AES’ vision for a net-zero carbon future and how we’re getting there
AES’ vision for the future is a world with net-zero carbon by 2050. The Climate Scenario Report we recently published shows that we have the vision for a net-zero future, and the strategy and energy solutions that are critical for getting there.
Our new report builds from our ground-breaking report in 2018 as the first publicly-traded US power company to release a climate scenario report in line with Task Force on Climate-related Disclosures (TCFD) recommendations. Our new report continues to lead the industry in climate-related disclosures, with expanded analysis and an in-depth assessment of the potential risk from extreme weather events over the next 20 years on our portfolio. Our stress tests and analysis demonstrate that our portfolio is resilient under a range of climate scenarios, including the impacts of transition and physical risks.
At AES, we’re taking decisive, measurable action to both transform our own portfolio and create innovative solutions that enable others to rapidly decarbonize as well.
A greener energy future
- In 2021, we expect to add 3,000 – 4,000 megawatts (MW) of renewables to our portfolio through Power Purchase Agreements signed.
- By 2025, we will reduce coal-fired generation to less than 10% of our portfolio on a proforma megawatt-hour basis[1], accelerating our original commitment of 2030 by 5 years.
- By 2040, we’ve set a new target to achieve net zero carbon emissions from electricity sales, one of the most ambitious announcements to date by any major company in our industry that owns a significant portion of thermal generation today
- Beyond these new targets, we reaffirmed our commitment to be net zero by 2050 for all business scopes, including the carbon emissions associated with the use of our energy products by our customers. We also added an intermediate carbon intensity target for 2030, following the Sectoral Decarbonization Approach outlined by the Science Based Targets initiative.
Our vision
Not only do we believe it’s critically necessary to achieve the Paris Agreement goal to limit the average rise in global temperatures to well below 2°C above pre-industrial levels, we believe it’s both possible and affordable. We have the tools we need to make significant progress toward economy-wide decarbonization by 2050 and create an electrified renewable future, starting today. With the appropriate policy structures, such as a price on carbon, and advancements in key technologies such as carbon capture and hydrogen production, society can bring a net zero energy system to life.
Four ways the energy future in 2050 will differ from today
Based on new industry leading research and models, we anticipate the future energy system will be highly electrified. Today, carbon free electricity represents roughly 7% of global primary energy demand. In 2050, we believe that will shift closer to 90% as renewably generated electricity becomes the primary energy source for virtually all activities. Difficult to electrify industries can largely be served by synthetic fuels derived from green hydrogen combined with other inputs such as captured carbon or nitrogen. Fuel synthesis technologies have existed for decades; scaling these technologies with clean energy and green inputs is key to decarbonization.
We anticipate that flexible loads will become increasingly prevalent. Renewable power generation capacity 3-4 times the size required to serve today’s traditional power loads will allow for peak power demand to be met with existing renewables and storage technologies, with hydrogen production and fuel synthesis occurring during periods of excess renewable generation. We also see a role for low deployment, high value gas infrastructure in providing flexible capacity during the increasingly limited occasions in which renewable resources cannot directly meet demand. Carbon capture technology will likely advance to enable either capture of emissions at the plant, or production of carbon neutral renewable synthetic natural gas for these applications.
AES’ role in this transformation
Together with our customers and partners, our greener, smarter strategy for the future is well-positioned to help turn this vision for the future into a reality. The product offerings we launched in 2020 comprehensively support the four key components we envision in a future energy system that is highly electrified, interconnected, digital and powered by smarter, greener energy solutions.
Together, we can achieve a 100% carbon-free energy future.
[1] Based on annual generation in MWh from the portfolio as of, or expected by, the relevant date, adjusted for: (i) (+) generation from new assets added to the portfolio; and (ii) (-) actual generation from announced asset sales or retirements.