Electricity

Environmental Impacts of Electricity

The electricity industry is one of the world’s heaviest contributors to greenhouse gas emissions because it still relies substantially on fossil fuels. Currently, 35% of worldwide greenhouse gas emissions come from the generation and transmission of electricity, as two-thirds of the global mix of electricity production is fuelled by coal (39%), natural gas (22%) and oil (5%). Global demand for electricity is constantly increasing because it parallels the growth of the world population and of the rising living standards in developing countries.

This high impact intensity framework covers all of the activities related to and supplies required for electricity from power generation, storage, transmission, network operation to retail. In the value chain, the electricity generation step concentrates the biggest environmental impact.

As energy utilities often manage several types of energy, such as gaseous, liquid and solid fuels and biofuels, the Electricity framework is completed by two other energy frameworks: Fuel (insert link) and Heat (insert link). For instance, gas-fired power plants are covered by this framework, as natural gas exploration, extraction, network operation and retail is covered by the Fuel framework.

How the NEC measures the impacts of electricity generated

In brief, the methodology used to calculate the environmental impacts of electricity is based on 3 components: the climate NEC component makes 50% of the NEC score and the other 50% is equally weighted between ecosystems/ biodiversity and resources/waste impacts.
Each component measures the environmental performance per kilowatthour, kWh, of electricity, as follows:

CLIMATE

Greenhouse gases emissions factor
in g CO2-equivalent per kWh

BIODIVERSITY

Species depletion in points
per kWh on a log scale

WASTE

Radioactive and non-radioactive waste in ecopoints
per kWh on a log scale

Resulting average NEC scores by type of generation technology

How the NEC measures the impacts of electricity managed

The NEC of the stored, transmitted, distributed or sold electricity is simply resulting from the power generation mix. When unknown, area or country default electricity NEC are given based on each national generation mix, as illustrated below:

Smart grid systems, energy efficiency services or additional renewable source integration can also be converted into positive incremental NEC (bonus).

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WHAT IS THE NEC METRIC?

Designed to inform and empower investment decision makers, it uses physical data from across the whole value chain to provide a snapshot of an activity’s net environmental contribution and it can be applied at a company, portfolio, index or product/source level.

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WHY THE NEC METRIC?

The NEC evaluates the impact of industry activities based on environmental issues including climate change, water and biodiversity impacts.
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