Our Climate Journey
Our climate change journey began back in 2004, when we published our first renewable energy target of 5% by 2010. In 2007, we set a carbon intensity reduction target of around 75% by 2050 compared to 2007 levels, which was based on the scenarios presented in the Energy Technology Perspectives 2006 publication from the International Energy Agency (IEA). This target became the cornerstone of our Climate Vision 2050, and was supported by a series of interim carbon emissions intensity targets in 2010, 2020, and 2035. We were amongst the first power utilities in the world to commit to a carbon reduction pathway.
In 2010, our Climate Vision 2050 was updated and the 2020 carbon intensity target was stepped up from 0.7kg CO2 / kWh – a reduction of around 15% from 2007 levels – to 0.6kg CO2/kWh, a reduction of around 30%. Having already met our 5% target, we set a new 2020 renewable energy target of 20% and a non-carbon emitting target for the same year of 30%, including nuclear power.
We had previously committed to reviewing our Climate Vision 2050 roadmap in 2018, after the Intergovernmental Panel on Climate Change releases its new 1.5°C emissions scenario projections. Given the positive momentum created by the successful ratification of the Paris Agreement on climate change, as well as one of the Financial Stability Board’s Recommendations of the Task Force on Climate-related Financial Disclosures being the use of 2°C scenario analyses, we believed it was appropriate to start this review a year earlier in 2017.
Reviewing our Climate Vision 2050
A great deal has changed in the climate change arena since we published our Climate Vision 2050 in 2007. Most world leaders have signed up to the Paris Agreement and there have been giant strides in climate change science, technology and social expectations.
In reviewing our Climate Vision 2050, we carried out scenario analyses to test the impact on our business of varying speeds of transition to a low carbon future in each of our markets, along with different options for implementing our approach. We developed realistic simulations of how our business would look under slow, medium, and fast transition scenarios and set them against the International Energy Agency’s World Energy Outlook 2016 projections for world and regional energy development. It transpired that the targets we set a decade ago had predicted the future relatively well and were close to the medium-speed scenario that assumes countries will meet the targets set out in the Paris Agreement.
Although our original targets were still valid considering the anticipated pace of change in our region, we believed there was room for improvement. Now, to further support the Paris Agreement goals, we have set even more ambitious targets.
Read more on how we move towards clean energy
Our updated Climate Vision 2050
The changes in the current review included:
- Tightening of our cornerstone carbon intensity reduction target from 75% to 82% by 2050 compared with 2007;
- Developing new interim carbon intensity reduction targets of 40% by 2030 and 60% by 2040 compared with 2007. We have removed the previous interim target for 2035 to better align with the Paris Agreement timeline as well as the United Nations Sustainable Development Goals, which focus mostly on 2030; and
- Establishing a renewable energy target of 30% and a non-carbon emitting target of 40% by 2030, considering the growing significance of solar and wind in new capacity additions globally.
The updated targets build on the optimism of our original aspirational, science-based trajectory, but take into consideration the realities of the development of energy markets in the Asia-Pacific region. We believe these new targets are challenging and ambitious and we will review them regularly to ensure that we take into account the momentum of change over time. For a more holistic picture of power capacity requirements, we will also begin to report our progress on these targets on a basis that includes capacity purchases in addition to facilities we own and operate. The two new targets on renewable energy and non-carbon emitting energy for 2030 will also take into account the capacity purchases we make.
Upcoming carbon trading schemes
Our assets currently do not operate in any locations where mandatory or voluntary carbon trading schemes are in place. However, we believe this will change in Mainland China.
In December 2017, the Chinese government announced the launch of a nationwide carbon market, which is set to be the world's largest carbon trading system and underlines the country’s determination to fulfil its pledge to see carbon emissions peak by the end of 2030. The initial phase of the market will cover only power generation. Power generators will be granted a certain amount of free emissions allowance by the Government and those emitting beyond the allocation will have to procure the shortfall from the market. We will closely monitor the impact on our assets and ensure that all our projects comply with the obligations.
Helping our customers towards net zero carbon
As well as reducing our own carbon footprint, it is essential that we support our stakeholders on their journeys to a low carbon future. In 2017, we completed the development of an eCommerce platform which allows users to purchase carbon credits online. The platform is planned to be launched in the first quarter of 2018.
The platform allows users to calculate their carbon emissions and purchase carbon credits from our India windfarms online, making it easier for individuals or organisations to offset their carbon emissions on voluntary basis. In many markets, we believe a price on carbon is inevitable. Therefore, offsetting unavoidable emissions is one way to begin incorporating a potential price on carbon into the financial planning and budgeting process for an individual or an organisation. This will be the last component of the three-step range of solutions we plan to offer our stakeholders to assist them in their journeys towards achieving net zero carbon emissions.
At EnergyAustralia, customers can now get 100% carbon neutral electricity in their home at no extra cost. For customers who opt for carbon neutral electricity, EnergyAustralia purchases carbon offset units which support projects that reduce emissions, such as renewable energy projects in developing countries or land management and tree planting in Australia, to offset the amount of carbon they release into the atmosphere. Over 100,000 customers have opted in to this programme.
In Hong Kong, under the new Scheme of Control, we will introduce a new Feed-in-Tariff Scheme later in 2018, to support our customers to develop their own RE projects.