About SSE
SSE’s core purpose is to responsibly provide energy and related services needed now and in the future and its vision is to be a leading provider of energy and related services in a low carbon world.
Across the UK and Ireland, SSE has over 11,160MW of capacity for generating electricity. Its most material environmental impact is the carbon dioxide emitted when generating electricity and so it has an important part to play in supporting the transition to a low carbon energy system.
A decade of carbon intensity reduction
Following the UK’s Climate Change Act 2008, which targets a reduction of at least 80% in emissions of carbon dioxide and other greenhouse gases between 1990 and 2050, SSE set itself a target to cut the carbon intensity of the electricity it generates (g/kWh) by 50% between 2006 and 2020. That target was first met in March 2017.
Both the UK and Ireland ratified the Paris Agreement in 2016, committing to undertake ambitious efforts to combat climate change and adapt to its effects. In the UK, there is ongoing consensus to meet the ambitions of the 2008 Climate Change Act, exemplified by the work of the UK Committee on Climate Change and by the content of the UK Government’s Clean Growth Strategy. The Irish Government’s National Mitigation Plan, published in 2017, reaffirmed its commitment to decarbonising the energy mix through specific actions to achieve its 2050 target of an 80 to 95% reduction in greenhouse gases compared with 1990 levels.
It is in this context that SSE has considered its carbon intensity ambitions for the period to 2030.
Considerations in setting future carbon intensity ambitions
The UK government intends that electricity generated from unabated coal will be phased out of the UK electricity system by 2025. To demonstrate its support for this decision, SSE has joined the Powering Past Coal Alliance, a joint UK-Canada initiative, launched at the UN Climate Change Conference, COP23, in November 2017. The Alliance brings together a diverse range of governments, businesses and organisations that are united in taking action to accelerate clean growth and climate protection through the phase out of traditional coal power by 2030.
The retirement of coal means that flexible gas-fired electricity generation will have an important role to play in supporting the transition to a low carbon UK electricity system. As a non-nuclear generator, SSE believes that by having a greater focus on its core competences in wind (on- and offshore), hydro (including pumped storage) and flexible gas-fired generation, it can make an important contribution to the UK’s electricity needs in the period to 2030 and beyond.
To meet UK carbon targets, the Committee on Climate Change estimates the average grid intensity of electricity generated in 2030 should be between 50g/kWh and 100g/kWh. As would be expected from generators with flexible gas-fired generation plant still required to complement low carbon generation and provide other system security services, SSE anticipates the grid intensity of its generation will be above this average. SSE’s investment in Keadby 2, a new combined cycle gas-fired generation station with world-leading efficiency, will reduce the carbon intensity of its gas-fired fleet. Keadby 2 is also expected to reduce carbon emissions for the overall GB electricity system by reducing the need for older, lower efficiency CCGTs as well as single cycle generation, all of which produce higher carbon emissions when running.
The Committee has also highlighted the importance of carbon capture and storage (CCS) technology in helping the UK to achieve its carbon emissions targets. SSE has 10 years’ experience of working towards commercial demonstration of CCS technology in the UK and endorses the Committee’s view of its long-term importance.
More broadly, positioning SSE’s business strategy to realise carbon intensity ambitions requires the maintenance of a stable and investable UK and Irish public policy framework that ensures the electricity mix required to deliver the countries’ carbon targets. In particular, it is critical the UK government provides clarity around the timing and frequency of future Contracts for Difference allocation rounds and budgets for delivering low carbon generation as well as a robust carbon price signal out to 2030. In Ireland, a new renewable support scheme will be essential to deliver a wider range of renewable technologies, including offshore wind.
Carbon intensity ambitions based on future generation portfolio
SSE’s 2030 ambition is based on modelling of a number of scenarios in which it develops, constructs and operates the majority of its existing electricity generation development pipeline. However, the makeup and resultant carbon intensity of SSE’s electricity generation portfolio will fluctuate depending on the requirements of electricity customers, and of the UK electricity system as a whole and whether SSE deems itself the best owner of assets it has developed or of assets which it may have the opportunity to acquire.
Over a period of 12 years, it is possible – perhaps even likely – that the requirements of electricity customers and of the electricity system as a whole will result in some departure from the central scenarios as they appear in 2018.
As a company committed to ongoing disclosure of climate related data, SSE will continue to report its carbon emissions (including g/kWh) and its performance in managing climate change risks and opportunities, through its annual report, its participation in CDP’s carbon disclosure activities, and future enhanced disclosures in line with TCFD recommendations. SSE will maintain transparency on its progress towards its carbon intensity ambitions and continually assess the impact of developments in the electricity system, changes in electricity generation technology, public policy and SSE’s strategy. This reporting will enable investors and other stakeholders to assess whether SSE’s actions are consistent with the company’s vision of being a leading provider of energy and related services in a low carbon world.
A new carbon intensity ambition for 2030
Mindful of the considerations in setting future carbon intensity ambition, SSE is now setting a new, longer term ambition for the carbon intensity of the electricity it generates:
SSE aims to reduce the carbon intensity of its electricity production by a further 50% by 2030, based on 2017/18 levels.
This means that SSE’s electricity generation carbon emissions are now forecast to be around 150 gCO2e/kWh by 2030, which also represents a 75% cut based on its original 2006 baseline. This target is consistent with the Paris Agreement.
Working towards a science based carbon target
While the carbon emitted from SSE’s electricity generation activities is its most material impact, there are other activities across the company’s value chain (e.g. electricity transmission, distribution and supply chain) that contribute to SSE’s total carbon emissions.
SSE’s current 2020 carbon intensity target is supported by additional targets to address further carbon emissions across the SSE group. For example, the reduction of carbon emissions relating to losses on the electricity distribution networks by 3% between 2015 and 2023, SSE is working towards setting a comprehensive science based target and will outline further targets that relate to these other emissions before the end of the next financial year (March 2020).
SSE plc
May 2018