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The U.S. Utilities Decarbonization Index

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The data in this infographic comes from the NPUC Annual Utility Decarbonization Report 2022

Infographic: The U.S. Utilities Decarbonization Index 2022

The U.S. Utilities Decarbonization Index

With the Biden administration targeting a zero-emissions power sector for the U.S. by 2035, how are the nation’s largest electric power providers faring in terms of decarbonization? 

Together, Visual Capitalist and our sponsor National Public Utilities Council have developed the Annual Utility Decarbonization Index. The index quantifies and compares the status of decarbonization among the 30 largest investor-owned utilities in the United States.

Decarbonization is quantified by scoring companies on six emissions-related metrics based on publicly available data from 2020 (the latest available).

Why the 30 Largest IOUs?

Why does the Decarbonization Index specifically look at the 30 largest IOUs by electricity generation? 

Well, these 30 utilities collectively generated around 2.3 billion megawatt hours (MWh) of electricity (including purchased power), making up over half of U.S. net electricity generation in 2020. Moreover, they also served over 90 million customers, accounting for roughly 56% of all electric customers in the country.

30 largest utilities in the U.S.

Therefore, it’s safe to say that the 30 largest IOUs have an important role in decarbonizing both the power sector and the U.S. economy. Since the residential, commercial, industrial, and agricultural sectors all use electricity, the decarbonization of utilities—the providers of electric power—can enable emissions reduction throughout the economy.

Decarbonization Index Methodology

For each of the six metrics used in the Decarbonization Index, utilities are scored on a scale of 1 (lowest) to 5 (highest), indicating whether they are trailing or leading, respectively. Scores for each metric are based on the range of figures for each metric divided into five equal buckets that the utilities fall into. 

For simplicity, let’s suppose that the lowest reported total emissions figure is zero metric tons of carbon dioxide (CO2) and the highest is 100 metric tons. In that case, companies that emit fewer than 20 metric tons of CO2 will receive the highest score of 5. Those that emit between 20 and 40 metric tons of CO2 will receive a 4, and so on.

A utility’s overall decarbonization score is an average of their scores across the six metrics, summarized below:

  1. Fuel Mix: The share of low-carbon sources (renewables, nuclear, and fuel cells) in the utility’s owned net electricity generation. We’ve assumed that the share of low-carbon sources can range from 0% to 100%, and scores are assigned based on that range.
  2. CO2 Emissions Intensity: The amount of CO2 emitted per megawatt-hour of owned and purchased electricity generation.
  3. Total CO2 Emissions: The sum of absolute CO2 emissions from owned and purchased electricity generation. While this overlooks the differing sizes of utilities, the rationale is that smaller unconsolidated utilities may find it easier to decarbonize than larger peers.
  4. CO2 Emissions per Capita: The amount of CO2 emitted from owned and purchased electricity generation per retail customer served in 2020.
  5. Decarbonization Goals: An evaluation of the utility’s interim greenhouse gas (GHG) emissions reduction goals and net-zero targets. The baseline for this is 50% GHG emissions reduction by 2030 and net-zero emissions by 2050 (utilities with baseline targets get a score of 2.5/5).
  6. Low-Carbon Investment: The share of planned capital expenditure (CAPEX) for electricity generation that is allocated to low-carbon sources. We’ve assumed that the share of CAPEX for low-carbon sources can range from 0% to 100%, and scores are assigned based on that range.

The data for these metrics comes from various sources including company sustainability reports, quantitative reporting templates from the Edison Electric Institute, and the Climate Disclosure Project’s Climate Change Questionnaire filings.

Explore all six metrics of the U.S. Utility Decarbonization Index

NPUC Annual Utility Decarbonization Report

Download The NPUC Annual Utility Decarbonization Report for free.

The Annual Utility Decarbonization Index 2022

Before looking at numbers, it’s important to note that the Decarbonization Index is relative and compares the 30 largest IOUs to each other. Therefore, a score of 5 does not indicate full decarbonization or net-zero emissions. Instead, it suggests that the utility is doing particularly well relative to its peers. 

