Setting Science-Based Targets for Electric Utilities

Challenge

For electric utilities, the business-related benefits of climate action—including improved brand reputation, increased investor confidence, more resilience against regulation, and cost reductions—are becoming more apparent. The pathway electric utilities should take to understand if their actions are in line with limiting global warming to 1.5° C, however, can be less clear. Creating such a pathway requires the combination of future global power demand and the ability to reduce the emissions per unit (kWh) were needed. To help utilities take more strategic and impactful actions, the Science Based Targets initiative (SBTi) engaged Guidehouse to develop a quick start guide specific to electric utilities on setting science-based targets.

Solution

Guidehouse, in partnership with CDP, assessed different climate scenarios and models to develop a climate reduction pathway specific to electric utilities. To comply with SBTi’s principles, modeled scenarios must be consistent, responsible, and objective relative to the desired goal of limiting global warming to 1.5°C. Not all scenarios meet these criteria. The assessment found 20 pathways for the power sector that complied with the principles, and one well-documented scenario was selected.

The chosen scenario shows growth of about 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.

Impact

The findings are detailed in Setting 1.5°C-Aligned Science-Based Targets: Quick Start Guide for Electric Utilities. This quick start guide allows electric utilities to set science-based targets that meet sector-specific requirements through a four-step process: 

• Calculating emissions inventory
• Determining target scope and approach 
• Constructing targets
• Submitting targets to SBTi

Guidehouse and CDP also created a Science-based Target Setting Tool, enabling electric utilities to submit 1.5°C-aligned targets to SBTi for validation.

Due to rapid technology cost reductions for solar, wind, and storage, along with the expansion of enabling conditions that arise from national and subnational goals, and a growing demand for renewable electricity, the power sector is crucial in the decarbonization of society. This guide and the tool are helping electric utilities to align their business strategy with climate science and the Paris Agreement.