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Kate Zerrenner headshot

Why Electric Utilities Would Benefit from Embracing Net-Zero and SBTs

By Kate Zerrenner

Companies setting Science-Based Targets (SBTs) to address climate change have increased six-fold in the past four years, according to Power Forward 4.0, a new report by World Wildlife Fund (WWF). The current trend among Fortune 500 companies is the net-zero target, the latest iteration of aiming for carbon neutrality. To date, 17 percent of the top companies have set a net-zero goal.

What’s the best path toward net-zero?

However, the lack of an economy-wide definition of what encompasses net-zero means the targets vary widely. To some extent, such flexibility is a positive because it enables companies to determine the most appropriate path, but it also leads to some uncertainty in assessing plans and subsequent actions in terms of quality, credibility, and accountability. SBTs provide guidance and best practices for every sector to limit greenhouse gas emissions to below 2 degrees Celsius, according to the Paris Climate Agreement.

Some sectors are falling short altogether. WWF’s report notes that the financial services, fossil fuels and retail sectors lag all others, with less than 50 percent having set a target. The power generation sector, which is at the heart of many countries’ emissions, currently has about 90 percent of companies with a target, but only 5 percent of those are SBTs. Without this sector on board, efforts to meet or exceed commitments to the Paris Climate Agreement will likely fall short. The power generation sector is a linchpin in addressing climate change, and it’s in its own best interest to step up to the task.

The power generation sector’s stance on SBTs and net-zero

Despite responsibility for a quarter of U.S. carbon emissions, in general, the power generation sector (as in utilities) has not gone gently into the low-carbon world, often resisting efforts for meaningful reductions The clearest example of this resistance was in the fight over the Clean Power Plan, the Obama Administration’s effort to set state-based national emissions reductions for the power sector.

Resistance, however, did not come from every corner, and the introduction of the plan back in 2014 jump started a conversation around “utilities of the future” - redesigning utility business models to align and be prepared for a future under a changing climate. Further, as the costs of solar plummeted and new storage and distributed generation technologies evolved, more utilities have come on board.

Shifting political winds meant the end to the Clean Power Plan, but climate change marched on. Since 2015, the U.S. has so far suffered at least 82 billion-dollar natural disasters, and a predicted more-active-than-normal hurricane season began June 1. Disasters often directly stress the capacity and resilience of power generation systems. Utilities have become acutely aware of the risks to their operations after several years of battering storms.

Updated recommendations were issued last year to help shore up systems before hurricane and wildfire seasons, but problems still exist throughout the system. In February of this year, Texas residents suffered multiple days of power outages amidst an ice storm after the state’s utility commission failed to winterize their infrastructure, despite being advised to do so after a similar storm took down power in 2011.

Drought is another threat to this sector that, in many places, is not adequately accounted for. Business-as-usual drought contingency planning is no longer enough, especially as more places unaccustomed to prolonged drought are hit more often with it, such as New England and the southeastern U.S.

What utilities should do in the name of resilience

Incorporating updated climate modeling as well as setting SBTs can increase the resilience of the country’s electricity infrastructure. Traditional resources and business models are not built for the changing landscape under most climate scenarios. For example, hydropower in areas increasingly suffering under drought conditions, such as California and the Pacific Northwest, may no longer be a viable resource. As water constraints tighten, the use of hydropower can lead to an increase in carbon emissions as the technology has to do more with less.

Fossil fuel- and nuclear-powered electricity are also highly water-intensive, which is exacerbated in times of drought and heat waves, when an increase in demand for air conditioning puts additional pressure on already-stressed electric infrastructure. Above-ground transmission further creates challenges for reliability during storms, including hurricanes and winter storms. Power generation, transmission and distribution is done effectively in a variety of climates, even extreme ones. The technology exists to make electric infrastructure resilient, but without plans and investment to upgrade, the power sector remains at risk from extreme weather.

The Science-Based Targets Initiative, which defines best practices and provides technical assistance for developing SBTs, released guidance for the power sector in 2020. The guidance lays out a pathway for deep emissions cuts by the sector that includes low-water renewable energy technologies and developing innovative and flexible business models that prioritize distributed generation, smart grid deployment and storage options.

The good news is that due to a number of factors, from technological innovations to policy changes to economic drivers, the U.S. power sector is now halfway toward net-zero carbon emissions from 2005 levels. Setting net-zero goals has proven to bring results. Getting to the finish line will require a more rigorous set of targets. More uptake of SBTs by utilities and the wider power generation industry will ensure that the sector meets ambitious climate goals, creating resilience for its own infrastructure and the communities that rely on it.

Image credit: Gary Yost/Unsplash

Kate Zerrenner headshot

Kate is a writer and policy wonk, with a focus on water, clean energy, climate change and environmental security. She spent over a decade running energy-water nexus and energy efficiency programs at Environmental Defense Fund as well as time at the U.S. Departments of Energy and Defense, U.S. Government Accountability Office, and state and federal legislatures. She serves as an Advisory Board member of CleanTX, which aims to accelerate the growth of the clean tech industry in Texas.

Read more stories by Kate Zerrenner