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Global utility companies, generally perceived as some of the worst offenders when it comes to climate transition and meeting future net zero carbon emissions, are actually playing a driving force in helping drive a more carbon-friendly global footprint across industries, according to new research from Morningstar Sustainalytics.
In its first Low Carbon Transition Rating Industry Report, focusing on Utilities, Morningstar Sustainalytics Associate Director of Climate Research Pustav Joshi takes a closer look at this sector and the role that utility providers are playing in the global climate transition.
The analysis, which looks at 328 of the largest utility companies globally across electric utilities, gas utilities, independent power production and traders, multi-utilities, renewable power production and water utilities, paints a picture of an industry sector which is current “significantly misaligned” with the net zero by 2050 target, but is playing an increasingly important role in the global carbon transition. According to Joshi, utilities are bringing more renewable energy generation capacity to traditionally carbon-focused industries, gradually decarbonizing the energy intensity of generated power. In fact, according to the IEA, annual global renewable energy investment in areas like solar energy may already be outpacing fossil fuel energy investments.
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Pustav Joshi – Associate Director, Climate Research, Morningstar Sustainalytics:
“The fact that global utilities are perceived as some of the biggest global polluters yet at the same time are playing an increasingly pivotal role in the transition to a low-carbon global economy underscores the important nuances at work when examining such a dynamic and multi-faceted topic as climate change. Our climate analysis and sector drill downs help investors put aside some of the inherent misperceptions to get at a better understanding of the forces at work across sectors in the road to net zero.”