Utilities Beyond Fossil Fuels

Case Study: ENGIE

by | Feb 4, 2021

We take a look at ENGIE’s global coal phase-out, identifying fossil gas conversion risks and a lack of Paris Agreement alignment.

With countries across the world pledging to reach net zero emissions by 2050 and the need to limit global warming to 1.5°C, the full decarbonisation of the electricity sector has never been so essential and urgent.  

While governments are creating the regulatory environment necessary to achieve these objectives, this is not the only solution. The private sector must also accept responsibility and take affirmative action to adapt its objectives, behaviours and impact. 

Ember’s report published today examines ENGIE’s global strategy to transition from coal-fired power generation and assesses the associated limitations and risks.

ENGIE is a France-based global energy company that employs 170,000 people globally and is the world’s largest independent electricity producer.  It has approximately 100GW of installed electricity generation capacity. ENGIE announced in 2016 that it would stop producing electricity from coal.  At that time, coal accounted for 15% of its electricity mix compared to around 4% today.  Fossil gas is its primary electricity fuel source at 54%.  

ENGIE’s strategic reports, submissions and announcements have been analysed in the context of their regulatory, economic and climate risks and impact.

Key findings:

  • ENGIE announced in 2016 that it would stop producing electricity from coal, however it still does not have confirmed shutdown dates for 70% of its remaining coal-fired power fleet.
  • ENGIE’s goal is to have renewables providing 58% of its total power generation by 2030.
  • ENGIE intends to convert coal-fired plants to fossil gas and biomass as a key component of its global electricity transition.
  • ENGIE may source shale gas with high levels of methane emissions for its fossil gas plants.
  • ENGIE’s Science Based Target initiative (SBTi) accreditation is for 2°C. This is not aligned with the Paris Agreement objective of well below 2°C and, in October 2019, the SBTi stopped accepting target submissions for 2°C. 
  • Our assessment of the current outlook for climate policy, investor preferences and the cost of renewable electricity alternatives, such as wind and solar, identifies key risks in ENGIE’s transition strategy.

To limit global warming to 1.5°C above pre-industrial levels, the International Panel on Climate Change (IPCC) identifies the need for net zero emissions and a full decarbonisation of electricity generation by 2050.  In the power sector, this means that OECD nations need to end coal use for electricity production by 2030 and coal-fired power stations must be shut down in the rest of the world by 2040. 

The absence of a comprehensive coal phase-out schedule means that ENGIE’s current strategy is not aligned with the objectives of the Paris Agreement.  To mitigate its risks and meet its climate obligations, ENGIE needs to urgently address its coal phase-out plan and escalate investment in low-carbon electricity rather than commit to the deployment of fossil gas and biomass.

Sarah Brown, Senior Analyst, Ember, said: 

“ENGIE announced in 2016 that it would stop generating electricity from coal, but it still has no confirmed closure dates for 70% of its remaining coal-fired power plants.  And while ENGIE aims to make up 58% of its electricity generation by 2030, it also intends to convert coal-fired power plants to fossil gas and biomass.  This strategy comes with financial and environmental risks.” 

Lucie Pinson, Founder & Executive Director, Reclaim Finance, said:

“Has ENGIE recently given up importing shale gas into France to supply its power plants in Chile? This is a crucial question to which ENGIE’s shareholders are entitled to expect answers. While 23 French financial players expect ENGIE and their other coal customers to adopt a coal exit plan, many of them have also committed to align their activities with a carbon neutral or Paris Accord objective. Their own objective, already weakened by the fact that ENGIE has only a 2°C strategy, will be defeated if ENGIE does not turn coal phase-out into an opportunity to switch to renewables.” 

Please read the report for further information.

More posts you might like

Drax received more than £800m in biomass subsidies last year – with no obvious climate benefit

Drax received more than £800m in biomass subsidies last year – with no obvious climate benefit

Today’s financial report from Drax, Europe’s largest biomass power generator, shows the extraordinary scale of the public subsidies the company is receiving. 
India’s coal power declines for second consecutive year

India’s coal power declines for second consecutive year

COVID-19 demand shock may mean coal power has already passed its peak - if India delivers its wind and solar targets.
The Drax gas plant is dead – but others remain

The Drax gas plant is dead – but others remain

A UK commitment to phase-out gas by 2035 will avoid wasting more public money.
China’s surge in aluminium produced more emissions than Indonesia

China’s surge in aluminium produced more emissions than Indonesia

The aluminium sector in China needs an urgent wake-up call to phase out its captive coal capacity in just the next 10 years.