Power sector draft standard for net-zero emissions unveiled by SBTi

The Science Based Targets Initiative (SBTi) has released a draft of its Power Sector Net-Zero Standard, setting ambitious goals for companies in the power sector to transition towards net-zero emissions. The standard, currently under development as Corporate Net-Zero Standard V2, aims to establish science-based environmental target setting as a standard practice for power sector companies.

The new standard presents a significant challenge for the power sector, which is responsible for nearly 40% of global energy-related emissions. It faces significant risks and opportunities from the transition to net zero. The sector is exposed to climate risks, including threats to critical infrastructure and generation capacity, but is also positioned to contribute significantly to the transition in other sectors and to benefit from the substantial growth in electricity's share in the energy mix over the coming years.

The draft standard requires power sector companies to publicly disclose a transition plan away from unabated fossil fuel power generation. Companies are given until 2030 to cease new investments in unabated natural gas assets in non-OECD countries. In line with the phase-out plans, coal assets are to be fully retired or abated in OECD countries by 2030 and in non-OECD countries by 2040. Oil and natural gas assets are to be phased out by 2035 in OECD countries and 2040 in non-OECD countries.

To ensure the sustainable use of biomass for power generation, the standard introduces a requirement for companies to commit to sourcing 100% of the biomass from certified sustainable sources by 2030. The SBTi is considering allowing third-party certification schemes for meeting this sustainability requirement.

The draft standard is open for feedback from companies across the power sector, including those involved in power generation, transmission, distribution, storage, trade, and retail, until November 3, 2025. The SBTi has also released a Financial Institutions Net-Zero (FINZ) Standard for the financial sector.

The SBTi, founded in 2015, has been under investigation in the U.S. by Florida Attorney General James Uthmeier for potential antitrust violations and deceptive trade practices. This investigation comes following a letter from 23 U.S. State Attorneys General demanding information about the organization and its members, citing concerns about potential violations of antitrust, consumer protection, and other laws.

Despite these challenges, the SBTi continues to push for science-based environmental target setting as a standard corporate practice, aiming to help companies achieve a net-zero emissions future. The new Power Sector Net-Zero Standard draft, developed in alignment with the SBTi's draft Net-Zero Standard V2, introduces new methodologies and requirements specific to power sector companies, providing a roadmap for a sustainable future in the power sector.