SETTING1.5°C-ALIGNEDSCIENCE-BASEDTARGETS:QUICKSTARTGUIDEFORELECTRICUTILITIESJUNE2020DEVELOPEDBYWITHSUPPORTFROMACKNOWLEDGMENTSThisguidancewasdevelopedbyCDPonbehalfoftheScienceBasedTargetsinitiativewithsupportfromGuidehouse.TheScienceBasedTargetsinitiativemobilizescompaniestosetscience-basedtargetsandboosttheircompetitiveadvantageinthetransitiontothelow-carboneconomy.ItisacollaborationbetweenCDP,theUnitedNationsGlobalCompact,WorldResourcesInstitute(WRI)andtheWorldWideFundforNature(WWF)andoneoftheWeMeanBusinessCoalitioncommitments.Guidehouseisaspecialized,globalprofessionalservicesfirm.Withover700consultants,Guidehouse’sglobalEnergy,Sustainability,andInfrastructuresegmentisthelargestintheindustry.Wecollaboratewithandserveastrustedadvisorstoutilitiesandenergycompanies,largecorporations,investors,NGOs,andthepublicsectortohelpthemthriveintherapidlychangingenergy,resources,andinfrastructureenvironment.Weleadthroughourinsightsandexcelatstrategy,transformation,andimplementation,creatingmoresus-tainableandresilientcountries,governments,companies,cities,andinfrastructure.Duringthedevelopmentofthiswork,wealsohadtheadviceoftheSBTiScientificAdvisoryGroupandstakeholdersparticipatinginapublicconsultationwebinarinMarch2020.Primaryauthors:AndresChang,CDPJeroenScheepmaker,GuidehouseOskarKrabbe,GuidehouseAnnemarieKerkhof,GuidehouseWewouldliketothankFernandoRangelVillasana(WWF),NateAden(WRI),andMarianaHeinrich(WBCSD)fortheircontributionstothispublication.Supportedby:CONTENTSIntroduction4Electricutilitiesplayacrucialroleinadecarbonizedsociety4Decarbonizationoptionsforelectricutilities5Whatthesciencetellsusisnecessary6Guidingnear-termaction7Theroleofcarbondioxideremoval8Howtosetascience-basedtarget9Step1:Calculateemissionsinventory9Step2:Determinetargetscopeandapproach10Step3:Constructtargets13Step4:SubmittargetstoSBTi15Additionalresources16Effectivedatesofsector-specificrequirements16References17Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities4INTRODUCTIONTheIntergovernmentalPanelonClimateChange’s(IPCC’s)SpecialReportonGlobalWarmingof1.5°Chaslaidoutastarkobligation:wemustpursue“rapid,far-reaching,andunprecedentedchangesinallaspectsofsociety”toholdtemperatureriseto1.5°Cabovepreindustriallevelsorfaceirreversibledamagetooursocieties,economies,andthenaturalworld(IPCC,2018).Inresponsetothisurgency,theScienceBasedTargetsinitiative(SBTi)hasintroducedtechnicalresourcesthatenablecompaniestosetgreenhousegas(GHG)emissionsreductiontargetsinlinewiththeflagshipgoaloftheParisAgreement,limitingwarmingto1.5°C.ThisguidanceaccompaniestheSBTi’sselectionofasetof1.5°Cpathwaysforthepowersectorandspecifieshowthesepathwaysmaybeusedtoestablishemissionsreductiontargetsthatdemonstratethehighestlevelofclimateleadership.ElectricutilitiesplayacrucialroleinadecarbonizedsocietyInallclimatescenariosthatlimitwarmingto1.5°C,theshareofelectricityinfinalenergyconsumptiongrowssteadilybetween2020and2050(Rogelj,etal.,2018).Reasonsforthistrendaremultifacetedbutprimarilyreflectthepotentialforelectricitytodecarbonizeatamuchfasterratethanalternativeenergycarriers.TrendsinprojectedelectricitygrowthareshowninFigure1.ThousandTWh403020100200020102020203020402018202020302040201820202030204050403020100ThousandTWh•UnitedStates•EuropeanUnion•Japan•Otheradvancedeconomies•China•India•Otherdevelopingeconomies•Industry•Residential•Services•Transport•Otherfinaluses•PowerservicesSustainableDevelopmentStatedPoliciesFigure1:ProjectedincreaseofglobalelectricityuseintheIEA’sStatedPoliciesScenario(left)andtheincreaseofelectricityuseinseveraleconomicsectorsintheIEA’sStatedPoliciesScenarioandSustainableDevelopmentScenario(right)(InternationalEnergyAgency,2019a).Companiesandutilitiesarerecognizingthebusinessbenefitsoftakingclimateaction,findingthatithelpstoimprovebrandreputation,increasesinvestorconfidence,boostsresilienceagainstregulations,andachievescostreductions.Corporateleadershipcanalsoadvocateforstrongclimatepolicy,ascurrentpoliciesareinsufficientformeetingtheglobalgoaloflimitingwarmingto1.5°C.Thedebatehasquicklyshiftedfromwhatispracticaloreasy–theincrementalchangesandquickwins–toactionthatisgroundedinthelatestscience.