SSE plc is a publicly listed energy company headquartered in the UK with operations and assets in the UK and Ireland. In 2019, it had a revenue of US$9.02 billion and installed capacity of 10.53 GW (including purchased capacity). SSE's climate strategy is generally strong but is undermined by inadequate emissions targets and locked-in emissions from gas-fired power plants.
The company has a strong management approach to climate change and a detailed low-carbon transition plan. The CEO is responsible for the plan and his renumeration is linked to its success. The plan provides targets to reduce emissions intensity by 50%, triple renewable energy generation and provide network infrastructure that can accommodate 10 million electric vehicles by 2030. To finance this plan, SSE has issued green bonds, linked its revolving credit facility to environmental, social and governance (ESG) criteria and is dedicating 70% of capital investment to renewables and electricity networks from 2018 to 2023. SSE has conducted scenario analysis to inform its plan and intends to extend this analysis in the future.
SSE’s past emissions intensity performance shows it has made considerable effort to decrease its emissions. Its emissions intensity fell from 576 gCO2e/kWh in 2013 to 284 gCO2e/kWh in 2018. This impressive decline was driven by the replacement of coal generation with increased gas and wind generation.
SSE is shifting to a low-carbon business model across its organisation. In 2019, SSE Renewables was established to drive renewable generation growth and has 8 GW of new wind generation planned. If completed, wind will represent a significant proportion of SSE’s installed capacity, which stood at 10.53 GW in 2019. SSEN, SSE’s transmission and distribution business, is also upgrading transmission and distribution infrastructure to accommodate variable renewables and electric vehicles. SSEN helped launch Project Local Energy Oxfordshire, which is integrating smart grids with electric vehicles, local renewables, demand-side response and battery storage. SSE also provides smart city and distributed energy services through SSE Enterprise Utilities.
SSE’s target to reduce its emissions intensity from 284 gCO2e/kWh in 2018 to 154 gCO2e/kWh in 2030 is not ambitious enough for its well-below 2-degree pathway. However, SSE has committed to setting a science-based target. By establishing a science-based target that aligns with a well-below 2-degree or 1.5 degree decarbonisation pathway it can establish itself as a leader in the sector. Since SSE achieved a reduction in emissions intensity of 50% from 2013 to 2018, a more ambitious emissions target is eminently achievable. The company lacks short-term targets that can incentivise action. Neither does it have a long-term target (to 2050) to enable strategic consideration of the emissions that generation assets will create throughout their lifetimes.
SSE’s locked-in emissions from current and planned gas-fired electric power plants mean the company is expected to diverge increasingly from its decarbonisation pathway, and it will exceed its well-below 2-degree carbon budget. Although SSE successfully closed its last coal-fired power plant in March 2020, it is continuing to build gas power plants with lifetimes into the 2040s and 2050s. The company’s website states it will not develop ‘further gas-fired power stations unless they have a clear route to decarbonisation’. However, it is unclear how SSE intends to decarbonise gas assets and whether these will produce zero emissions.
SSE discloses few details about how much it invests in R&D on technologies with significant potential to mitigate climate change, with information only found on investment in energy storage R&D. However, the company is supporting other low-carbon R&D, such as a consortium to develop a zero-carbon industrial cluster using hydrogen as well as carbon capture and storage technology. Disclosing information on all its low-carbon R&D investments, including the amount invested in non-mature technologies, would provide a strong signal to stakeholders that the company is intending to decarbonise its whole business.
SSE is awarded a score of =. If the company were reassessed in the near future, its score would likely stay the same. The rapid reduction in emissions between 2013 and 2018 shows SSE can decarbonise at the rate required by its decarbonisation pathway. Its current emissions intensity target is not ambitious enough for its decarbonisation pathway, though this target is likely to be enhanced as SSE has committed to setting a science-based target. Additionally, SSE’s locked-in emissions from current and planned assets mean it is projected to strongly exceed its well-below 2-degree carbon budget. The company’s website also states that it will ‘not develop any further gas-fired power stations unless they have a clear route to decarbonisation’. However, there is no clear plan to add carbon capture and storage technology to existing and in-development gas generation assets, such as Keadby 2.
In 2018, SSE set three targets for 2030: reduce its carbon intensity by 50% to 154 gCO2e/kWh; triple renewable electricity generation; and build grid infrastructure to accommodate 10 million electric vehicles. No targets, such as a net-zero target, have been set for after 2030.
SSE plans to reduce its emissions intensity by tripling its renewable electricity generation. It is investing 70% of its planned capital expenditure in renewables and electricity networks and has a wind pipeline of 8 GW. To finance this, the company has issued green bonds and an ESG-linked revolving credit facility.
SSE is expanding its renewable portfolio, having established SSE Renewables in 2019 as a stand-alone business focusing on renewables growth. While it recently closed its last coal-powered station, the company is continuing to build new gas generation without clear plans for decarbonising these assets.
SSE made considerable progress in reducing its emissions intensity from 576 gCO2e/kWh to 284 gCO2e/kWh between 2013 and 2018. This was driven by phasing out coal generation and increasing gas and wind generation.
SSE is building on previous success in reducing emissions intensity with a clear transition plan. SSE has committed to disposing of its gas production fields. However, it is continuing to build new gas electricity generation assets without clear plans for carbon capture and storage.