About 79 power generators could face carbon costs totaling $56 billion, which equals to almost 12 percent of revenues on average, according to a Trucost survey on the environmental performance of more than 107 utilities worldwide.
As a result, investors and businesses could be exposed to environmental costs passed on by utilities in their supply chains, posing significant financial risks.
The report, “Power Utilities: Who’s Hot,” finds that energy-intensive sectors such as aluminum, industrial gases, cement and iron and steel are at the highest risk of being impacted by these rising costs.
While carbon prices will vary nationally until global carbon trading is in place, Trucost says it used the average carbon price under the EU’s Emission Trading Scheme (ETS) over three months to January 4, 2010 ($19.23) to model potential exposure to carbon costs worldwide. If the 79 power generators were to pay $19.23 for each tonne of CO2e emitted, their carbon costs would total over $56 billion.
In addition to greenhouse gas emissions, other environmental costs could come from managing sulphur dioxide (SO2) nitrogen oxides (NOX) emissions, nuclear waste, and water use, according to the report.
The report also reveals that renewable power generators have the lowest exposure to costs for CO2e, SO2 and NOX. However, several conventional power generators have lower exposure to process water costs, which reflect varied fuel types, generation processes and efficiency within the sector, says Trucost.
Here’s the ranking of utilities by carbon intensity.