Decarbonization Targets for the Largest U.S. Utilities
The U.S. recently rejoined the Paris Climate Agreement and decarbonization is back on the minds of government officials and companies alike.
Though every sector plays a major role on the path to net zero carbon emissions, none are as impactful as the energy sector. In 2016, almost three-quarters of global GHG emissions came from energy consumption. With organizations looking to either curb energy consumption or transition to cleaner forms of energy, the pressure is on utilities to decarbonize and offer green alternatives.
How are U.S. utilities responding?
This infographic from the National Public Utility Council highlights the decarbonization targets of the largest investor-owned and public U.S. utilities.
U.S. Utility Decarbonization Targets Through 2035
The American energy sector has many players, but the largest utilities account for the bulk of production.
For each state, we looked at the largest investor-owned and public electric utilities by retail sales as tracked by the U.S. Energy Information Administration. Decarbonization targets were taken from each utility’s stated goals or sustainability report.
After narrowing down from 3,328 different entities and subsidiaries, the final list of 60 utilities accounted for 60% of U.S. energy sales in 2019 at just under 1.93 trillion MWh (megawatt hours).
Many companies on the list have multiple goals spread across different timeframes, but they can be grouped into a few distinct categories:
- Reducing carbon dioxide (CO2) or greenhouse gas (GHG) emissions: These measures are either percentage-based or flat reductions, and also include becoming carbon neutral or “net zero” by balancing reduced emissions with carbon offsets.
- Reducing carbon intensity: These measures work on reducing the impact of electricity generated by fossil fuels, rather than reducing the amount directly.
- Increasing renewable energy production: These measures focus on adding renewable energy with a lower carbon footprint to the production mix and can be either percentage-based or flat additions.
- Increasing clean electricity production: These measures are centered around ensuring that electricity produced is 100% carbon free.
Utilities with decarbonization targets set for 2035 and earlier vary wildly in scope, from completely carbon neutral to minimal reductions.
|Entity||State (Largest Provider)||Decarbonization Goal||Target Year|
|City of Seattle||WA||Carbon neutral||2005 (since)|
|ALLETE||MN||△50% Renewable energy||2021|
|Exelon||DC, DE, IL, MD, NJ, PA||▽15% GHG emissions||2022|
|Otter Tail Power||ND||▽30% CO2 emissions, △30% Renewable energy||2022|
|Avangrid||CT, ME||▽35% GHG emissions||2025|
|Emera (Tampa Electric)||FL||▽55% CO2 emissions||2025|
|Green Mountain Power||VT||▽100% CO2 emissions||2025|
|NextEra Energy||FL||▽67% CO2 emissions||2025|
|NiSource||IN||▽50% GHG emissions||2025|
|NRG||TX||▽50% CO2 emissions||2025|
|Avista Corp||ID, WA||Carbon neutral||2027|
|AES||IN||▽70% Carbon intensity||2030|
|Alliant||IA, WI||▽50% CO2 emissions||2030|
|Ameren||IL, MO||▽50% CO2 emissions||2030|
|American Electric Power||AR, KY, LA, MI, OK, OH, VA, WV||▽70% CO2 emissions||2030|
|Arizona Public Service||AZ||△65% Clean electricity||2030|
|Black Hills||SD, WY||▽40% GHG emissions||2030|
|City of Colorado Springs||CO||▽80% CO2 emissions||2030|
|DTE Electric Company||MI||▽50% CO2 emissions||2030|
|Duke Energy||FL, IN, NC, OH, SC||▽50% CO2 emissions||2030|
|Entergy||AR, LA, MS||▽50% CO2 emissions||2030|
|Eversource||CT, MA, NH||Carbon neutral||2030|
|FirstEnergy||MD, NJ, OH, PA||▽30% GHG emissions||2030|
|Green Mountain Power||VT||△100% Renewable energy||2030|
