Yes, we consider Centrica’s plan to be aligned with the Paris Agreement to limit global warming to well below 2°C and pursue efforts to limit it to 1.5°C above pre-industrial levels. We fully support ambitious national climate targets and have set a net zero target for our Scope 1 and 2 emissions by 2040, a full decade ahead of the global 1.5°C goal of net zero by 2050. Our interim goal of a 50% reduction by 2032 aligns closely with the 1.5°C pathway, reflecting our significant control over these emissions. Scope 3 emissions are more challenging to decarbonise due to the limited control we have. Our long-term goal to help customers achieve net zero by 2050 aligns with UK and European commitments to limit global warming to 1.5°C. In the short term, our 2030 target aims for a 28% reduction in GHG intensity of customer energy use from 2019 levels, equating to a 27% absolute reduction, which is broadly consistent with a well-below 2°C pathway. We recognise this falls short of the 1.5°C pathway, which requires closer to a 40% reduction by 2030. Our view is that the UK is currently not on track to achieve this level of decarbonisation due to challenges in decarbonising heating. We’re taking action to address this gap and help accelerate further reductions and we see the 40% reduction by 2030 as a stretch goal which drives our investments and advocacy in this area. For more detail, please see Section 3: Metrics and Targets of our plan.
Centrica’s capital allocation strategy is fully aligned with our Climate Transition Plan, which is integrated into our overall strategic planning process. Our resourcing plans are embedded within our financial plans and balance sheet, ensuring we are well-capitalised to support necessary investments. Our Green Focused Investment Strategy, introduced in 2023, aims to allocate over 50% of our total investment to green activities between 2023 and 2028, focusing on supply security, flexibility, renewable generation, and customer initiatives.
The Science Based Targets initiative (SBTi) currently does not have a sector-specific decarbonisation approach for the oil and gas industry, which means they are unable to validate our targets as 1.5°C aligned at this time. Despite this, we are committed to ensuring our targets are scientifically robust. We use the SBTi’s cross-sector absolute reduction method along with other credible methodologies and pathways to assess our target alignment and ensure they are based on science.
We have set robust Climate Ambitions to support and deliver our Climate Transition Plan, covering our entire business and addressing key decarbonisation levers to drive progress towards our net zero targets. Progress will be monitored at the management level and reported to Executive and Board Committees three times a year. This allows these ambitions to serve as key non-financial KPIs for decision-making and enables course corrections as needed. The ambitions will be reviewed in detail during an annual performance assessment, considering our progress and key dependencies beyond our control and the appropriateness of the ambition. If concerns arise, potential out-of-cycle reviews will be conducted. Performance, along with any revisions to the Climate Ambitions, will be reported annually in our Annual Report & Accounts.
We recognise that in the near term our forecast emissions may exceed a well below 2°C pathway before rapidly reducing in the 2030s in line with 1.5°C. As we play our role in enabling our customers and communities to decarbonise in a secure and affordable way, we need to manage trade-offs which at times see our own footprint increase. This is particularly true in the near-term as renewable solutions are supported by more traditional technology to ensure an orderly transition. For example, we are investing in rapid response gas engines. These engines are crucial for balancing the power system as intermittent renewable energy sources grow, and whilst they currently use natural gas, they have the potential to switch to cleaner fuels like biomethane or hydrogen. Despite these short-term increases, we remain committed to significantly reducing our emissions in the long run.
The majority of our emissions come from heating homes, making the decarbonisation of heat a top priority for us. This remains a sector-wide challenge, and while we play a key role in driving change, we cannot move significantly faster than national markets. We are committed to helping customers transition from gas-based heating to low-carbon alternatives, primarily heat pumps, through our dedicated business unit and market-leading propositions that reduce the cost and performance gap between gas and electric heating. Achieving the necessary adoption rates to decarbonise in line with the Paris Agreement requires strong policies to incentivise customers by overcoming cost and planning barriers. Despite the nascent market, we aim to sell 20,000 heat pumps per year by 2030, recognising the need for continued policy support and acknowledging that different buildings and locations may require variations in low-carbon heating solutions. While we have made significant progress, installing 3,000 heat pumps in 2023, the UK market has not developed as required for rapid decarbonisation at scale, prompting us to amend our previous ambition set in 2021. We still see this as a stretching ambition but one we are set to deliver. We are technology agnostic and open to selling and installing all forms of lower-carbon heating solutions.
The energy transition cannot be achieved by a single entity; it requires collaboration with partners, customers, colleagues, and governments to drive widespread change. Our plan relies on key actors fulfilling their roles. For instance, decisive and rapid action from the government is essential to establish key policies and support mechanisms that stimulate low-carbon markets. We need customers to engage in the transition and be open to adopting new technologies in their homes. Additionally, the energy system must be upgraded, such as enhancing the electricity grid to support the electrification of transport and heating and developing hydrogen infrastructure to create a commercially viable market.
Our primary concern and priority is ensuring a Just Transition—one that leaves no one behind and maximizes benefits for all. Therefore, our plan is comprehensive and transparent about the challenges we face. We will continue to advocate for progress and highlight areas where additional pressure is needed
We prioritise abatement over removals and in line with best practice we expect residual hard-to-remove emissions to be significantly less than 10% of our base year emissions. We aim to reduce more than 95% of our Scope 1 and 2 emissions through carbon abatement and aim to reduce customer emissions to 10% or less before using offsets.
While we do not currently use carbon credits, when appropriate (in time for deployment in the late 2030s), we’ll develop a strategy to achieve high quality nature-based or engineered carbon removal projects. Our in-house carbon trading team will manage these projects according to our Carbon Offset Quality Framework.
Our stance on CCUS is that the UK should leverage its abundant natural geological formations for carbon dioxide storage. We recognise that achieving net zero emissions, especially in high-emission sectors, necessitates negative emissions technologies. We support public policies that foster sustainable business models for all aspects of the CCUS value chain, including capture, transport, utilisation, and underground storage. Our joint venture, Spirit Energy, envisions contributing significantly to the UK’s net zero goals by converting legacy assets that might otherwise become stranded. For example, the Morecambe Hub and its depleted gas reservoirs have the potential to become one of the UK’s largest carbon storage hubs, capable of storing up to one billion tonnes of carbon and meeting 50% of the UK’s 2035 carbon storage target. Additionally, we are exploring the use of CCUS to decarbonise our Whitegate power plant in Ireland.
We believe that hydrogen will be used as a low-carbon alternative fuel for power generation, both for baseload and flexible needs. For instance, new gas peakers in Ireland, set to go live in mid-2025, can run on up to 20% hydrogen, and Brigg Energy Park will be the first UK power station partially fuelled by hydrogen. Additionally, we plan to convert our large storage facility, Rough, to store green hydrogen to manage seasonal production and demand fluctuations, subject to securing the appropriate regulatory framework to unlock the investment. In the long term, Rough could become Europe’s largest hydrogen store. Hydrogen could also be blended into the existing gas grid, and we plan to market hydrogen to industrial off-takers, depending on our success in Hydrogen Allocation Rounds. Our assumptions will be updated based on the viability and progress of these initiatives.
Government support for hydrogen in both the UK and Ireland is a significant dependency for our plan. We are active advocates for policies and support models that enable the development of markets and infrastructure necessary for the production, transportation, and consumption of hydrogen at scale. Effective regulatory support will reduce uncertainty and accelerate capital deployment, fostering the growth of the nascent hydrogen market.