European coal companies do not comply with net-zero pledges
Limited Utility: The European energy companies failing on net zero commitments report published in January 2022 by Europe Beyond Coal and think tank Ember, and endorsed by ten other organisations including Reclaim Finance. The report finds that the business plans of European coal companies do not contain the intermediate targets necessary to deliver on their net zero pledges.
What is the report about?
Limited Utility: The European energy companies failing on net zero commitments examines the plans of 21 Europe based coal utilities against three milestones of the International Energy Agency’s (IEA) net-zero by 2050 roadmap. According to the IEA’s net-zero emissions report, all unabated coal plants must be phased out by 2030 in advanced economies, and by 2040 in the rest of the world. Advanced economies must reach overall net‐zero emission electricity by 2035, and the rest of the world must reach net‐zero emission electricity by 2040. In 2030, 60% of total global electricity generation should come from renewables, which requires at least a six-fold growth in solar and wind between 2020 and 2030.
Utilities analysed by the report: BEH, CE Oltenia, ČEZ, Drax, EDF, EnBW, ENEA, Enel, ENGIE, EPH, Fortum/Uniper, Iberdrola, Naturgy, PGE, RWE, SSE, Sev.En, STEAG, Tauron, Vattenfall and Ørsted
What the report’s findings?
Despite 16 of 21 major European coal-burning utilities analyzed in the report pledging to reach net-zero emissions by 2050 at the latest, the report shows that none of them plan to meet all of the required scientific benchmarks set out by the IEA to reach this target. Less than half plan to deliver on the required coal exit benchmarks, while all intend to operate fossil gas power plants in the EU and OECD beyond 2035. Collectively, they will comfortably quadruple solar and wind capacity from 88 GW in 2020 to 428 GW by 2030, but will fall short of the minimum six-fold global growth required.
Among the companies is ENGIE. Its forecasts, stronger than those of the majority of its peers, in the development of renewables, do not reach the level necessary for alignment with the IEA’s Net-Zero scenario. Above all, the French company plans to make significant use of biomass despite studies showing its harmful impact on the climate and biodiversity. Finally, ENGIE, a gas heavyweight in Europe, does not have a plan to get out of gas, unlike ENEL, which has announced its intention to get out of gas completely by 2040.
What does the report demand?
The report calls financial institutions – banks, insurers and investors – to require these companies to adopt measures to decarbonize the power production by 2035 in EU and OECD countries and by 2040 in other countries. They must refuse long-term net-zero pledges which would not be completed with Paris-aligned short-term measures. Anything less constitutes complicity in policies that would see the world miss out on the chance to limit increase in global temperatures to 1.5C above pre-industrial levels, and reach net zero by 2050.
If the current European energy crisis tells us anything, it’s that until all fossil fuels are eradicated from Europe’s energy supply and replaced with fossil-free, renewable sources of energy, the continent will remain vulnerable to energy price and supply volatility. Financial institutions that want to protect people, nature, and our global climate, and deliver the just transformation required to meet the continent’s climate commitments, must force utilities to break with coal and fossil gas at a time frame consistent with the 1.5°C target and increase the speed and scale of their investments in wind and solar power.