A new report “Limited Utility: The European energy companies failing on net zero commitments” by Ember and Europe Beyond Coal finds that the business plans of major European power utilities do not contain the intermediate targets necessary to deliver on their net zero pledges.

This report investigates whether or not the near-term plans of twenty one Europe-based coal-burning utilities align with the urgent need to decarbonise their fossil fuel electricity portfolios and accelerate their deployment of renewables. The utilities analysed by the report include BEH, CE Oltenia, ČEZ, Drax, EDF, EnBW, ENEA, Enel, ENGIE, EPH, Fortum/Uniper, Iberdrola, Naturgy, PGE, RWE, SSE, Sev.En, STEAG, Tauron, Vattenfall and Ørsted. REGlobal presents the executive summary of the report…

Key Findings

  • Only nine (43%) of the 21 analysed coal utilities have aligned their coal phase-out dates with the 2030 (EU/OECD) and 2040 (rest of the world) benchmarks.
  • 16 of the 21 assessed power utilities have pledged to reach net zero emissions by 2050 at the latest. However, five of those with pledges have not actually aligned their coal phase-out dates with the 2030 (EU/OECD) and 2040 (rest of the world) benchmarks.
  • There is a substantial lack of transparency and clarity around future fossil gas generation capacity. Based on currently available information, all 21 of the assessed utilities will be operating fossil gas power plants in the EU/OECD beyond 2035.
  • The total wind and solar power capacity of the 21 companies will comfortably quadruple from 88 GW in 2020 to 428 GW by 2030. Whilst this appears encouraging, the level of commitment by the utilities varies widely and the current rate of deployment does not correspond to the required and the barest minimum of six-fold growth.
  • The power utilities that are most actively investing in wind and solar will also be heavily involved with fossil fuels beyond the timelines required for net zero 2050.

It has been scientifically recognised that limiting global warming to 1.5 °C is imperative and there is an overwhelming consensus that this cannot be achieved without the rapid decarbonisation of the power sector. If that alone is not enough to instigate an acceleration away from fossil fuel electricity, then the current EU energy crisis must surely represent a significant, additional incentive. With soaring energy prices and the political commitment to reach net zero by 2050, the transformation and decarbonisation of the electricity sector has never been so necessary and urgent.

The ongoing energy crisis has exposed the risks of continued dependence on imported fossil fuels and underinvestment in renewable energy solutions. Increasing Europe’s self-reliance through renewable energy is a key solution to meet the continent’s climate commitments while providing an insurance against fossil fuel price volatility. Furthermore, the best way to protect people, communities and nature is a fair transformation of Europe’s energy system. Spending on renewables needs to rapidly rise or Europe will remain vulnerable to the inherent risks that come with fossil fuels.

16 out of 21 (76%) of the coal-burning corporations dominating the European electricity market, and covered in the report, have published net zero targets. For the majority, these net zero targets are for 2050. This report seeks to investigate the shorter-term strategies of these coal-burning utilities to decarbonise the power sector. The report shows that the companies’ pledges do not represent the required emission cuts and technology deployment that is aligned with the available scientific benchmarks, namely the key milestones described by the IEA Net Zero by 2050 Roadmap (NZE). Going forward, utilities need to be asked to provide separate sectoral targets for the main fuels and technologies, and increasingly aggressive scope 3 targets. Those financial institutions associated with these companies must become assertive in demanding proper alignment from the European power utilities.

According to the IEA, global electricity generation needs to reach net-zero emissions by 2040 and the global energy sector is based largely on renewables in 2050, with solar and wind the single largest source of supply. Prior to that, there must be a phase-out of coal power in the EU and OECD by 2030. And by 2035 the European power sector must almost entirely decarbonise as coal and gas exit the power grids, leaving them operating mainly with renewable energy. By 2030 renewable energy must triple, reaching 60%, and solar and wind grow six- fold. Consequently, the European power utilities, often with global assets, are the companies whose accelerated transition is paramount.

The report finds that only nine (43%) of the analysed coal utilities have committed to a global coal phase-out by 2030. So a proportion are steadily advancing with their coal phase-outs but there are significant laggards: PGE, ENEA, Tauron, Sev.En, RWE, BEH, ČEZ, Fortum/Uniper, EPH, STEAG and EnBW headquartered in Poland, Czechia, Germany, Bulgaria and Finland. On the future role of fossil gas the reporting is much less transparent but, based on currently available information, all 21 (100%) of the utilities will be operating gas power plants in EU and OECD countries beyond 2035. For some, hydrogen has been promoted as the solution to ultimately decarbonise the gas fleet. There are claims that new fossil gas plants will be ‘hydrogen-ready’ – in other words they can be converted to burn low carbon hydrogen in the future. However, the current hydrogen production is only a fraction of utilities’ existing fossil gas capacity so any current pledges are not significant enough to replace current gas-fired electricity generation. Furthermore, several of the utilities are not exclusively committed to low-carbon hydrogen deployment in the long term, which puts the credibility of the hydrogen economy at risk. And there are no binding timeframes for any of the proposed fossil gas-to-hydrogen plant conversions or any tangible definitions of ‘hydrogen-readiness’.

On renewables, the report reveals that some of the assessed power utilities are well-placed to take up the task but are generally not meeting the required wind and solar additions. Many large power generators will become pivotal players in getting wind and solar projects off the ground: the total wind and solar generation of the 21 companies will comfortably quadruple by 2030, growing from 88 GW to 428 GW, as many utilities intend to multiply their existing wind and solar capacity. An NZE-aligned renewable energy portfolio entails a minimum tripling of global installed renewable capacity and for renewables to account for at least 60% of all power generation by 2030. This requires a minimum of six-fold increase in wind and solar. However, this report finds that only four companies (19%) will triple their production with wind and solar additions and only two companies (10%) will grow their wind and solar portfolio more than six-fold. The report shows that the current wind and solar investment strategies are insufficient and the companies must increase their near-term levels of ambition. This is particularly important for those companies that are headquartered in Eastern Europe.

However, the best performing renewable companies are also those very same utilities that plan to run an expansive fossil fuel fleet well beyond 2035, despite public commitments to net zero. This internal contradiction will stand in the way of these companies’ credibility to make Paris-compatibility claims, even if their wind and solar investments are substantial.

An overview of the key indicators with respect to the progress each of the power utilities is making towards achieving Net Zero is summarised in Table 1.

The complete report can be accessed here