Decarbonizing Utility Supply Chains

Abstract

Sustainability and decarbonization are growing trends in the energy industry, and electric utilities are no exception to that trend. Currently, 29 out of the 30 largest utilities in the United States have some type of net‐zero carbon goal, committed to reducing and offsetting their emissions across Scopes 1, 2 and 3 by 2050, with some utilities committing to achieve it by 2030. Initial decarbonization efforts focused on meeting these goals by reducing direct (Scope 1) emissions from generation or indirect (Scope 2) emissions by purchasing emission‐free electricity. However, net‐zero commitments and growing requirements for emissions disclosure are driving emission reductions throughout other utility operations, in particular utility supply chains. Scope 3 emissions, or emissions driven by a firm's supply chain, make up the majority of emissions at most organizations. Because of this, companies across industries, including the utility industry, have increased focus and resources to begin reducing Scope 3 emissions to reach their net‐zero goals. Given the large number and diversity of utility suppliers—companies that supply utilities with a product or service—decarbonizing utility supply chains presents significant challenges for utilities and their suppliers. Despite these challenges, there has been significant progress in the last few years in identifying the best practices to ensure companies realize success in reducing Scope 3 emissions within their operations.