Vattenfall

Through a strategic decision to divest from lignite and expand its renewable capacity, Vattenfall reduced its scope 1 and 2 emissions intensity by 80% from about 430 gCO2/kWh in 2015 to 95 gCO2/kWh in 2020. This reduction is aligned with the company’s future 1.5°C pathway. Vattenfall’s emissions intensity between 2021 and 2025 is projected to decrease at a rate which is aligned with the company’s 1.5°C pathway.

Vattenfall has strong climate governance, the company implemented board-level oversight of climate change, has a member of the board with significant expertise in the low-carbon transition and severed any links between fossil fuel power generation growth and executive compensation.
The company has a comprehensive transition plan called CO2 roadmap. The plan was informed by climate scenario analysis that considered the implications of a 1.5°C scenario. The company can improve its performance on scenario analysis by publishing financial information such as value-at-risks for their investments.

Vattenfall is in direct engagement with EU policy makers, represented on the Board of WindEurope, as well as active in the working groups of national and EU climate-positive trade associations. The company supports several relevant climate policies, including cap and trade scheme and a reform of the EU Emissions Trading System (EU ETS) which is a cornerstone of the EU’s policy to combat climate change and its key tool for cost-effective reduction of emissions.

In 2020 Vattenfall has invested almost USD 50 million in research and development (R&D) of low-carbon technologies. This accounts for about 2% of its total capital expenditure (CapEx) which is below the expectation that electric utility companies should be investing 5% of CapEx in low-carbon R&D. While focusing on batteries, machine learning and digital inspections, Vattenfall is also involved in several innovative collaborations working on new projects, such as fossil-free steel and fossil-free hydrogen. The company can improve its reporting by disclosing a breakdown of investment by technology type, highlighting the investment in non-mature technologies.

Though Vattenfall commits to phase out coal by 2030, the closure dates for German assets remain unclear. Considering some visible investments in coal and gas generation in 2020, with the absence of a clear timeline of the reduction of the fossil-based capacity, transition plan is not credible enough. The company can improve its transition plan by publishing the data on future generation mix including short-term and mid-term milestones. Additionally, the company is expected to reveal its planned investments in low carbon technologies over the next 5 years.

Vattenfall set net zero target for 2040. Interim scope 1 and 2 emissions intensity reduction targets along with scope 3 reduction targets are set for 2025 and 2030. Though the Science Based Targets initiative has verified that scope 1 and 2 reduction target is consistent with a 1.5°C pathway, the company is being assessed against the ambition of the IEA NZE scenario which requires the company to be net zero by 2035. There remains an opportunity for Vattenfall to increase by a factor of about 1.5 its targeted scope 1 and 2 emissions reductions to align with its 1.5°C pathway. The company is also expected to set a net zero target for 2035.

Vattenfall commits to reduce scope 1 and 2 emissions by 77.1% per kWh by 2030 comparing to 2017 and to reduce absolute scope 3 emissions by 32.5% within the same timeframe. The company plans to phase out coal by 2030 and become fossil free company before 2050.

Vattenfall is going to invest SEK 32bln (about USD 3.7 billion) in generation growth in 2021 and 2022, 71% of the investment (USD 2.6 billion) will be directed towards wind power, 6% (USD 0.2 billion) towards charging solutions, solar and battery projects, decentralised solutions and the HYBRYT project.

In 2020, Vattenfall made progress towards phasing out coal as tender to shut down the Moorburg coal-fired power plant was accepted in Germany’s coal phase-out auction. 98% of Vattenfall’s generation expenditure was in low-carbon electricity generation, 1% was invested in gas and coal generation.

In 2020 Vattenfall commissioned 1,560 MW of new renewables capacity. The absolute CO2 emissions target for 2020 was achieved as a result of lower coal-fired generation. However, more than 20% of Vattenfall’s capacity is thermal based, and coal is accountable for 8%.

Vattenfall’s plans to reduce emissions, expand its renewables portfolio and phase out coal are supported by relevant investments. However, continuous reliance on natural gas and absence of a clear thermal capacity reduction schedule is at odds with overall strategy to become fossil free company.