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities5DecarbonizationoptionsforelectricutilitiesThepowersectorcanestablishsteepemissionsreductionsduetorapidtechnologycostreductionsforsolar,wind,andstorage;expansionofenablingconditionsthatarisefromnationalandsubnationalgoals;andgrowingdemandforrenewableelectricity.Figure2showstheincreaseinvolumeofpowerpurchaseagreements(PPAs),atrendthatislikelytocontinueincomingyearsasmanycompaniesoutsidethepowersectorincorporatepurchasedrenewableenergythroughbundledPPAsintotheirclimateactionstrategies.Nonetheless,electricutilitiesalsoneedtoestablishinnovativebusinessmodelsaroundsmartgrids,demandmanagement,andenergystoragetobeconsistentwithanet-zeroeconomy.Thenextsectionexaminesscenariosforthepowersectorandthefollowingsectionreviewsscience-basedtarget-settingmethodsandprovidespracticalguidance.2017.51512.5107.552.50200820092010201120122013201420152016201720182019YTD•Technology•Communications•Materials•Consumerstaples•Government&university•Manufacturing•Financials•OtherFigure2:GlobalPPAvolumesbysector,2009-2019(InternationalEnergyAgency,2019b).©thomas/flickrSetting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities6WHATTHESCIENCETELLSUSISNECESSARYLimitingwarmingto1.5°CmeansthatglobalGHGemissionsneedtobereducedbyhalfby2030andtoapproachnet-zeroby2050(JohanRockstrom,2017;UNEP,2019).Thisrequiresacomprehensivetransformationacrossvirtuallyalleconomicsectors.Theenergysystemwillplayacentralroleinthistransformation,asnearlythree-quartersoftoday’semissionsareenergy-related–mainlythecombustionoffossilfuels(Figure3).Decarbonizingthepowersectoriskeytotheenergysystemtransition.Ifincreasinglygraverisksaretobeavoided,decarbonizingthepowersectorwillrequirethesustainedrapidgrowthofrenewableelectricityandsignificantreductionsincoal-firedandgas-firedgenerationatagloballeveloverthenext10years(Grant&Coffin,2019,pp.38-41;Chang,2020).401787957Energy73%Electrcityandheat13%Transportation15%Manufacturingandconstruction13%Otherfossilfuelcombustionandfugitiveemissions14%AnnualglobalgreenhousegasemissionsbysectorGtCO2e/yearAgriculture,landusechange,andforestry17%Non-energyindustrialprocessesandwaste10%Figure3:AnnualglobalGHGemissionsbysectorbasedonrecenthistoricaldata(Ørsted,2020).Thedeepdecarbonizationofthepowersectorisarobustoutcomeofallmodeledscenariosthatlimitwarmingto1.5°CintheIPCC’sSpecialReporton1.5°C.Sectoremissionsarereducedby70%-92%between2020and2035,approachingzerobyaround2040-2045(Figure4).Othercharacteristicsofthepowersectortransitionshowmorevariationacrossscenarios,likegrowthinelectricitygeneration,thesector’smixofprimaryenergysources,andthesector’sdeploymentofbioenergycarboncaptureandstorage(BECCS).