With that in mind, here’s a look at the Annual Utility Decarbonization Index 2022: 

Rank
CompanyDecarbonization Score
#1Public Service Enterprise Group4.7
#2NextEra Energy Resources4.7
#3Pacific Gas and Electric4.5
#4Avangrid4.2
#5Exelon4.1
#6Portland General Electric3.7
#7Dominion Energy3.6
#8Florida Power and Light3.6
#9PNM Resources3.5
#10Alliant Energy3.4
#11Consolidated Edison3.4
#12Fortis Inc.3.4
#13American Electric Power3.3
#14Consumers Energy3.3
#15Evergy3.0
#16NRG Energy3.0
#17AES Corporation2.9
#18Xcel Energy2.9
#19WEC Energy2.9
#20DTE Energy2.8
#21Duke Energy2.8
#22Entergy2.8
#23TransAlta2.8
#24Emera2.7
#25Ameren2.6
#26Berkshire Hathaway Energy2.5
#27Oklahoma Gas & Electric Company2.4
#28Southern Company2.3
#29PPL Corporation2.2
#30Vistra Corp.2.0

A small number of companies did not report data on certain metrics and have been excluded from scoring for those metrics (denoted as N/A). In such cases, the decarbonization score is an average of five metrics instead of six.

Public Service Enterprise Group (PSEG), headquartered in New Jersey, tops this year’s rankings thanks to its low-emissions profile and ambitious climate goals. The company is aiming to achieve net-zero emissions from operations by 2030—five years ahead of the Biden Administration’s target and faster than any other utility on the list.

Tied with PSEG is NextEra Energy Resources, the clean energy-focused subsidiary of NextEra Energy. The company is the world’s largest producer of solar and wind power and generated 97% of its net electricity from low-carbon sources in 2020.

In third place is California’s largest utility, the Pacific Gas and Electric Company (PG&E). PG&E had the lowest emissions per capita of the 30 largest IOUs at 0.5 metric tons of CO2 per retail customer in 2020. That figure is significantly lower than the average of 11.5 metric tons across the 30 IOUs. 

Rounding out the top five are Avangrid, a renewables-focused U.S. subsidiary of the Spanish Iberdrola Group, and Exelon, the nation’s largest utility by number of retail customers. Avangrid had one of the cleanest fuel mixes with 87% of its owned net electricity coming from low-carbon sources. Exelon is the nation’s largest provider of emissions-free electricity, generating around 157 million MWh or 86% of its owned net electricity from nuclear power.

Download the Full Utility Decarbonization Report

While the Decarbonization Index provides a look at the current status of utility decarbonization, there’s much more to uncover in the full report, including:

  • The obstacles that utilities face on the path to decarbonization
  • The detailed data behind the six individual metrics
  • The U.S. utilities ESG report card
  • The solutions and strategies that can help accelerate decarbonization

Download the full report and find out everything you need to know about utility decarbonization.

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Decarbonization

Visualized: Carbon Pricing Initiatives in North America

We map out all of the national and subnational carbon pricing initiatives in North America using data from the World Bank.

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Visualized: Carbon Pricing Initiatives in North America

Carbon pricing mechanisms are a vital component of an effective emissions reduction strategy. But these initiatives currently cover just 15% of total North American carbon emissions.

To discover which initiatives are currently contributing to this coverage, this graphic sponsored by the National Public Utilities Council maps out all of the national and subnational carbon pricing initiatives across North America using data from the World Bank.

Let’s begin by looking at types of carbon pricing.

Carbon Pricing Explained

Carbon pricing is a market-based policy tool that assigns a cost to carbon emissions, incentivizing reductions through the use of economic signals.

While there are several ways to go about carbon pricing, the most commonly used types of carbon pricing strategies include:

  • Emissions Trading Systems (ETS)
    ETS establishes a market for trading emissions allowances among companies. A cap on total emissions is set, and all companies receive tradable emission units. Those exceeding their limits can buy allowances from those with a surplus.
  • Carbon Taxes
    Carbon taxes impose a direct price on carbon emissions. Their goal is to disincentivize carbon-intensive activities, such as burning fossil fuels, by making them financially less attractive.

