NextEra Energy

NextEra has publicly stated its intention to reduce its emissions by 67% by 2025 compared to the base year of 2005. However, base-year emissions data have not been reported, meaning the ambition of this target cannot be quantified. NextEra has an opportunity to demonstrate its climate ambition by reporting this base-year data. The company could improve its low-carbon alignment further still by extending the end date of its target. NextEra has already committed to emissions levels beyond 2033 through its current and pipeline (planned future) assets, so the company’s target end date should reflect this.

NextEra has achieved emissions reductions in the past. However, apart from a vague mention of reducing reliance on coal and oil, the company has not made any commitments to phase out fossil fuels. Persistent gas use means NextEra’s material investments are not aligned with the company’s well-below 2-degree-compatible pathway. NextEra already exceeds its decarbonisation pathway emissions budget, and any new thermal units run the risk of becoming stranded assets. The company has a significant low-carbon business through its subsidiary NextEra Resources, representing 64% of its 2018 generation. The company should shift all of its focus towards expanding this business segment in order to improve its low-carbon alignment.

NextEra’s climate governance is lacking. While the company does mention climate change and emissions reductions on its media-friendly website and in its sustainability brochure, these do not feature in the company’s formal annual reports, calling into question the credibility and strategic importance of its commitments. Further, NextEra has not undertaken any scenario analysis or stress testing, so the climate change risk to its business has not been quantified, at least externally. Scenario analysis would enhance the company’s low-carbon alignment by helping to identify potential stranded assets and plan for any sudden shocks or financial stressors.

NextEra has committed to reducing its emissions by 67% by 2025 compared to a 2005 baseline. However, it has not disclosed the baseline data needed to measure the ambition of this target. The company also intends to install 30 million solar panels by 2030, through Florida Power & Light Company, but the MW capacity increase of this initiative is unknown.

NextEra does not set out a road map towards alignment with the low-carbon transition.

Through its subsidiary NextEra Resources, NextEra has significant renewable capacity – wind and solar accounted for 25% of its total installed capacity in 2018. The company has closed coal assets in recent years, but it has made no commitment to a complete coal phase-out. Gas electricity generation still plays a major role in the business, with new gas assets in the pipeline.

NextEra has reduced its emissions at a low-carbon-aligned rate thanks to a decrease in its coal-fired electricity generation and increases in wind and solar generation. The company’s gas-fired electricity generation has remained consistent.

Decarbonisation is not embedded into NextEra’s strategy. While the company has a large renewables segment now, without a clear, quantified commitment to a low-carbon-dominated portfolio, the company leaves room for further fossil fuel expansion.