©UnitedNationsPhoto/flickrSetting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities7150010005000-50020202030204020502060YearEmissions(MTCO2/yr)GlobalelectricityCO2emissionsFigure4:Globalemissionsfromelectricitygeneration.Interquartilerangeofall1.5°Clow/no-overshootscenarios(grayshadedarea),SBTi1.5°Cpowerpathways(blue),andexcludedpathways(orange).BlacklineisMESSAGE-GLOBIOMLowEnergyDemandscenarioGuidingnear-termactionTodetermineminimumambition,modeledscenariosusedbytheSBTishouldbeplausible,consistent,responsible,andobjectiverelativetothedesiredgoaloflimitingwarmingto1.5°Corwell-below2°C(ScienceBasedTargetsinitiative,2019).Notallscenariosmeetthesecriteria,someshowlimitednear-termGHGemissionsreductionsduetotheassumedfuturedeploymentofCO2removal(CDR)technologies,whichareassociatedwithsignificantrisksanduncertainties.ThesescenariosshouldnotbeusedforSBT-settingpurposes.Ultimately,asetof20pathwaysforthepowersectorarefoundtocomplywithSBTiprinciples(SupplementaryMaterial1)andareconsideredvalidfortargetsettingwiththeSectoralDecarbonizationApproach(Krabbe,etal.,2015).Ataminimum,SBTipowersectorpathwaysalignedwith1.5°Capproachzeroemissionsaround2040.Thesepathwaysarecharacterizedby2020-2035reductionsgreaterthanthemedianofalllowandno-overshootscenariosintheIPCC’sSpecialReportonGlobalWarmingof1.5°C.Highernear-termambitionsreflectsthatmanyexcludedscenariosrelyonCDRbeyondwhatisknowntobefeasibletobalanceunmitigatedemissionsandreduceatmosphericCO2from2040onward.Regardless,theSBTi’spowersectorpathwaysareconsistentwitharangeofelectricitygrowthtrajectories(Figure4).TheMESSAGE-GLOBIOMLowEnergyDemandscenarioiswell-documentedandestablishestheminimumambitionemissionsreductionpathwayforthesector.Thescenariodepictsabout30%growthinelectricitygenerationbetween2020and2035.Combinedwiththeemissionspathway,thisisequivalenttoan85%reductioninemissionsintensitybetween2020and2035.After2035,theMESSAGE-GLOBIOMLowEnergyDemandscenarioleadstoanemissionsintensityofapproximatelyzeroby2050(theconvergenceyearfortheSBTi’sSectoralDecarbonizationApproach[SDA]method).Someotherscenarioscontinuedownwardemissionstrends,resultinginnegativeemissionsforthesectorinthesecondhalfofthecentury.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities8400300200100020202030204020502060YearGlobalelectricityproductionGlobalelectricitydemand15010050020202030204020502060YearElectricityintensity(MTCO2/EJ)GlobalelectricityintensityFigure4:Globalelectricitygeneration(top)andemissionsintensityofelectricity(bottom).Interquartilerangeofall1.5°Clow/no-overshootscenarios(grayshadedarea),SBTi1.5°Cpowerpathways(blue),andexcludedpathways(orange).BlacklineisMESSAGE-GLOBIOMLowEnergyDemandscenarioTheroleofcarbondioxideremovalEvenifallcountries’GHGemissionstargetspledgedundertheParisAgreement(i.e.,NationallyDeterminedContributions)weremet5yearsearly,CDRwouldstillbeneededtolimitwarmingto1.5°Cin2100(Holz,Siegel,Johnston,Jones,&Sterman,2018).Therefore,CDRtechnologiesshouldbefurtherdevelopedinparallelwiththerapidtransformationofpowergeneration.Intheenergysector,CDRtechnologiesmayincludeBECCSanddirectaircapture;nature-basedsolutionssuchasafforestationandreforestationalsocanbeused.TheSBTiisdevelopingguidanceonhowcompaniescansettargetsthatincorporateremovalsbeyondthescopeoftraditionalSBTs,whichwillbereflectedinitsNet-ZeroCriteriaandGuidance.Atthistime,noSBTsareexpectedtoresultinnegativeemissions.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities9HOWTOSETASCIENCE-BASEDTARGETThissectionprovidesstep-by-step,practicalguidanceforelectricutilitiesonsettingSBTs.Fourstepsaredescribed:1.Calculateemissionsinventory.Calculatebaseyearandmostrecentyearemissionsinventoriesandactivity(e.g.,electricitygenerated)followingguidanceprovidedbytheGHGProtocol.2.Determinetargetscopeandapproach.ReviewtheSBTicriteriaandusethePowerGenerationSDAApplicabilityMatrix(Table1)todeterminehowtosetSDAtarget(s)acrossrelevantactivitiesandscopes.3.Constructtargets.ModelSDAtarget(s)usingtheSBTiTool.AdditionaltargetsmayalsobeneededtoaddressemissionsnotapplicabletothePowerGenerationSDAtomeettheSBTicriteriaandcanbemodeledwiththeSBTiTool.4.SubmittargetstoSBTi