In 2022, carbon pricing strategies generated $5 billion in the U.S. and $8 billion in Canada. These funds were primarily allocated toward green investments and support for low-income households.

Carbon Pricing Initiatives By Country

The U.S. is currently the only country in North America without a national carbon pricing initiative. Both Canada and Mexico, on the other hand, have implemented federal ETS and carbon tax programs.

Beyond federal initiatives, many regions on the continent have also implemented or are considering their own carbon pricing initiatives. These subnational initiatives are listed in the table below:

RegionCarbon Pricing InitiativeStatus
🇨🇦 Alberta, CanadaETSImplemented, 2007
🇨🇦 British Columbia, Canada Carbon tax and ETS Implemented, 2008 and 2016
🇨🇦 Manitoba, CanadaCarbon tax and ETS Under Consideration
🇨🇦 New Brunswick, CanadaCarbon tax and ETS Implemented, 2020 and 2021
🇨🇦 Newfoundland and Labrador, CanadaCarbon tax and ETS Implemented, both 2019
🇨🇦 Northwest Territories, CanadaCarbon taxImplemented, 2019
🇨🇦 Nova Scotia, CanadaETSImplemented, 2019
🇨🇦 Ontario, CanadaETSImplemented, 2022
🇨🇦 Prince Edward Island, CanadaCarbon taxImplemented, 2019
🇨🇦 Quebec, CanadaETSImplemented, 2013
🇨🇦 Saskatchewan, CanadaETSImplemented, 2019
🇺🇸 California, U.S.A.ETSImplemented, 2012
🇺🇸 Hawaii, U.S.A.Carbon taxUnder Consideration
🇺🇸 Massachusetts, U.S.A.ETSImplemented, 2018
🇺🇸 New York, U.S.A.ETSUnder Consideration
🇺🇸 North Carolina, U.S.A.ETSUnder Consideration
🇺🇸 Oregon, U.S.A.ETSImplemented, 2021
🇺🇸 Pennsylvania, U.S.A.ETSUnder Consideration
🇺🇸 Regional Greenhouse Gas Initiative (RGGI)*ETSImplemented, 2009
🇺🇸 Washington, U.S.A.ETSImplemented, 2023
🇲🇽 Durango, Mexico Carbon taxImplemented, 2023
🇲🇽 Guanajuato, Mexico Carbon taxScheduled, 2023
🇲🇽 Jalisco, Mexico Carbon taxUnder Consideration
🇲🇽 Queretaro, Mexico Carbon taxImplemented, 2022
🇲🇽 State of Mexico, Mexico Carbon taxImplemented, 2022
🇲🇽 Yucatan, Mexico Carbon taxImplemented, 2022
🇲🇽 Zacatecas, Mexico Carbon taxImplemented, 2017

The RGGI was the first mandatory ETS initiative in the U.S. and applies to power plants in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia.

Since its inception, emissions in the RGGI region fell by more than 50%—twice as fast as the nation as a whole—and raised nearly $6 billion to invest in local communities.

Are All Carbon Pricing Initiatives Created Equal?

In the landscape of carbon pricing initiatives, one critical factor stands out—the price of carbon itself.

According to The High-Level Commission on Carbon Prices, achieving alignment between carbon pricing strategies and the Paris Agreement temperature target requires a price of US$40–80/tCO2 by 2020 and US$50–100/tCO2 by 2030.

Unfortunately, many North American initiatives fall short of these prices, especially in the U.S. and Mexico, where carbon prices reach as low as US$12/tCO2e. Conversely, most Canadian initiatives set a price of US$48/tCO2e.

It’s also important to note that the broader impact of these initiatives depends on a multitude of other factors, including the industries they cover, their flexibility in accommodating changing economic conditions, and the manner in which generated revenue is invested back into sustainable practices.

Within the balance of these various elements lies the potential to steer all industries—including the power sector—toward the necessary emissions reductions.

Learn more about how electric utilities and the power sector can lead on the path toward decarbonization here.

