Fewer than 25% of electric utilities globally would be profitable if they had to account for the environmental and potential financial costs of their carbon emissions, according to the Carbon Disclosure Project's Global Electric Utilities report, sponsored by a group of 225 institutional investors with $31.5 trillion under management.
Based on current emission levels, some U.S. electric utilities could face costs equivalent to 7% of revenue if they had to reduce emissions by 25%, as proposed by new regulations instituted in California. European companies were less carbon-intensive than North American or Asian companies, "largely due to the efficiency of European plants historically, given their access to fuel resources," according to the report.
The report "shows how far we have to go," said Clark McKinley, spokesman for the $228.7 billion California Public Employees' Retirement System, Sacramento, one of the report's sponsors. "We're concerned about how environmental issues and climate changes could adversely affect the value of our investments." CalPERS has more than $5.3 billion invested in utilities, including $3.7 billion in electrical utilities.
The report is based on data from a 2006 survey of 112 of the 265 largest electric utilities about the commercial risks and opportunities posed by climate change, energy costs and emissions, and related management responsibilities.
The institutional investors represented also included the $156.1 billion California State Teachers' Retirement System, Sacramento, Goldman Sachs and ABN AMRO.
