Assessing Corporate Transition Plans using a Production Asset-Based Planning Approach

Abstract

Corporate transition plans (TPs) are increasingly seen as crucial components of assessing the compatibility and credibility of corporate commitments to meet climate targets. However, robust and transparent methods to assess the credibility of disclosed TPs are lacking. Here we propose a novel open-source methodology for assessing the credibility of corporate TPs based on asset-level data to estimate CO2 emission trajectories: the production asset-based planning approach (APA). We test this approach on a sample of ten electric utilities and ten steel companies and find that only three of the companies' stated TPs are compatible with Paris-aligned benchmarks. We also find that 12% and 42% of existing carbon-intensive assets operated by electric utility and steel companies, respectively, will require reinvestment before 2030, posing significant carbon lock-in risk. Applying this method will ensure that TPs can be assessed in a robust manner and help drive CO2 emission reductions towards achieving the Paris climate target.