.SendacompletedTargetSubmissionFormtotheSBTi.Step1:CalculateemissionsinventoryBeforeacompanysetsatarget,itshoulddevelopacomprehensiveGHGemissionsinventoryforitstargetbaseyearfollowingGHGProtocolguidelines.InadditiontoensuringgeneralalignmentwiththeGHGProtocolCorporateAccountingandReportingStandard(RevisedEdition),companiesareinstructedtoreview“AppendixA:AccountingforIndirectEmissionsfromElectricity”andtheGHGProtocolTechnicalGuidanceforCalculatingScope3Emissions,withafocuson“Category3:Fuel-andEnergy-RelatedActivitiesNotIncludedinScope1orScope2.”Companieswithcombinedheatandpower(CHP)activitiesshouldalsoreferto“AllocationofGHGEmissionsfromaCombinedHeatandPower(CHP)Plant.”Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities10Step2:DeterminetargetscopeandapproachAsacompany’scarbonfootprintcanbeextensive,companiesshouldfocuseffortsonkeycategorieswithintheirfootprints.TheSBTioffersrecommendationsfordefiningthetargetscopeandhasadetailedsetofcriteriathatitusesforassessment.SeeBox1formoreinformation.Thereareavarietyoftarget-settingapproachesendorsedbytheSBTi,buteachapproach’sapplicabilityissubjecttosector,scope,andactivity-specificrequirements.Theseapproachesaredescribedforelectricutilitiesinthefollowingsection.BOX1:KEYSBTICRITERIAANDRECOMMENDATIONSV4.1ThecompanyshoulddevelopitsSBTusingtheSBTiCriteriaandtheTargetValidationProtocol.1Themostrelevantcriteriaforelectricutilitiesaresharedinthefollowinglist,butthisisnotexhaustive.C2–SIGNIFICANCETHRESHOLDS:Companiesmayexcludeupto5%ofscope1andscope2emissionscombinedintheboundaryoftheinventoryandtarget.C4–BIOENERGYACCOUNTING:Directemissionsfromthecombustionofbiomassandbiofuels,aswellasGHGremovalsassociatedwithbioenergyfeedstock,mustbeincludedalongsidethecompany’sinventoryandmustbeincludedinthetargetboundarywhensettingascience-basedtargetandwhenreportingprogressagainstthattarget.Ifbiogenicemissionsfrombiomassandbiofuelsareconsideredclimateneutral,thecompanymustprovidejustificationoftheunderlyingassumptions.(GHGremovalsthatarenotassociatedwithbioenergyfeedstockarecurrentlynotacceptedtocountasprogresstowardsSBTsortonetemissionsintheinventory.)C5–BASEANDTARGETYEARS:Targetsmustcoveraminimumof5yearsandamaximumof15yearsfromthedatethetargetissubmittedtotheSBTiforanofficialvalidation.R3–BASEYEAR:TheSBTirecommendschoosingthemostrecentyearforwhichdataareavailableasthetargetbase-year.C8–LEVELOFAMBITION:Ataminimum,scope1andscope2targetswillbeconsistentwiththelevelofdecarbonizationrequiredtokeepglobaltemperatureincreasetowell-below2°Ccomparedtopreindustrialtemperatures,thoughcompaniesareencouragedtopursuegreatereffortstowardsa1.5°Ctrajectory.C17–REQUIREMENTTOHAVEASCOPE3TARGET:Ifacompany’srelevantandmandatoryscope3emissionsare40%ormoreoftotalscope1,2,and3emissions,ascope3targetisrequired.[…]C18–BOUNDARY:Companiesmustsetoneormoreemissionsreductiontargetsand/orsupplierorcustomerengagementtargetsthatcollectivelycover(s)atleast2/3oftotalscope3emissions[…]C20.2–FOSSILFUELSALE,TRANSMISSIONANDDISTRIBUTION:Companiesthatsell,transmit,ordistributenaturalgasorotherfossilfuelproductsshallsetabsoluteorintensitypercentage-basedemissionsreductionscope3targetsfortheuseofsoldproducts[irrespectiveoftheshareoftheseemissionscomparedtothetotalscope1,2,and3emissionsofthecompany.…]1Atthetimeofpublishing,themostrecentavailablesetofSBTicriteriaisversion4.1;however,targetsubmissionsinlinewithversion4.0oftheSBTicriteriaareaccepteduntilJuly15th,2020.CriteriaareupdatedonanannualbasisbetweenJanuaryandMarch.