Introduction: Why the Power Sector and Why Now

The power sector is the single largest contributor to global greenhouse gas emissions, accounting for about 40% of global energy-related emissions in 2023. Decarbonizing electricity is therefore fundamental for achieving net-zero and enabling wider electrification of transport, heating, and industry. The Science Based Targets initiative (SBTi) has positioned itself as the global benchmark for aligning corporate climate commitments with science. In September 2025, SBTi released the first consultation draft of the Power Sector Net-Zero Standard, designed to provide sector-specific guidance. The consultation runs from September 2 to November 3, 2025, giving companies, investors, and policymakers a critical opportunity to influence the framework.

What SBTi Is and Its Role in Climate Accountability

The SBTi is a global partnership that helps companies and financial institutions set science-based emissions reduction targets. Founded by CDP, the UN Global Compact, WRI, and WWF, it ensures that targets are consistent with the Paris Agreement and aligned with limiting warming to 1.5°C. The new power sector standard builds on the Corporate Net-Zero Standard V2 and replaces the Quick Start Guide for Electric Utilities from 2020.

Why New Guidelines for the Power Sector

The power sector faces unique challenges and opportunities compared to other industries. The previous SBTi guidance was limited to generation intensity and did not fully cover transmission, storage, or retail activities. The new draft expands scope to the entire value chain:

• Strict timelines for phasing out unabated coal, oil, and gas generation between 2030 and 2040, depending on whether a country is OECD or non-OECD.
• Clarification on how natural gas will be treated, with limited exemptions for non-baseload capacity.
• A requirement for companies using biomass to source it sustainably by 2030.
• Stronger treatment of Scope 3 emissions in power trade and retail.
• Introduction of specific metrics to address transmission, distribution, and storage losses.

What the Draft Guidance Covers

The consultation draft sets out detailed expectations for target-setting:

• Power generation companies must commit to achieving net-zero by 2050, with interim goals set either by emission intensity or the share of low-carbon generation.
• Utilities are required to publish plans to phase out unabated fossil capacity with clear milestones.
• Transmission and distribution operators are expected to reduce network losses and commit to minimizing SF6 emissions.
• Storage operators will need to adopt efficiency targets to reduce losses.
• Companies involved in electricity trade and retail must increase the share of low-carbon electricity they purchase.
• All companies using biomass must ensure that 100% of it is sustainably sourced by 2030.

Activities and emissions in scope of the Power Sector Standard

Consultation Period and Timeline Moving Forward

The public consultation is open from September 2 to November 3, 2025. Feedback can be provided via survey, with options to respond to all or selected sections. After the consultation closes, SBTi will review and analyze all input and publish a summary of the feedback and how it has been addressed. The draft may then be revised and undergo technical review in collaboration with the Expert Advisory Group. A revised version will be re-released for pilot testing and a second round of consultation. Feedback from both phases will further shape the Standard. Before it becomes operational, the Standard must be submitted for approval by the Technical Council and adopted by the Board of Trustees.

This inclusive process ensures that the standard reflects operational realities while staying ambitious and scientifically robust.

Stakeholder Section: Implications Across the Value Chain

Companies: Must prepare for near-term interim targets with five-year milestones and plan the phased retirement of fossil fuel assets in line with OECD and non-OECD timelines.

Investors: Gain transparent benchmarks for assessing whether power sector strategies are aligned with the 1.5°C pathway, helping strengthen stewardship and engagement while assessing risks tied to fossil phaseouts and renewable expansion.

Policymakers: Can rely on the framework to ensure corporate actions reinforce IPCC and IEA pathways, serving as a complementary tool to strengthen national decarbonization policies and just transition planning.

Conclusion: A Milestone for Power Sector Transformation

The consultation draft of the Power Sector Net-Zero Standard marks a critical step in aligning the world’s most carbon-intensive sector with a 1.5°C pathway. By expanding scope to transmission, distribution, storage, and retail, and by setting clear deadlines for fossil phaseout, the draft raises the bar for climate accountability. With final adoption expected in 2025, stakeholders now have a decisive role to shape the framework. The power sector’s alignment with these guidelines will determine the pace and credibility of the global transition to net-zero. scope to transmission, distribution, storage, and retail, and by setting clear deadlines for fossil phaseout, the draft raises the bar for climate accountability. With final adoption expected in 2025, stakeholders now have a decisive role to shape the framework. The power sector’s alignment with these guidelines will determine the pace and credibility of the global transition to net-zero.

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