New research from researchers at the University of Oxford shows that electric utility companies around the world are continuing to invest heavily in fossil-fuel-based power generation, resulting in a missed opportunity for progress on global climate commitments.
The study, published in Nature Energy, is the first to investigate electric utilities on a global scale. Using a machine-learning technique, the research analyses the activities of more than 3,000 companies over the past two decades.
‘This research highlights a worrying gap between what is needed to stop global warming, and what actions are being taken by the utility sector,’ explains Galina Alova, study author and researcher at the Smith School of Enterprise and the Environment. ‘Although there have been a few high-profile examples of individual electric utilities investing in renewables, this study shows that overall, the sector is making the transition to clean energy slowly or not at all.’
The study finds that only 10% of companies prioritised renewables – i.e. expanded their renewables-based power generation capacity faster than their gas or coal fired capacity. Many of these organisations also continued to invest in fossil fuels in parallel with renewables, although at a slower rate.
Many countries and businesses have committed to reach net-zero greenhouse gas emissions by 2050, to avoid the worst impacts of climate change. To achieve this, fossil fuels must be replaced with renewable energy throughout the economy. But the study suggests that utilities remain committed to their conventional fossil-fuel-dominated activities. While independent power producers are leading the penetration of renewables, traditional utilities lag behind.
‘Utilities’ continued investment in fossil fuels leaves them at risk of stranded assets – where power plants will need to be retired early – and undermines global efforts to tackle climate change,’ says Ms Alova.
She maintains, ‘The global transition to a low carbon future might be further jeopardised by the strain that COVID-19 pandemic has put on public and private finance, as well as supply chains, resulting in delay or cancellation of new renewable energy projects. This could be especially detrimental to developing countries that are dependent on green development finance.’