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities11SBTapproachesforthepowersectorTheSDAisamethodforsettingphysicalintensityGHGreductiontargetsthatalignwiththesectoralpathwayofanunderlyingclimatechangemitigationscenario.Emissionsintensitytargetsaredefinedbyareductioninemissionsrelativetoaspecificbusinessmetric,suchasproductionoutputofthecompany(inthiscase,kgCO2eperkWh).AcentralprincipleoftheSDAisthatallcompaniesinasectormustconvergetoacertainemissionsintensitybyachosenyear,specifiedtobe2050.AsFigure5shows,emissionsconvergetozerooranegativeintensityinthepowersector;however,theSBTidoesnotcurrentlyprescribeanynegativetargetsanddefersitsassessmentoftargetsthatincludeCO2removalstoitsforthcomingnet-zerocriteriaandguidance.Becausethepathto1.5°Cisnotlinear,companiesthatapplythePowerGenerationSDApathwayneedtoreduceemissionsmostrapidlyoverthenextdecaderelativetohistoricemissionsintensitylevels.CompaniesthatgeneratepowermustusetheSDAtomodeltargetsonemissionsfrompowergeneration.TheabsolutecontractionapproachisusedtosettargetsonemissionsthatcannotbeaddressedusingtheSDA.Absolutecontractiontargetsareexpressedasapercentageemissionsreductionachievedbetweenabaseyearandafuturetargetyear,withoutdirectlyincorporatingchangesinacompany’sproductionoutput.CompaniesshouldusetheSBTi’starget-settingtooltomodelSDAandabsolutecontractiontargetsatanyoftheambitionlevelsacceptedbytheSBTi.0.40.20.020202030204020502060YearkgCO2e/kWhSDApathwaysforthepowersectorFigure5:SDApathwaysforthepowersectoralignedwith1.5°C(blacklineandshadedarea)andwell-below2°C(dashedgreenline)basedonIEAETPB2DSwithGHGemissionsintensityonthey-axis.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities12ApplicabilityofpathwayandmethodBecauseelectricitygenerationistheprimarysourceofemissionsinthepowersector,thisguidancefocuseson1.5°C-alignedoptionsforelectricitygenerationexpressedintermsofCO2eemissionsperkWh.Commercialheatgeneration,includingCHP,isalsoaddressed.Theresultingpathwayisdirectlyapplicabletocompaniesthatgenerateelectricityorelectricityandcommercialheatandisastartingpointforexploring1.5°C-alignedpathwaysacrossothersectors.Dependingontheutility,emissionsassociatedwithpowergenerationmaybeaccountedforinscopes1,2,or3.Forcompaniesgeneratingpower,theSDAmustbeusedtomodeltargetscoveringelectricitygeneration-relatedemissionswithintheorganizationalboundary,aswellasgeneration-relatedemissionsassociatedwithallsoldelectricity.Emissionsnotassociatedwithelectricityshouldbeaddressedbythecompany’sSBT(ifapplicable)butmaybemodeledusingadifferenttarget-settingmethod.Transmissionanddistribution(T&D)companiesthatdonotgenerateelectricityarenotrequiredtofulfillpowersector-specificcriteriaandshoulddeferprimarilytotheSBTi’sgeneralrequirements.Table1summarizeshowthePowerGenerationSDAshouldbeappliedbyelectricutilitiesinvolvedwithdifferentactivities.ThetableshouldbeusedafteranemissionsinventoryhasbeencalculatedandcriteriaC2andC17havebeenobserved.Step3providesseveralexamplestodemonstratehowthePowerGenerationSDApathwaycanbeapplied.ACTIVITYEMISSIONSSCOPESDANUMERATOR(EMISSIONS)SDADENOMINATOR(ACTIVITY)APPLICABILITYTOORGANIZATIONALBOUNDARYSDATARGETAPPLICABILITYTOALLSOLDELECTRICITYSDATARGETPowergenerationinorganizationalboundaryElectricityScope1GHGemissionsgeneratedMWhelectricitygeneratedRequiredRequiredCHP-derivedheatScope1GHGemissionsgeneratedGJheatsoldOptionalOptionalOtherheatScope1GHGemissionsgeneratedGJheatsoldOptionalOptionalPurchasedelectricityOwnuseScope2GHGemissionscalculatedwithlocationormarket-basedfactorMWhelectricitypurchasedOptionalOptionalElectricitythatispurchasedandsoldScope3category3GHGemissionscalculatedwithlocationormarket-basedfactorMWhelectricitypurchasedN/ARequiredTable1:PowerGenerationSDAApplicabilityMatrix.ThecompanyshouldonlyreportoneSDAtargetcoveringpowergenerationintheorganizationalboundaryand,ifapplicable,oneSDAtargetcoveringallsoldelectricity.TheemissionsintensityassociatedwitheachtargetiscalculatedbasedonthesumofrelevantemissionsintheSDAnumeratorcolumndividedbythesumofrelevantactivityintheSDAdenominatorcolumn.Forpurchasedelectricity,emissionsmustbecalculatedusingthelocation-basedormarket-basedapproach.1Companiesthatgenerateheathavetheoptionofincludingheat-relatedemissionsinSDAtarget(s)withelectricityorinaseparateabsolutecontractiontarget.1GHGProtocol,Scope2Guidance:Thelocation-basedmethodreflectstheaverageemissionsintensityofgridsonwhichenergyconsumptionoccurs(usingmostlygrid-averageemissionsfactordata).Themarket-basedmethodreflectsemissionsfromelectricitythatcompanieshavepurposefullychosen(ortheirlackofchoice).Itderivesemissionfactorsfromcontractualinstruments,whichincludeanytypeofcontractbetweentwopartiesforthesaleandpurchaseofenergybundledwithattributesabouttheenergygeneration,orforunbundledattributeclaims.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities13Step3:ConstructtargetsTargetsshouldbecalculatedusingtheSBTiTool.Thissectionprovidesfourexamplesthatdemonstratehowdifferenttypesofelectricutilitiescanmodeltargetsusingthetool.Example1:CompanygeneratingelectricityApowerutilitywithnocogeneration/CHPcapacity,nosaleordistributionofthermalenergy.SCOPE1:electricitygeneration(inorganizationalboundary)NANAMARKETAnSDAtargetmustbeconstructedthatcoversscope1emissionsfromfuelcombustionforelectricitygeneration.Scope2emissionsassociatedwithelectricityforthecompany’sownusemusteitherbeincludedintheSDAtargetboundaryoraddressedseparatelyusingabsolutecontraction.Ifotherscope1or2emissionsaresignificant(e.g.,combustionoffuelfortransportation)itisbestforthemtobeaddressedseparatelyusingabsolutecontraction;however,becausethePowerGenerationSDAtypicallyresultsinmoreambitiousemissionsreductiontargets(inaggregate)thanabsolutecontraction,companiesmayincludeallscope1and2emissionsintheSDAtargetifdesired.Whenanelectricitygenerationcompany’sscope3emissionsexceed40%oftotalscope1,2,and3emissions,itmustalsoaddresstheseemissionsusinganSBTitarget-settingmethod.Otherwise,scope3emissionsmaybeoptionallycoveredwiththeexceptionofsoldanddistributedfossilfuels,whichmustbecoveredbyatarget.TosetatargetusingtheSDAmethod,theamountofelectricitygeneratedmustbedefinedinthebaseyearandestimatedinthetargetyear.TheSBTiToolthenprovidesacalculationofthecompany’stargetinabsoluteemissionsandemissionsintensity(kgCO2e/MWh).Example2:CompanygeneratingandpurchasingelectricityApowerutilitygeneratingandpurchasingelectricitywithnocogeneration/CHPcapacity,nosaleordistributionofthermalenergySCOPE1:electricitygeneration(inorganizationalboundary)SCOPE3CATEGORY3:electricitypurchasedNAMARKETTwoSDAtargetsmustbeconstructed:onetargetcoveringscope1emissionsfromfuelcombustionforelectricitygeneration(sameasExample1),andtheothertargetcoveringthesumofgeneration-relatedemissionsinscope1andscope3category3(i.e.,allsoldelectricity).Inthetargetcoveringallsoldelectricity,emissionsintensityiscalculatedSetting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities14bydividingthesumofgeneration-relatedemissionsinscope1andscope3category3bytotalelectricity,whichisthesumofelectricitygenerationintheorganizationalboundaryandelectricitypurchasedtobesoldtocustomers.Emissionsintensityshouldbecalculatedforthebaseyearandestimatedforthetargetyear.Companiesmayusethelocation-basedormarket-basedapproachtocalculateemissionsassociatedwithpurchasedelectricity.Example3:Companygeneratingelectricityandcommercialheat:Apowerutilitythathascogenerationcapacityand/orcontrollingheatplantsSCOPE1:electricity&commercialheatgeneration(inorganizationalboundary)NANAMARKETThisexampleissimilartoExample1,butwithanotableexceptionthatitallowstheoperationofCHPorcommercialheatplants.Assomeutilitiesreuseandcommercializeheatfromallorpartoftheirpowergenerationassets,thisapproachisdesignedtoenablecompaniestosetSBTsinclusiveofheatandtorecognizetheimprovedefficiencyofCHP.Companiesthatmatchthisexamplehavetwooptionsforsettingtargets:A.Setseparatetargetsonelectricitygenerationandcommercialheat:EmissionsallocatedtoelectricitygenerationmustbecoveredbyanSDAtargetandemissionsallocatedtocommercialheatmustbeaddressedbyabsolutecontraction.B.Developacombinedtarget:ThesumofemissionsassociatedwithelectricityandheatgenerationiscoveredbyacombinedSDAtargetusinganemissionsintensitymetricbasedontotalpowergenerationinmegawatt-hours(i.e.,thesumofelectricitygeneratedandcommercialheatsold).Example4:Verticallyintegratedpowercompany(includingT&Dactivities)Apowerutilitygeneratingandpurchasingelectricitywithnocogeneration/CHPcapacity,andwithT&Dactivities.SCOPE1:electricitygeneration(inorganizationalboundary)SCOPE3CATEGORY3:electricitypurchasedT&DMARKETVerticallyintegratedelectricutilitiesmaysettargetsfollowingasimilarapproachasExample2.Foranypowergeneratedbythecompany,emissionsassociatedwithelectricitylostinT&Dareimplicitlyincludedinscope1.Forpowerpurchasedtobesoldtocustomers,emissionsassociatedwithelectricitylostinT&DaregenerallyincludedSetting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities15inscope3category3.Inthetargetcoveringallsoldelectricity,emissionsintensityiscalculatedbydividingthesumofgeneration-relatedemissionsinscope1andscope3category3bytotalelectricity,whichisthesumofelectricitygenerationintheorganizationalboundaryandelectricitypurchasedtobesoldtocustomers.Emissionsassociatedwithpurchasedelectricityshouldbecalculatedbasedonlocationormarket-basedemissionsfactors.SimilartoExample2,anSDAtargetmustalsobesetthatcoversscope1emissionsfromfuelcombustionforelectricitygenerationandthatexcludesemissionsinscope3.ItisrecommendedthatcompaniesthatownT&Dplacespecialemphasisonreducingscope1emissionsoftheGHGsulfurhexafluoride(SF6),whichisusedindistributionsystems,inadditiontodecarbonizingpowergeneration.Step4:SubmittargetstoSBTiToapplyforanSBTi-approvedtarget,thecompanymustcompletetheTargetSubmissionFormandemailittotargets@sciencebasedtargets.org.SubmissionsarevalidatedagainsttheSBTiCriteriaandSBTiTargetValidationProtocol.Eachapprovedtargetalsoreceivesatargetclassificationof1.5°Corwell-below2°C.Forelectricutilities,thetargetclassificationisdeterminedbythelevelofambitionoftheSDAtargetcoveringemissionsfrompowergenerationintheorganizationalboundary.TheSBTi’spaidtargetvalidationserviceoffersatleasttwosubmissionsandupto2hoursoffeedbackoncallswithreviewersontheTargetValidationTeam.DetailsregardingthisserviceandassociatedfeesareavailableontheSBTiwebsite.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities16ADDITIONALRESOURCESItisrecommendedthatcompaniessubscribetotheSBTimailinglistandregularlycheckthewebsiteforplannedupdatestoSBTiresources.CompaniesmayalsofinditusefultoreviewtargetsthathavealreadybeenapprovedbytheSBTi,whicharepublishedontheSBTi’swebsite.Stakeholdersareencouragedtorefertothird-partyresourceswithincreasedgeographicorsectoralresolutionaspracticaltoolstoassistintargetplanningandimplementation.EFFECTIVEDATESOFSECTOR-SPECIFICREQUIREMENTSThenewlyintroducedrequirementforelectricutilitiesthatgenerateelectricitytosetaPowerGenerationSDAtargetonallsoldelectricity,ifapplicable,willbeineffectasofJanuary1,2021.AllsubmissionsreceivedbytheSBTipriortoJanuary1,2021canbeassessedwithorwithoutaPowerGenerationSDAtargetonallsoldelectricity,althoughdoingsoisencouraged.Setting1.5°C-alignedScience-basedTargets:QuickStartGuideforElectricUtilities17REFERENCESChang,A.