Electricity is a key source of energy in the United States, with consumption growing almost every year since the 1950s. Total electricity consumption in the U.S. measured at 4.05 trillion kWh in 2022, and as the impacts of climate change become top of mind for many consumers, demand for renewable energy sources increases.
In 2022, a U.S.-based electric utility company took initial steps toward decarbonization through the development of a net-zero plan. Motivated by its majority shareholders, the company reached out to ADEC ESG Solutions to help bring a sharper focus to its greenhouse gas (GHG) inventory and its current and planned emissions reduction programs, as well as to help the company begin its net-zero transition.
Laying the foundations: GHG emissions inventory and support
The development of a GHG emissions inventory is a foundational part of any ESG program. High quality emissions data helps create a baseline for emissions reduction targets, supports target-setting and monitoring, and informs mitigation strategy identification initiatives. ADEC ESG helped our client develop its first GHG emissions inventory for scopes 1 and 2 for all direct operations, including power generation. The streamlined systems we helped develop can also be used year after year to update future GHG inventories, facilitate third-party verification, and support later strategy prioritization and ESG metric performance monitoring.
The SBTi is a collaborative global body that supports companies with emissions reductions targets and has established sector-specific guidance, designed with explicit criteria to help certain sectors transition to a low-carbon economy. SBTi’s power sector guidance, using the Sectoral Decarbonization Approach (SDA) method, specifically calls for targets that cover emissions from electricity generated (scope 1) and for all electricity that is purchased and sold (scope 3, category 3). The Power Sector SDA also provides guidance for setting optional targets for other scope 1, 2, and 3 emission sources, as applicable.
With these requirements in mind, we worked with our client to analyze its operations in a way that addressed the company’s key challenge: how to deliver power to customers in a way that was reliable, consistent, and helped reduce emissions. With renewable energy coming largely from intermittent sources such as solar and wind, our focus was on how our client could best utilize the renewable resources it had available, how those resources currently impacted its scope 1 inventory, and how this data would inform net-zero strategy and planning.
Taking action: Net-zero strategy and planning
Electric utility companies such as our client face a unique challenge in decarbonization. The power sector is expected to decarbonize very quickly compared to other high-emission industries, due in part to the relative maturity of solutions like renewables. These high expectations, coupled with the Biden-Harris Administration’s goal of converting the U.S. power sector to zero-emission grids by 2035, create a high-pressure environment in which power companies are expected to rapidly evolve. Emission reduction strategies for companies in this sector require needlepoint precision in evaluating feasible strategies, including location, cost, regulatory requirements, and reliability of resources.
Based on previous emissions calculations, we worked with our client to establish a long-term net-zero target as well as an interim 2030 target. These targets would help set the client on the path to decarbonization, guide ESG programs across the organization, and ensure that the client’s internal teams and stakeholders had a clear and unified understanding of each target.
Using data gathered for scopes 1, 2, and 3 inventories and analyses, we then developed a comprehensive list of key strategies for each emission source. For each strategy, we evaluated:
- Technical feasibility to meet the client’s needs
- Ease of implementation for potential projects
- Emission reduction potential through the lens of availability, reliability, and cost-effectiveness of renewable power sources
- Each strategy in the context of different scenarios, giving the client a clear picture of how each potential strategy and combination of strategies may contribute to their overall impact
This information armed our client with the knowledge they needed to make decisions around emission mitigation planning and prioritization. We then formulated a net-zero business plan that recommended a plan of action and a timeline for implementation that aligned with the client’s short- and long-term emission reduction goals. The net-zero business plan included both retirement years for fossil generation plants and installation years for solar, wind, and coal with carbon capture and storage.
These foundational ESG metrics and strategy efforts presented our client with a clear path towards decarbonization—and identified a credible path forward to reducing its emissions. We look forward to supporting our client as the company takes leaps towards its ambitious goal of becoming a leading clean energy company, steered by the desire to provide resilient, reliable, and sustainable energy to its customers and communities.
Results and Deliverables
- GHG emissions inventory for scopes 1 and 2
- Scope 3 GHG emissions key source identification and analysis
- Scope 3 Category 3 calculations per SBTi requirements
- Net-zero target setting
- Net-zero strategy identification and scenario analysis