|Long Island Power Authority||NY||▽40% GHG emissions||2030|
|MDU Resources||ND||▽45% GHG emissions||2030|
|National Grid||MA, NY, RI||▽80% GHG emissions||2030|
|NiSource||IN||▽90% GHG emissions||2030|
|NV Energy||NV||△50% Renewable energy||2030|
|OGE Electric||OK||▽50% CO2 emissions||2030|
|Pacific Gas & Electric||CA||△60% Renewable energy||2030|
|PacifiCorp||ID, OR, UT, WY||▽60% CO2 emissions||2030|
|PSEG||NJ||▽13 million tons CO2 emissions||2030|
|Puget Sound Energy||WA||Carbon neutral||2030|
|Southern California Edison||CA||△60% Renewable energy||2030|
|Southern Company||AL, GA, MS||▽50% CO2 emissions||2030|
|Tennessee Valley Authority||TN||▽70% CO2 emissions||2030|
|Vistra (TXU Energy Retail)||TX||▽60% CO2 emissions||2030|
|WEC Energy||WI||▽40% CO2 emissions||2030|
|Xcel Energy||CO, MN, ND, NM, SD||▽80% CO2 emissions||2030|
|Avangrid||CT, ME||Carbon neutral||2035|
|Salt River Project||AZ||▽65% Carbon intensity, ▽30% CO2 emissions||2035|
|Tucson Electric Power||AZ||▽80% CO2 emissions, △70% Renewable energy||2035|
It’s also important to note that carbon emission reductions are not equal across the board.
Reduction is traditionally based on a base-year measurement (usually 2000 or 2005) that changes for each utility, and a small reduction at a major energy producer can be more impactful than 100% clean energy at a small local utility.
U.S. Utility Decarbonization Targets 2040 and Beyond
From 2040 and beyond, the decarbonization efforts become more ambitious.
In line with many states and the federal government making sweeping clean energy commitments, most of the utility companies with decarbonization targets from 2040 to 2050 are aimed at either carbon neutrality or significant reductions.
For some companies these are their first and only targets, while others are building on smaller goals from earlier years. In the case of the few utility companies marked *N/A, a decarbonization target goal couldn’t be found.
|Entity||State (Largest Provider)||Decarbonization Goal||Target Year|
|Ameren||IL, MO||▽85% CO2 emissions||2040|
|Black Hills||SD, WY||▽70% GHG emissions||2040|
|City of Colorado Springs||CO||▽90% CO2 emissions||2040|
|City of San Antonio||TX||▽80% CO2 emissions||2040|
|CMS Energy||MI||Carbon neutral, △90% Clean electricity||2040|
|Consolidated Edison||NY||△100% Clean electricity||2040|
|Emera (Tampa Electric)||FL||▽80% CO2 emissions||2040|
|Lincoln Electric System||NE||Carbon neutral||2040|
|National Grid||MA, NY, RI||▽90% GHG emissions||2040|
|PNM Resources||NM||▽100% CO2 emissions||2040|
|Portland General Electric||OR||Carbon neutral||2040|
|PPL||KY, PA||▽70% CO2 emissions||2040|
|Avista Corp||ID, WA||△100% Clean electricity||2045|
|Hawaiian Electric Industries||HI||Carbon neutral, △100% Renewable energy||2045|
|Idaho Power||ID||△100% Clean electricity||2045|
|NorthWestern Energy||MT, SD||▽90% Carbon intensity||2045|
|Pacific Gas & Electric||CA||△100% Clean electricity||2045|
|Puget Sound Energy||WA||△100% Clean electricity||2045|
|Sempra||CA||△100% Clean electricity||2045|
|Southern California Edison||CA||△100% Clean electricity||2045|
|PSEG||NJ||▽80% CO2 emissions||2046|
|Alliant||IA, WI||Carbon neutral||2050|
|Ameren||IL, MO||Carbon neutral||2050|
|American Electric Power||AR, KY, LA, MI, OK, OH, VA, WV||▽80% CO2 emissions||2050|
|Arizona Public Service||AZ||△100% Clean electricity||2050|
|City of San Antonio||TX||Carbon neutral||2050|
|Dominion Energy||NC, SC, VA||Carbon neutral||2050|
|DTE Electric Company||MI||Carbon neutral||2050|
|Duke Energy||FL, IN, NC, OH, SC||Carbon neutral||2050|
|Emera (Tampa Electric)||FL||Carbon neutral||2050|
|Entergy||AR, LA, MS||Carbon neutral||2050|
|Evergy||KS, MO||▽80% CO2 emissions||2050|
