About 34% of the world’s largest corporations have carbon neutrality goals. But 93% of them won’t hit their 2030 targets unless they speed up their emissions reductions. That’s according to Accenture, which says the pursuit of net zero is critical to avoiding the worst-possible effects of climate change.
To that end, COP28 — to take place in Dubai in December 2023 — is focused on the so-called “global stocktake,” which takes stock of national actions and assesses the collective progress. Countries must work hand-in-glove with industry, ensuring they run their operations with the cleanest fuels and adopt the most energy-efficient technologies — if they are to fulfill their promises. The good news is that power companies are generally on board — companies that have the opportunity to benefit financially from the electrification of global economies.
Indeed, 70% of the largest U.S. electric and gas utilities have net-zero goals, says S&P Global Market Intelligence.
“Commitments are meaningless without a plan. We will enable actions and hold all actors to account,” creating a paradigm shift — “sector by sector and region by region,” says Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, during a symposium in Abu Dhabi.
Paris aims to keep temperature rises to no more than 1.5 degrees Celsius by mid-century compared to pre-industrial levels to mitigate such things as droughts, floods, and food and water shortages. Scientists say we are nearing the 1.2 degrees mark and on track to hit 2.7 degrees. Before Paris, the trend was 4 degrees Celsius.
COP28 will dive deep into where countries are falling short of emissions reductions and what they can do to change that. Francesco La Camera, director-general of the International Renewable Energy Agency, says the key reason the global community is off track is that the legacy energy infrastructure — built over more than a century — favors the production of oil, gas, and coal.
But wind and solar prices have fallen drastically. That’s why 80% of the installed electric generation capacity has come from renewables in the last four years. La Camera says we need to triple those investments — from the existing installed base of 260 gigawatts to more than 800 gigawatts by 2030. That will require $5.7 trillion, returning 85 million new jobs by 2030.
“For us, the main action is to build an arc, which can change the course,” says La Camera. “If you add more renewables, there will be more demand for them” — made possible if the infrastructure to produce and deliver those resources is built.
Which industries are the trailblazers and laggards?
Electric utilities are at the vanguard of this mission, and the ones leading the decarbonization effort include Xcel Energy and Edison International.
Take Xcel, which plans to serve 1.5 million EVs by 2030 — a vehicle that produces 80% fewer emissions than traditional cars: Xcel will install home chargers at no cost to customers. The system will encourage juicing during non-peak hours to not stress the grid.
Xcel has a goal of being carbon neutral by 2050. Wind power is not just its most significant contributor but also the company’s least expensive option. The utility expects 60% of its electric generation to be fueled by renewables in 2030, with natural gas to back it up. It is preserving its nuclear fleet.
Edison International is another utility aiming high — part of California’s regulatory effort to limit CO2 releases. The state seeks to reduce CO2 emissions from 1990 levels by 40% by 2030 and be net zero by 2045. It also wants to phase out the sale of gas-powered cars and trucks by 2035.
Edison’s Southern California Edison has the Tehachapi Energy Storage Project, located on a wind farm about 100 miles north of Los Angeles. It generates 8 megawatts for four hours, which equates to 32 megawatt/hours. It also uses lithium-ion batteries, which can store and discharge electricity at any time, although they have a limited duration.
“The most affordable way to get to net zero by 2045 is through renewables … and minimal use of fossil fuels,” says Pedro Pizarro, chief executive of Edison International, at the CERA event. “We see about 6% of electrons in 2045 still coming from gas … Across California, adding that 80 gigawatts of renewables and 30 gigawatts of bulk power storage .. would require something like $175 billion … between now and 2045, plus another $70 billion or so of investment on the grid side to make sure the grid can manage all that.”
A separate study by CDP generally agrees with the Accenture analysis, saying that of the 4,000 companies it reviewed, only 81 had credible climate plans. It said that power generators and infrastructure companies were furthest along. Conversely, it noted the apparel, fossil fuel, and hospitality industries had the “poorest disclosures.” It defines a climate transition plan as a “time-bound action plan that outlines how a company will achieve its strategy.”
“The science tells us that 1.5 is possible, but the window is closing fast, and we are off track,” says the UNFCCC’s Simon Stiell. “The global stocktake will inform us how to move forward, sector by sector and actor by actor, providing a blueprint on how to course correct.”