Developing a Quick Start Guide for Electric Utilities Setting Science-Based Targets

Challenge

Due to rapid cost reductions for solar, wind, and storage, national and local climate goals, and a growing demand for renewable electricity, the power sector is expected to play a crucial role in decarbonization. While it’s known that the efforts of electric utilities will play a key role, which pathway they should use to understand if their targets are aligned with limiting global warming to 1.5°C were not clear. To create this type of pathway, the combination of future global power demand and the ability to reduce the emissions per unit (kWh) was needed. Guidehouse was engaged to evaluate the options and clarify how utilities could set science-based targets relevant to their sector and align their business strategies with climate science and the Paris Agreement.

Solution

In partnership with CDP, and on behalf of the Science Based Targets initiative (SBTi), Guidehouse assessed different climate scenarios and models to come to a climate reduction pathway for electric utilities. To determine minimum ambition, modeled scenarios needed to be consistent, responsible, and objective relative to the desired goal of limiting global warming to 1.5°C. Not all scenarios met the criteria, but ultimately, a set of 20 pathways for the power sector were found to comply with SBTi’s principles, and one well-documented scenario was selected. Guidehouse and CDP translated this scenario into clear steps that electric utilities can take to set science-based targets:

1. Calculate emissions inventory
2. Determine target scope and approach
3. Construct targets
4. Submit targets to SBTi

The selection of the scenario, the steps to develop science-based targets, including like the carbon inventory, scoping and boundaries, and target construction, were captured in a quick-start guide. In addition to the guide, Guidehouse and CDP also created a Science-based Target Setting Tool enabling electric utilities to submit 1.5°C-aligned targets to the SBTi for validation.

Impact

The climate decarbonization pathway described in the guide shows a growth scenario of roughly 30% in electricity generation between 2020 and 2035. Combined with the climate impact scenario, this is equivalent to an 85% reduction in emissions intensity between 2020 and 2035. After 2035, the scenario leads to an emissions intensity of approximately zero by 2050.