Are electric utilities prepared for a low carbon future? | CDP newsline

Source: Are electric utilities prepared for a low carbon future? | CDP newsline

As global demand for energy continues to grow, world governments are committed to action on climate change and are expected to agree a landmark deal – if all goes to plan – in Paris later this year. This will be another key moment in the inexorable tightening of regulations to drive a shift towards low-carbon electricity generation from the utility sector.

CDP’s new quarterly in-depth research series takes a sector-by-sector look at key emissions-related metrics which, taken in aggregate, could have a material impact on a company’s earnings. The newly released “Flicking the switch: are electric utilities prepared for a low carbon future?” is the latest in this series.

The report takes a detailed look at Europe’s major utilities companies, ranking them in a league table based on a number of different metrics to show which businesses might be best placed to benefit from increasing regulatory change, and which might struggle without adapting their business models. In a market where the regulator is seeking to cut greenhouse gas (GHG) emissions in the European Union by 40% by 2030 (and 80% by 2050) from 1990 levels, investors should be paying close attention.

If the industry as a whole is to meet the regulator’s targets, more than 45% of European electricity production will need to come from renewable energy sources by 2030, up from 25% in 2013. The utility sector has considerable work to do to make this a reality in the face of a switch back from gas into coal throughout Europe over the past few years, driven by low coal prices and an inefficient carbon emissions market.

There is a wide divergence in how prepared European utilities are to meet the costs and opportunities presented by regulation. Spain’s Iberdrola, British multinational Centrica and Verbund, Austria’s largest electricity provider, top the charts due to their low-carbon mix of power generation. The UK’s SSE, together with German firms EnBW and RWE, lag a considerable way behind.

Find out more about how electric utilities are faring in addressing environmental and regulatory issues in the report here.