(2020).AnalysisandTranslationofGlobalScenariostoInformParis-alignedpathwaysfortheEnergySystem(forthcoming).ScienceBasedTargetsinitiative.Grant,A.,&Coffin,M.(2019).BreakingtheHabit.TheCarbonTrackerInitiative.GreenhouseGasProtocol.(2006).AllocationofGHGEmissionsfromaCombinedHeatandPower(CHP)Plant.GreenhouseGasProtocol.(2011).CorporateValueChain(Scope3)Standard.GreenhouseGasProtocol.(2015).ACorporateAccountingandReportingStandard(RevisedEdition).Grubler,A.,Wilson,C.,Bento,N.,Boza-Kiss,B.,Krey,V.,McCollum,D.L.,...Havlik.(2018).Alowenergydemandscenarioformeetingthe1.5°Ctargetandsustainabledevelopmentgoalswithoutnegativeemissiontechnologies.NatureEnergy.Holz,C.,Siegel,L.S.,Johnston,E.,Jones,A.P.,&Sterman,J.(2018).Ratchetingambitiontolimitwarmingto1.5°C–trade-offsbetweenemissionsreductionsandcarbondioxideremoval.EnvironmentalResearchLetters.InternationalEnergyAgency.(2019).Renewables2019.IEA.InternationalEnergyAgency.(2019).WorldEnergyOutlook2019.IEA.IPCC.(2018).SummaryforPolicymakers.In:Globalwarmingof1.5C.AnIPCCSpecialReportontheimpactsofglobalwarmingof1.5Cabovepre-industriallevels.Geneva,Switzerland:WorldMeteorologicalOrganization.JohanRockstrom,O.G.(2017).Aroadmapforrapiddecarbonization.Science,1269-1271.Krabbe,O.,Linthorst,G.,Blok,K.,Crijns-Graus,W.,vanVuuren,D.P.,Hohne,N.,...CarrilloPineda,A.(2015).Aligningcorporategreenhouse-gasemissionstargetswithclimategoals.NatureClimateChange,1057-1060.Minx,J.C.,Lamb,W.F.,Callaghan,M.W.,Fuss,S.,Hilaire,J.,Creutzig,F.,...Khanna,T.(2018).Negativeemissions—Part1:Researchlandscapeandsynthesis.EnvironmentalResearchLetters.Ørsted.(2020).Takingactiontostaywithin1.5°C.Ørsted.Riahi,K.,vanVuuren,D.P.,Kriegler,E.,Edmonds,J.,O’Neill,B.C.,Fujimori,S.,...Fricko,O.(2016).TheSharedSocioeconomicPathwaysandtheirenergy,landuse,andgreenhousegasemissionsimplications:Anoverview.GlobalEnvironmentalChange,153-168.Rissman,J.,Bataille,C.,Masanet,E.,Aden,N.,MorrowIII,W.R.,Zhou,N.,......(2020).Technologiesandpoliciestodecarbonizeglobalindustry:Reviewandassessmentofmitigationdriversthrough2070.AppliedEnergy.Roe,S.,Streck,C.,Obersteiner,M.,Frank,S.,Grimscom,B.,Drouet,L.,...Popp,A.(2019).Contributionofthelandsectortoa1.5°Cworld.NatureClimateChange.Rogelj,J.,Shindell,D.,Jiang,K.,Fifita,S.,Forster,P.,Ginzburg,V.,...Vilariño,M.V.(2018).Mitigationpathwayscompatiblewith1.5°Cinthecontextofsustainabledevelopment.In:Globalwarmingof1.5°C.AnIPCCSpecialReportontheimpactsofglobalwarmingof1.5°Cabovepre-industriallevels.IPCC.ScienceBasedTargetsinitiative.(2017).SectorDevelopmentFramework.SBTi.ScienceBasedTargetsinitiative.(2019).FoundationsofScience-basedTargetSetting.SBTi.ScienceBasedTargetsinitiative.(2020).SBTiCriteria(Version4.1).SBTi.ScienceBasedTargetsinitiative.(2020).TargetValidationProtocol(Version2).SBTi.Strefler,J.,Bauer,N.,Kriegler,E.,Popp,A.,Giannousakis,A.,&Edenhofer,O.(2018).BetweenScyllaandCharybdis:Delayedmitigationnarrowsthepassagebetweenlarge-scaleCDRandhighcosts.UNEP.(2019).EmissionsGapReport2019.Executivesummary.Nairobi:UnitedNationsEnvironmentProgramme.vanVuuren,D.P.,&al.,e.(2018).Alternativepathwaystothe1.5°Ctargetreducetheneedfornegativeemissiontechnologies.NatureClimateChange.YanguasParra,P.A.,Ganti,G.,Brecha,R.,Hare,B.,Schaeffer,M.S.,&Fuentes,U.(2019).Globalandregionalcoalphase-outrequirementsoftheParisAgreement:InsightsfromtheIPCCSpecialReporton1.5°C.ClimateAnalytics.SCIENCEBASEDTARGETSPARTNERORGANIZATIONSCOALITIONINCOLLABORATIONWITHlinkedin.com/company/science-based-targets/sciencebasedtargets.org@sciencetargets
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