Adaptation of Existent Methods for Setting Decarbonization Targets in the Brazilian Power Sector Companies

Power sector companies are crucial in global decarbonization, accounting for 32% of global greenhouse gas emissions. Despite frameworks like the Science-Based Targets initiative (SBTi), there is ongoing debate about the adequacy of current target-setting methods and emissions allocation. This paper focuses on Brazil’s diverse, renewable-heavy energy mix and complex regulatory environment. It highlights the challenges faced by vertically integrated and predominantly renewable energy companies in meeting SBTi goals, despite their commitment to climate action. The study finds that the current SBTi methodology fails to accurately reflect the efforts of these companies, often penalizing them for emissions beyond their control. An alternative methodology is proposed that excludes unmanageable emissions, aligning targets more closely with operational actions while maintaining transparency in reporting. A key finding is that this new methodology avoids distortions caused by external factors, ensuring emissions reductions are tied to company actions. For renewable power utilities, the methodology emphasizes high-emission categories within the value chain, such as asset construction and maintenance, promoting deeper engagement in decarbonization. A new tool and scenarios were developed, showing that proposed adjustments enhance target accuracy, support global emissions reduction goals, and provide a more transparent and equitable way for companies to report emissions, distinguishing between controllable and external factors.