Report Finds that Electric Utilities Are Unprepared for
Carbon Regulation
A new report by the Carbon Disclosure Project finds that disclosure by
electric utilities on greenhouse gas emissions has improved, but falls short
of the demands of a low carbon economy.
The urgency of a global transition to a low carbon economy is no longer in
doubt, and companies that address the challenges of the transition are more
likely to succeed over the long term. Sustainability investors whose
portfolios are designed for long-term growth require clearly articulated
disclosure of corporate strategies for addressing the risks and
opportunities of climate change.
The International Energy Agency (IEA) estimates that more than half of
electricity output worldwide in 2030 will come from power plants already in
operation today. According to a recent report issued by the Carbon
Disclosure Project (CDP) and written by RiskMetrics Group, "This underlines
the importance of policies that put a price on carbon, slow electricity
demand growth, and encourage faster turnover of power generating capital
stock."
Yet the report, entitled CDP Electric Utilities Report 2009, found that
only 16% of electric utilities are currently setting and disclosing absolute
greenhouse gas (GHG) emission reduction targets, despite the fact that the
industry accounts for 25% of global GHG emissions, the largest of all
industry sectors.
The CDP, a nonprofit organization which represents 475 institutional
investors with assets under management of $55 trillion, analyzed the
responses of 110 electric utilities to its questionnaire. Its report
concluded that while 61% of utilities forecast GHG emissions, and 59% have
emission reduction plans in place, less than half disclosed current
electricity generation capacity and production by fuel type. Only 14
respondents provided data on forecasted capacity and production.
Because few utilities have set and disclosed absolute emission reduction
targets, while a higher percentage have set targets that allow for growth in
overall GHG emissions, the reports questions the extent to which utilities
are willing to pay for the reduction of emissions that will be required of
them in a low carbon economy.
The report concludes, "Improved disclosure on forecasted capacity and
production would help investors to better assess exposure to such carbon
limits at this pivotal time in national and global climate regulation."
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