The power sector: US climate ambition must surge
15th Sep 2021
When it comes to the decarbonization of our global economy, the power sector is in a unique position of, well… power.
However, new data from the Science Based Targets initiative shows that despite some self-defined net zero targets, US power companies are severely lagging behind their neighbours across the Atlantic. The majority of European electricity companies are powering ahead with decisive climate action. The 13 most ambitious targets will result in total emissions reductions equivalent to more than the emissions from Spain last year.
Power to decarbonize
If we are to transform our economies to limit warming to 1.5°C, a dual approach is required. Electricity-related emissions must be sharply reduced, while electricity use is increased to replace fossil fuels in transport and heating. This is because the power sector can establish steep emissions reductions, enabled by rapid cost reductions for solar, wind, and storage, expansion of national and subnational goals and demand for clean energy.
It’s clear then that the decarbonization of power is vital to limiting the impact of global warming and maintaining a habitable planet for humankind. Making deep electricity sector emissions cuts by 2025 and achieving 100% clean power in the next 15-20 years is essential if we are to halve emissions by 2030 and unlock net-zero before 2050.
The IPCC report from earlier this year was clear that the climate crisis is accelerating towards environmental catastrophe. But fundamentally, there is still time to prevent the effects of global warming as long as every government, business and person takes urgent climate action. Companies must set robust targets that follow climate science, and the power sector must lead the way.
US companies must urgently act
The US is committed to reducing emissions by at least 50% by 2030 from 2005 levels, and the Biden administration is hoping to enact a Clean Energy Standard. If passed into law, the goal will be to generate 80% clean electricity by 2030 and 100% by 2035, up from 12% in 2020. This is critical to the US delivering on 2030 targets.
In the US, coal power is declining in the face of market competition from gas and renewables. But unfortunately, many US power companies are replacing coal with gas generation and actively opposing ambitious climate policy at federal and state level.
What’s more, only one US power company has an approved science-based target, compared to 18 major utilities in Europe.
Some major US utilities, including Duke Energy, Dominion and Southern Company, have self-defined net-zero targets for 2050. But they are only reducing emissions by 1-2% a year - nowhere near enough. It is therefore imperative that these companies and their peers urgently increase their climate ambitions and set science-based targets.
To provide clarity and to ensure business leaders can be confident their actions are in line with climate science, the SBTi is developing the first global science-based Standard for companies to set net-zero targets.
The importance of science-based targets
Since its conception in 2015, science-based target setting has evolved into a movement covering 20% of global market capital. Science-based targets are now the de facto standard in realizing robust and urgent climate action.
We now know that science-based targets drive corporate decarbonization - between 2015 and 2020, companies with validated targets cut emissions by 25%. Yet in the same timeframe, there was an increase of 3.4% in global energy and industrial emissions.
The climate crisis demands action and electricity companies can deliver this at scale. But targets must be science-based rather than self-defined in order to ensure rapid and robust emissions reductions.
EU powering ahead
Despite previous opposition to renewable energy and ambitious climate policy before 2015, European power companies are increasingly taking bold climate action. This includes the closure of polluting coal plants, heavy investment in the rapid expansion of renewable energy and supporting innovative climate policies. E.On, EDF, EDP, Enel, Engie, Iberdrola and Orsted were among the 200 companies supporting at least -55% EU emissions reductions by 2030. Support for ambitious climate policy is currently lacking from US companies.
In Europe, 18 power companies have approved science-based targets, including all 10 of the largest European utilities. Thirteen have also joined the SBTi’s most ambitious campaign - Business Ambition for 1.5°C. These will result in combined scope 1 and 2 emissions reductions of 303.5 million tonnes by 2030, more than the total greenhouse gases emitted from Spain last year (272 million tonnes). European power companies with 1.5°C approved targets are committed to cutting emissions by an average of 66% by target years ranging from 2021-2030.
The growth of science-based targets set by power companies in Europe shows that the knowledge and technology to reduce emissions in this sector exists. A green power revolution is well underway in the European power sector - US companies must follow suit by setting science-based targets and pledging significant climate action.
The decarbonization of the power sector is vital to securing a 1.5°C future, but every country must play its part in taking action to reduce emissions. With one of the largest power demands in the world, we cannot afford for the US to lag behind.
NRG Energy in the US has an approved 1.5°C science-based target, and has pledged to cut at least 32 million tonnes of emissions by 2025. This proves that emissions reductions in the US are possible.
But one US power company is not enough. We are calling on all US utilities to join NRG Energy by committing to set 1.5°C-aligned science-based targets. Vistra Corp recently committed to the Business Ambition for 1.5°C and is now working on development of its targets.
Only with sustained commitment and rapid action can we ensure the future of humankind and prevent the worst effects of the climate crisis. We have the power to do so, but we must act now.
To contact our expert team about setting a science-based target, email [email protected].