|FirstEnergy||MD, NJ, OH, PA||Carbon neutral||2050|
|Long Island Power Authority||NY||▽85% GHG emissions||2050|
|National Grid||MA, NY, RI||Carbon neutral||2050|
|NV Energy||NV||△100% Clean electricity||2050|
|Omaha Public Power District||NE||Carbon neutral||2050|
|PacifiCorp||ID, OR, UT, WY||▽80% CO2 emissions||2050|
|PPL||KY, PA||▽80% CO2 emissions||2050|
|Salt River Project||AZ||▽90% Carbon intensity||2050|
|Southern Company||AL, GA, MS||Carbon neutral||2050|
|Vistra (TXU Energy Retail)||TX||Carbon neutral||2050|
|WEC Energy||WI||▽80% CO2 emissions||2050|
|Xcel Energy||CO, MN, ND, NM, SD||Carbon neutral||2050|
|MidAmerican Energy||IA, IL||△100% Renewable energy||N/A|
|ENMAX (Versant Power)||ME||N/A||N/A|
|Nebraska Public Power District||NE||N/A||N/A|
|PUD 1 of Snohomish County||WA||N/A||N/A|
|Unitil Energy Systems||NH||N/A||N/A|
While the targets set above are significant, they are also a long time away from being met. With pressure to decarbonize increasing across the board, utility companies may need to reassess the impact or timeliness of their decarbonization targets.
The National Public Utilities Council is the go-to resource for all things decarbonization in the utilities industry. Learn more.
An Introduction to MSCI ESG Indexes
With an extensive suite of ESG indexes on offer, MSCI aims to support investors as they build a more personalized and resilient portfolio.
An Introduction to MSCI ESG Indexes
There are various portfolio objectives within the realm of sustainable investing.
For example, some investors may want to build a portfolio that reflects their personal values. Others may see environmental, social, and governance (ESG) criteria as a tool for improving long-term returns, or as a way to create positive impact. A combination of all three of these motivations is also possible.
To support investors as they embark on their sustainable journey, our sponsor, MSCI, offers over 1,500 purpose-built ESG indexes. In this infographic, we’ll take a holistic view at what these indexes are designed to achieve.
An Extensive Suite of ESG & Climate Indexes
Below, we’ll summarize the four overarching objectives that MSCI’s ESG & climate indexes are designed to support.
Objective 1: Integrate a broad set of ESG issues
Investors with this objective believe that incorporating ESG criteria can improve their long-term risk-adjusted returns.
The MSCI ESG Leaders indexes are designed to support these investors by targeting companies that have the highest ESG-rated performance from each sector of the parent index.
For those who do not wish to deviate from the parent index, the MSCI ESG Universal indexes may be better suited. This family of indexes will adjust weights according to ESG performance to maintain the broadest possible universe.
Objective 2: Generate social or environmental benefits
A common challenge that impact investors face is measuring their non-financial results.
Consider an asset owner who wishes to support gender diversity through their portfolios. In order to gauge their success, they would need to regularly filter the entire investment universe for updates regarding corporate diversity and related initiatives.
In this scenario, linking their portfolios to an MSCI Women’s Leadership Index would negate much of this groundwork. Relative to a parent index, these indexes aim to include companies which lead their respective countries in terms of female representation.
Objective 3: Exclude controversial activities
Many institutional investors have mandates that require them to avoid certain sectors or industries. For example, approximately $14.6 trillion in institutional capital is in the process of divesting from fossil fuels.
