This analysis gives specific guidance for investors and companies to assess climate change-related risks and opportunities in the U.S. electric power sector. The 2019 update incorporates the Intergovernmental Panel on Climate Change’s (IPCC) call to limit global warming to 1.5 degrees celsius, finding that nothing short of a complete decarbonization of the sector before 2050 is in order. The update builds off the framework released in 2018 that provided a framework for a well below 2 degree climate scenario analysis.
In April 2018, Ceres published a framework developed by M.J. Bradley & Associates (MJB&A) that provides specific guidance for assessing climate change-related risks and opportunities for companies in the U.S. electric power industry.1 Building on existing literature and consistent with the Financial Stability Board’s Task Force for Climate-related Financial Disclosures (TCFD), the framework describes an approach that includes two primary components:
Scenario analysis that reflects a) the transition in the U.S. electric power industry and across the economy that would be necessary to reduce emissions consistent with limiting global temperature rise to 1.5- to 2-degree Celsius and b) the potential physical impacts associated with climate change; and
The application of scenario analysis insights to business strategy.
Since the beginning of 2018, more than ten companies in the electric power industry have published climate strategy assessment reports, and a number of additional companies are expected to release reports throughout 2019.2 At the same time, expectations from investors are growing as they learn from published climate strategy reports, the impacts of climate change become clearer and market opportunities for zero carbon resources advance.
This update reviews developments since the release of the 2018 framework, including investor interest, the publication of the Intergovernmental Panel on Climate Change (IPCC) special report on the impacts of global warming of 1.5 degrees Celsius (1.5°C) above pre-industrial levels and commitments made by companies to reduce emissions. This update also reviews assessments that companies in the electric power industry have released over the past year.