Recent Study Shows Electric Utilities Increasingly Off Track Against Climate Targets

A study conducted by the CDP, World Benchmarking Alliance and ADEME show that many companies in the electric utilities and automotive sectors are falling behind on their climate goals.

According to the study, almost all companies across the electric utilities sector are set to exceed their 1.5°C warming scenario budgets. With COP26 now concluded and pressure mounting on businesses, this critical industry is shown to be lagging far behind where they should be on reducing emissions and their reliance on fossil fuels. 

The largest study of its kind, the research ranks the most influential 50 electric utilities and 30 automotive companies on their commitments and progress on achieving a low-carbon transition, in line with the milestones for achieving net zero set out in NZE(1).

The first assessment of these critical sectors released since world governments came together at COP26 to agree to a ‘phasing down’ of fossil fuel production, it shows that both sectors continue to rely heavily on fossil fuels, with nearly all (98%) companies in the electric utilities sector and 93% of the automotive sector set to exceed their carbon budgets. 

In the electric utilities sector, the key findings are:

  • Overall the companies assessed will exceed their total carbon budget by 57% up to 2035. 
  • Just 3 out of 50 companies (Ørsted, EDP and AES Corporation) have emissions targets that align with the IEA’s 1.5°C warming scenario. Only Ørsted is projected to stay within its carbon budget between now and 2035. 
  • Given their continued reliance on fossil fuels, the climate performance of 35 companies in this sector is expected to decline in the near term.
  • To be fully aligned with a 1.5°C pathway, 78% of companies’ electricity generating capacity needs to come from renewables by 2030. Currently, only 8 companies are investing at these levels.
  • There are no companies in the sample with a zero carbon portfolio and for 34 companies, coal accounts for more than 10% of their capacity. 
  • The sector has performed well on pursuing a Just Transition, with European headquartered companies demonstrating the highest levels of best practice on planning for and mitigating the social impacts of their low-carbon transition on workers, communities and affected stakeholders.

“To stay on track for safe levels of warming, we need to see massive strides from both of these critical sectors,” says Nicolette Bartlett, chief impact officer at CDP.  “At present, we’re simply not seeing change happen fast enough. The automotive sector has only increased its low-carbon vehicle share by 5% over the past five years - that kind of progress is not going to get us where we need to be by 2030. Likewise, the fact that only 8 out of 50 companies are currently investing enough in low-carbon tech to align with a 1.5°C warming scenario is a red flag for the entire industry. Companies must increase ambition and deliver against climate transition plans or it will prove disastrous for their businesses and for our overall climate efforts.”

These benchmarks are the latest iterations in a series of analyses from CDP, WBA & ADEME tracking the progress of the sectors (the second iteration of the electric utilities sector and the third of the automotive). 

For the latest electric utilities benchmark click here. 

 

 

 

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