The Science-Based Targets initiative grew at the UN Framework Convention for Climate Change (UNFCCC) conference in Paris as 114 companies from around the world committed emissions reduction targets. These targets are “scientific-based” because they are in line with the targets that scientists say are necessary to keep global warming to two degrees Celsius. The companies participating have combined annual emissions of at least 476 million tons of CO2. This is equivalent to the annual emissions of South Africa or 125 coal-fired power plants.
The commitment of these 114 companies to make ambitious reductions shows how significantly business action can contribute to the global effort to mitigate climate change. The companies that have agreed to set science-based targets represent at least US$932 billion in total combined profits (2014), which is greater than the GDP of Indonesia. Almost a quarter of the companies who have signed up are from the USA, followed by the UK, France, and Canada.
The companies include the world’s largest enterprises, such as Coca-Cola, Dell, Procter & Gamble and Sony, as well as Enel, the Italian utility company which is also the world’s largest power company in terms of customers. Mr. Francesco Starace, Chief Executive Officer and General Manager of Enel, said: “As a global energy company, Enel is ready to challenge business-as-usual habits and take the lead on transforming the energy infrastructure. We are committed to reach carbon neutrality by 2050. This is consistent with the level of de-carbonization required to limit global warming to 2 degrees.”
In an exclusive interview for REVOLVE, Mr. Andrea Valcalda, Head of Sustainability at Enel, said the company is looking to promote a vision for the energy production sector. Enel has committed to reduce CO2 emissions by 25% per kWh by 2020 from a 2007-base year. For an energy company, Mr. Valcalda said: “this means to have a clear view about the evolution of the energy sector and the willingness to lead the energy transition in place, fully embedding such sustainable development commitments into the industrial growth company strategy.”
In particular, Enel will be looking to shut down 13 gigawatts (GW) of fossil-fuelled power plants in its home market of Italy. “Enel’s future growth in generation will be accounted for by about 85% from renewables, with more than 9 billion Euro of investments in the next four years,” Mr. Valcalda explained. In addition, some mid-sized hydropower plants and combined-cycle gas turbine plants (CCGT) with the highest possible efficiency will round up Enel’s technology portfolio. Many countries are now committing to phasing out coal and stating that new coal-fired power stations will be banned in the future, and Enel is leading the way in reducing fossil-fuelled power plants. Mr. Valcalda said: “the exposure to less efficient fossil generation plants will be gradually reduced.”
This is only possible because of the current conditions in the markets where Enel operates. Mr. Valcalda explained that: “today we have overcapacity in power generation in Italy due to the boom of distributed plants, mainly solar PV, over the past five years. Enel is giving its contribution to this process by investing in the modernization and digitalization of the distribution network, enabling hundreds of thousands of small producers and traditional customers to actively participate in the new energy model.” The evolution of the traditional consumer into a “prosumer”, or combined producer-consumer is therefore being facilitated by Enel’s investments and continued commitment.
Enel is not only operational in Italy – it has several subsidiaries, more notably Spanish power company ENDESA and Slovak utility Slovenské Elektrárne. Both these subsidiaries operate or use energy from nuclear power, which was phased out in Italy at the end of the 1980s. “Nuclear will become a minor component of our generation asset portfolio in the future,” Mr. Valcalda said. “Considering that no new investments are foreseen in this technology and that some assets, namely in Slovakia, are being disposed of,” he added, referring to the ongoing process of negotiations for the sale of its 66% share in the Slovak subsidiary. “This kind of ‘heavy’ technology no longer fits with the strategic focus on more flexible and less risky investments with more timely returns which renewables provide.”
In Spain, ENESA continues to operate both renewable energy sources and nuclear. In fact, the country’s energy generation mix shows 69% of electricity coming from low-carbon technologies, including wind power (22.5%), hydropower (17.5%) and nuclear (23.8%) in March 2015. Solar PV and solar thermal power accounted for a total of only 3.7%. Enel’s plans for these assets is unclear.
Another energy company included in the list of 114 enterprises is NRG Energy, a USA-based utility. It became independent from Xcel Energy in 2004 after a bankruptcy process. It has committed to a 50% reduction of absolute emissions by 2030 from a 2014 base-year and a long-term target for a reduction of 90% absolute emissions by 2050 from 2014 levels.
The plans for traditional utilities to decarbonise show that the process for reducing greenhouse gas emissions from the world’s energy producers is gaining momentum. Through the pledges made at COP21, this momentum will continue. It will be even stronger if there is a clear policy instrument for decarbonization in place on a global or, at least, on a continental or regional level.
Writer: Lubomir Mitev is special guest contributor to Revolve from COP21 in Paris.