The U.S. Power Sector and Climate Policy

An InfluenceMap Report

April 2022

The U.S. Power Sector and Climate Policy

See coverage in GreenBiz, Bloomberg, Grist, The Washington Post, Kansas City Star, New Jersey Spotlight News, Charlotte Business Journal, and WABE.

This report analyzes the climate policy engagement of the 25 largest investor-owned energy utilities in the U.S., covering over 80% of the total market cap of publicly listed utilities. The results show a wide spectrum of engagement with climate policy, indicating a highly fractured sector in terms of climate policy positioning.

The U.S. has reached a critical juncture for climate policy. Despite growing calls for oil and gas expansion in the midst of an international crisis, it is widely understood that the U.S. risks falling short of its nationally determined contribution to the Paris Agreement. Utilities carry significant clout in policymaking processes, particularly at the subnational level, and thus have a critical role to play in advancing the legislation and regulation needed to mitigate climate change.

▪ The report finds that only four of the 25 utilities are engaging positively with climate policy, while nearly half of the 25 analyzed companies continue to demonstrate negative engagement that is misaligned with delivering the goals of the Paris Agreement. The analysis names Edison International, Exelon Corporation, and Public Service Enterprise Company as the top three leading utilities for climate policy engagement and identifies Southern Company and CenterPoint Energy as the laggards of the sector.

▪ The analysis finds a clear correlation between the success of individual states in passing climate policy, and the climate policy engagement of their largest utilities. Many states that have failed to deliver meaningful climate policy have a predominant utility with a low InfluenceMap Organization Score.

▪ Based on this analysis, at least 14 U.S. states are likely to face high levels of resistance from their largest utility in their efforts to pass climate policy. The largest utility in these states has a history of highly negative engagement and, barring a change in its positioning, may continue to obstruct climate policy going forward.

▪ Overall, the U.S. power sector is not embracing the energy transition as quickly as the EU power sector. U.S. utilities are significantly underperforming when compared to EU utilities which, by contrast, make up many of the highest-scoring entities in InfluenceMap's database. This finding correlates with the state of climate policy in the EU, which has made considerably more progress in regulating and reducing emissions from the power sector.

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To rapidly make progress on cutting carbon, we must clean up the power sector. But too many utilities are still delaying acting. This new report from InfluenceMap names names, showing which utilities are leaders and which are laggards.

Leah Stokes, Associate Professor, University of California, Santa Barbara

With a quarter of U.S. emissions stemming from the power sector, and its potential for decarbonizing the economy, effective climate policies must be enacted to promote a rapid shift away from fossil fuels for power generation. Investors are increasingly concerned about the impacts of climate disruption on their portfolios, on the health of the economy and on society broadly. Energy utilities – and their trade associations – must align their lobbying with the goals of the Paris Agreement to hold warming to 1.5oC. This report makes it clear that most are not on the right trajectory, and that needs to change.

Christina Herman, Director, Climate and Env. Justice Program, ICCR