To support these efforts, MSCI offers indexes that either:
- Exclude individual sectors such as fossil fuels, tobacco, or weapons;
- Exclude companies from a combination of these sectors; or
- Exclude companies that are not compatible with certain religious values.
Objective 4: Identify climate risks and opportunities
Climate change poses a number of wide-reaching risks and opportunities for investors, making it difficult to tailor a portfolio accordingly.
With MSCI’s climate indexes, asset owners gain the tools they need to build a more resilient portfolio. The MSCI Climate Change indexes, for example, reduce exposure to stranded assets, increase exposure to solution providers, and target a minimum 30% reduction in emissions.
An Index for Every Objective
Regardless of your motivation for pursuing sustainable investment, the need for an appropriate benchmark is something that everyone shares.
With an extensive suite of ESG indexes designed specifically for sustainability and climate change, MSCI aims to support asset owners as they build a more unique and personalized portfolio.
Tracked: The U.S. Utilities ESG Report Card
This graphic acts as an ESG report card that tracks the ESG metrics reported by different utilities in the U.S.—what gets left out?
Tracked: The U.S. Utilities ESG Report Card
As emissions reductions and sustainable practices become more important for electrical utilities, environmental, social, and governance (ESG) reporting is coming under increased scrutiny.
Once seen as optional by most companies, ESG reports and sustainability plans have become commonplace in the power industry. In addition to reporting what’s needed by regulatory state laws, many utilities utilize reporting frameworks like the Edison Electric Institute’s (EEI) ESG Initiative or the Global Reporting Initiative (GRI) Standards.
But inconsistent regulations, mixed definitions, and perceived importance levels have led some utilities to report significantly more environmental metrics than others.
How do U.S. utilities’ ESG reports stack up? This infographic from the National Public Utilities Council tracks the ESG metrics reported by 50 different U.S. based investor-owned utilities (IOUs).
What’s Consistent Across ESG Reports
To complete the assessment of U.S. utilities, ESG reports, sustainability plans, and company websites were examined. A metric was considered tracked if it had concrete numbers provided, so vague wording or non-detailed projections weren’t included.
Of the 50 IOU parent companies analyzed, 46 have headquarters in the U.S. while four are foreign-owned, but all are regulated by the states in which they operate.
For a few of the most agreed-upon and regulated measures, U.S. utilities tracked them almost across the board. These included direct scope 1 emissions from generated electricity, the utility’s current fuel mix, and water and waste treatment.
Another commonly reported metric was scope 2 emissions, which include electricity emissions purchased by the utility companies for company consumption. However, a majority of the reporting utilities labeled all purchased electricity emissions as scope 2, even though purchased electricity for downstream consumers are traditionally considered scope 3 or value-chain emissions:
- Scope 1: Direct (owned) emissions.
- Scope 2: Indirect electricity emissions from internal electricity consumption. Includes purchased power for internal company usage (heat, electrical).
- Scope 3: Indirect value-chain emissions, including purchased goods/services (including electricity for non-internal use), business travel, and waste.
ESG Inconsistencies, Confusion, and Unimportance
Even putting aside mixed definitions and labeling, there were many inconsistencies and question marks arising from utility ESG reports.
For example, some utilities reported scope 3 emissions as business travel only, without including other value chain emissions. Others included future energy mixes that weren’t separated by fuel and instead grouped into “renewable” and “non-renewable.”
The biggest discrepancies, however, were between what each utility is required to report, as well as what they choose to. That means that metrics like internal energy consumption didn’t need to be reported by the vast majority.
Likewise, some companies didn’t need to report waste generation or emissions because of “minimal hazardous waste generation” that fell under a certain threshold. Other metrics like internal vehicle electrification were only checked if the company decided to make a detailed commitment and unveil its plans.
As pressure for the electricity sector to decarbonize continues to increase at the federal level, however, many of these inconsistencies are roadblocks to clear and direct measurements and reduction strategies.
National Public Utilities Council is the go-to resource for all things decarbonization in the utilities industry. Learn more.
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