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Decarbonization

The 3 Building Blocks for a Decarbonized Power Sector

How can the U.S. achieve a 100% clean power sector? See the three key pillars of a decarbonized power sector in this infographic.

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decarbonized power sector

The 3 Building Blocks for a Decarbonized Power Sector

As part of the Paris Agreement, the U.S. has set goals to achieve a 50-52% reduction in emissions by 2030 and net-zero emissions by 2050.

To lay the foundation for these targets, the Biden Administration’s goal is to create a 100% clean power sector by 2035.

This infographic from the National Public Utilities Council shows why a clean power sector is essential for net-zero emissions and highlights the three building blocks needed to achieve it. This is part 2 of the Road to Net Zero series of infographics.

The State of U.S. Energy Use

Today, fossil fuels like oil and gas provide most of the energy used in the U.S. for transportation, heating, and industrial purposes.

For example, due to the prevalence of gasoline vehicles, petroleum accounts for 90% of the transportation sector’s energy consumption, with electricity making up less than 1% of the total.

Similarly, around 80% of the industrial sector’s energy needs are met with natural gas and petroleum. Meanwhile, the residential and commercial sectors use large amounts of natural gas for their space heating needs, along with electricity for other appliances.

With fossil fuels widespread in the U.S. energy mix, the fastest path to net-zero emissions is to electrify and decarbonize energy use in all sectors. This involves replacing technologies that use fossil fuels with those powered by electricity and a clean grid.

For instance, electric vehicles could transform the transportation sector’s energy consumption and reduce emissions. Additionally, electric heat pumps could replace oil and gas boilers in residential and commercial buildings.

However, for electrification to be effective in reducing emissions, decarbonizing the power sector and generating clean electricity is essential.

The Path to a Decarbonized Power Sector

Decarbonization calls for a transformation of the power sector, from one where fossil fuels generate 60% of total electricity to one dominated by clean energy and backed by an upgraded grid.

There are three foundational building blocks for the road to 100% clean electricity:

#1: Accelerate Clean Energy Deployment

With renewable energy now cheaper than fossil fuels, expanding solar- and wind-powered generation is key to replacing fossil fuels and reaching zero emissions.

According to Princeton University, for net-zero emissions by 2050, the U.S. needs to add more than 50 gigawatts of solar capacity annually from 2022 to 2035. That is significantly higher than the 13 gigawatts installed in 2021.

#2: Support Clean Energy with Grid Expansion

With the U.S. power grid aging, new high-voltage transmission capacity is essential for transporting electricity from remote solar and wind farms to centers of demand.

From 2013 to 2020, U.S. transmission capacity grew by just 1% annually. To align with the net-zero pathway, the pace of expansion needs to more than double through 2030.

Here’s how transmission expansion could affect U.S. greenhouse gas (GHG) emissions, as modeled by Princeton:

Transmission Expansion RateProjected GHG Emissions in 2030% Change in Emissions vs. 2021
1% per year4.6 billion tonnes-18%
1.5% per year4.0 billion tonnes-29%
2.3% per year3.8 billion tonnes-32%

Source: Princeton University – Zero Lab

With a 2.3% annual growth in transmission capacity, U.S. GHG emissions could achieve a 32% reduction from the 5.6 billion tonnes emitted in 2021.

#3: Invest in Nuclear Power and Battery Storage

The intermittent nature and low reliability of wind and solar power generation pose a challenge for the energy transition.

Battery storage systems and nuclear power can solve the intermittency problem by supplying clean electricity when wind and solar generation falls.

For example, storage systems can store excess solar power that is produced during sunny periods of the day, and supply it in the evening when solar generation dips. Meanwhile, nuclear power plants can supply electricity around the clock, acting as a clean baseload power source.

Towards a Carbon-free U.S. Economy

New renewable capacity, transmission expansion, and reliable backup sources are key to unlocking a carbon-free power sector.

Together, these three building blocks form the foundation for economy-wide emissions reduction and net-zero emissions by 2050.

Click here to learn more about how electric utilities and the power sector can lead on the path toward decarbonization.

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