Iberdrola: Leading the energy revolution with science-based targets

To find out more about how Iberdrola is ramping up its sustainability efforts, the Science Based Targets initiative (SBTi) sat down for a chat with Roberto Fernández de Albendea, the company’s Director of Responsibility and Corporate Social Responsibility.

What is Iberdrola’s science-based target and why did you set it?

We updated our science-based targets in 2020 by committing to reduce absolute scope 1, 2 and 3 GHG emissions by 43% by 2030 from a 2017 base year, to increase our decarbonization ambition to limit warming to 1.5°C. This ambitious target also supports our goal of being carbon neutral in Europe by 2030 and worldwide by 2050.

Iberdrola is fully committed to the Business Ambition for 1.5°C campaign and has developed a business strategy consistent with limiting warming to 1.5°C, and a goal for a fully decarbonized energy sector by 2050 is at the center of this transition. Iberdrola has also supported the Race to Zero campaign and the urgency to bolster climate commitments. In addition, the company has taken the Just Transition and Decent Jobs Pledge, encouraging companies to follow International Labour Organization’s core labour standards.

What are the key components of your decarbonization strategy?

As a global renewable energy industry leader, we play a significant role in global decarbonization. Iberdrola began transforming its business model more than 20 years ago when we opted for a sustainable, safe and competitive energy model based on decarbonization. We have closed 17 coal and fuel oil thermal power stations since 2001 and reduced our emissions intensity (gCO2/kWh) by over two thirds since 2007.

The electrification of the economy is playing a pivotal role in replacing fossil fuels in power, transport and heating. Therefore, we seek to guarantee affordable and accessible energy across our three global businesses: networks, renewables and wholesale and retail. We are also driving transformation in these areas:

• Tripling our currently installed renewable capacity to 60GW in 2025, and then reaching 95GW in 2030. In 2025 the clean energy portfolio will be divided between onshore wind (26GW), offshore wind (4GW), solar (16GW) and hydro (14GW).

• Networks will be critical to the electrification of the economy and the industrial revitalization of all territories. Planned investments in networks will exceed €27 billion by 2025 and the regulated asset base will reach €47 billion in 2025, after a 1.5-fold increase from 2019.

• The company will increase the number of contracts with customers worldwide to 70 million by 2030, up from 43.8 million at present, offering intelligent and innovative digital solutions. For residential customers, products will support energy storage, heat pumps, self-production and electric mobility. For industrial clients these will include smart solutions, electrification processes and green hydrogen.

What short-term climate actions are you progressing?

We are making progress on our plan to invest €75 billion in leading the energy transition by 2025, and plan to spend an additional €75 billion by 2030. The company is rolling out flagship projects to achieve our global strategic plan.

• Iberdrola is going to build a macro offshore wind complex in UK waters, the East Anglia Hub, our biggest offshore wind project worldwide. The project, with an investment of £6.5 billion, will start in 2022 and is expected to take four years. It will supply clean energy to 2.7 million British homes.

• Oitis is a large onshore wind farm project in Latin America. The project, scheduled for 2023, consists of 12 wind farms that will provide an installed capacity of 566.5MW once commissioned. The construction will contribute to the economic and social development in Brazil, creating more than 1,500 jobs, supplying electricity to around 4 million people, and preventing 1.2 million tonnes of CO2 emissions over 20 years.

• The IEA reports that the global demand for hydrogen for use as a fuel has tripled since 1975 and reached 70 million tonnes a year in 2018. It is a clean energy source that only emits water vapor and leaves no residue in the air, unlike coal and oil. This is why green hydrogen has been identified by Iberdrola as a key opportunity niche area for decarbonization where electrification is not possible or competitive, and to develop new products and services through R&D and innovation. In line with European recovery plans, Iberdrola plans to install 600MW by 2025 increasing to 800MW by 2027 together with Fertiberia. In 2020 Iberdrola developed the largest complex in Europe in Puertollano (Ciudad Real) with a 20MW electrolyser and an investment of €150 million for green hydrogen for industrial use.

What is your biggest challenge to decarbonization and how are you addressing it?

The identification, analysis and management of the risks arising from climate change is key in defining the process of corporate governance. We face physical risks posed by climate change and are keen to be climate action leaders.

Our Climate Change Policy, updated in 2020, establishes the company’s goals for decarbonization and highlights how the company is working to decarbonize its energy model by integrating climate change into internal decision-making processes. We also externally report on climate change. For instance, Iberdrola was one of the first companies to publicly commit in 2017, and implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Moreover, the company created an internal multidisciplinary working group to coordinate all the work performed in this area.

Can you provide more detail on how you engage your supply chain on climate action, and support them to set science-based targets?

In its firm commitment to fight climate change, Iberdrola aims to extend the effort to its suppliers to comply with the emission reduction objectives. During 2020, the Purchasing Division broadened the use of the new supplier sustainability evaluation model. It is a detailed and rigorous scoring system as it includes the supplier’s performance in wide-ranging areas: identification of goals linked to the Sustainable Development Goals, management of risks resulting from climate change, circular economy strategy and due diligence in human rights, etc. The supplier must provide evidence and supporting documentation for their claims and performance. A set of questions are included to understand the supplier’s climate change performance, including details on direct and indirect emissions, certification schemes and targets and commitments. Furthermore, we are working with key suppliers by teaching and providing them with tools and frameworks to enhance their emission reductions.

The decarbonization of power is vital to limiting the impact of global warming and maintaining a habitable planet for humankind. Making deep electricity sector emissions cuts by 2025 and achieving 100% clean power in the next 15-20 years is essential if we are to halve emissions by 2030 and unlock net-zero before 2050.

Iberdrola is a global power leader and one of more than 1000 companies worldwide that are committed to aligning with 1.5°C and net-zero through the SBTi’s Business Ambition for 1.5°C campaign.