Power moves and power failures report
The lack of a thorough regulatory framework for corporate reporting prevents a simple and coherent understanding of the transition plans of electricity producers. Yet, such a framework is essential to inform the actors financing their activities about the viability of their climate strategies. This report provides a comprehensive and robust analytical framework to evaluate and compare the power utilities’ transition plans, applied to five of the leading electricity producers in Europe (Enel, ENGIE, EPH, Iberdrola, and Statkraft).
Key messages:
None of the analyzed power utilities has committed to phase out fossil gas by 2035 as recommended by the International Energy Agency’s ‘Net Zero Emissions by 2050’ scenario.
- Enel, ENGIE and EPH remain significant developers of fossil gas-fired power plants, undermining the phase-out of fossil gas and pursuing strategies that will lock them and the countries in which they operate into the continued burning of gas.
- Coal phase-out plans that result in closures rather than sales or replacements are needed from Enel, ENGIE and EPH to ensure an absolute emission reduction regarding this kind of asset.
- Though they fall short on their fossil gas phase-out, Iberdrola and Statkraft show that a coherent transition plan towards a sustainable-based power system (wind, solar, storage and grids) is possible. They exemplify better practices regarding their fossil fuel phase-out ambitions.
- Financial institutions must engage with their power utility clients so that they develop credible transition plans that contribute to the decarbonization of the power sector and implement strong governance practices.
None of the five analyzed power utilities presents a complete and robust transition plan that guarantees a decarbonization pathway limiting global warming to 1.5°C with low or no overshoot. A commitment to phasing out fossil fuels in Europe by 2035 is the main shortfall and thus jeopardizes the emission reductions made possible through a significant development of sustainable energy. The financial actors supporting their activities have an important role to play in evolving their clients’ practices and achieving their own climate goals. They must require credible transition plans from the power utilities belonging to their asset portfolios.