Making Sense of Utility Carbon-Reduction Targets

Over the past three years, a growing chorus of U.S. utilities and utility parent companies have announced, expanded or accelerated long-term targets for reducing carbon emissions. These targets span from commitments to achieve a carbon-free power supply by 2030, to plans to achieve net-zero emissions by 2050. Given the range of industry terminology and nuanced target details, it is challenging to accurately assess the current state of utility targets.

Recognizing the need for a consolidated tracking resource, SEPA launched the Utility Carbon-Reduction Tracker™ in 2019. This tool serves as the go-to source of data and information on the state and scope of utility carbon-reduction targets. Utilities use it as a benchmarking tool to assess their own targets against industry peers’. Financial analysts refresh the tracker to evaluate utility commitments. Solution providers, reporters, non-profits, researchers and government officials also visit regularly.

Tracker 2.0
Building on insights from users of the Utility Carbon-Reduction Tracker, SEPA recently launched several enhancements. First, the tracker now differentiates targets adopted by individual utilities from those adopted by utility parent companies. This distinction is significant because targets, especially net-zero targets, adopted by utility parent companies typically apply to the parent company’s overall emissions, and it is common for utility parent companies to own other types of companies in addition to electric utilities. As such, all individual utilities owned by the parent aren’t necessarily bound by or expected to achieve the parent’s stated target. By comparison, it is much easier to determine the expected impact of a target adopted by an individual utility.

Second, the tracker now separates voluntary utility targets from state-level 100% requirements. It’s important to understand which utilities have voluntarily committed to carbon reduction, and which are fulfilling a state-level 100% carbon-free or net-zero requirement. Motivations for adopting a voluntary target include economic opportunity; financial, political and public pressure; and a sincere recognition that carbon reduction is “the right thing to do.”

Some major utilities subject to a state-level 100% requirement have adopted a voluntary target that exceeds the state requirement. For example, the Sacramento Municipal Utility District (SMUD) and the Los Angeles Department of Water and Power (LADWP) are aiming to achieve targets ahead of California’s statewide requirement that all retail sales of electricity to end-use customers come from 100% “renewable energy resources and zero-carbon resources” by 2045. SMUD has committed to reaching a zero-carbon power supply by 2030, and LADWP is targeting a 100% renewable and carbon-free power grid by 2035. In New York, where state law requires the “statewide electrical demand system” to be free of greenhouse-gas emissions by 2040, the New York Power Authority has committed to reaching 100% carbon-free electricity by 2035.

Third, users can now easily differentiate targets by category, including:

• Targets aiming to achieve 100% renewable energy, clean energy, emissions-free energy or carbon-free energy. This is the most direct approach to full carbon reduction.
• Targets aiming to achieve net-zero emissions or carbon neutrality. This approach is less direct, but it allows greater flexibility in terms of how the target can be achieved.
• Targets aiming to achieve partial or relative carbon reduction (i.e., less than 100%), compared to a baseline year.

Fourth, SEPA enhanced the data visualization. The tracker now offers three interactive, color-coded maps which display service territories or jurisdictions for utilities and utility parent companies, for distribution utilities, and for state-level 100% requirements. Filters allow users to sort the data by various criteria, including utility type, target type and target attainment year.

Additional features include an enhanced, downloadable public dataset, summaries of interim targets, a list of recently-announced targets, a dashboard of easy-to-digest factoids derived from project data, and a new FAQ and methodology section.

Notable findings
The Utility Carbon-Reduction Tracker includes data on more than 300 industry targets that apply to individual utilities, whether voluntary or mandatory, or to utility parent companies. Some findings are presented in the figures below.

The SEPA Utility Carbon-Reduction Tracker is constantly evolving. The SEPA team is scoping additional project enhancements, including expanded analysis, detailed data on interim targets, a timeline depicting the evolution of targets, a library of primary documents, and information on whether targets align with industry standards. As the industry coalesces to address the climate crisis and begins to look towards tackling historical emissions, SEPA may be able to create a future category that covers negative or net-negative emissions targets.