try to talk in a too complicated manner. We try to write long papers, and the summary comes at the end instead of the beginning. And even, we sometimes forget to write the summary because it's boring. CFOs have no time. They want to understand within 15 seconds, whether this in principle makes sense or not. So as engineers and scientists, even if it hurts, let's simplify the message. It doesn't have to be 100 per cent perfect, it has to be more or less good, it has to be convincing. And you have to integrate financial aspects in your engineering calculations. So that will be perhaps my top recommendation. We have to make sure that science and engineering is explained in simple terms with financial figures. The CFO looks at it and says, aha, yes, exactly, we’re gonna do that.

Stephanie Groen: I love that, this has been such a great conversation. There are no perfect answers, make a decision, start somewhere, simplify and make it appealing, right? That's all we need to do. So to wrap up, what is the greatest role you believe you can have in helping countries, regions, economies and even businesses to adapt and building resilience against climate change?

Renat Heuberger: What I think we have to do right now is, I would call it a peer to peer learning. Let's as a government, and also as a company, let's not reinvent the wheel. But let's look what has worked, what hasn't worked in other countries, and shamelessly copy promising approaches. And I hope that my company South Pole can play a role in that as we, around the globe, connect these options. And I hope as many of you who are listening here, join in with your knowledge, with your experience, and populate our channels, your Facebook channels, your LinkedIn channels with great examples that could be copied around the world.

Stephanie Groen: Thank you very much, Renat. That was absolutely fantastic.

Renat Heuberger: Thank you.

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Climate change is everyone’s responsibility and we all have a role to play in being part of the solution.

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