Report outlines Biden, utility clash over 100% clean power

Source: By Kristi E. Swartz, E&E News reporter • Posted: Wednesday, December 2, 2020

Most of the nation’s largest investor-owned utilities aren’t on track to meet President-elect Joe Biden’s goals to decarbonize the power sector by 2035, according to a new analysis.

The companies may have set targets to remove all or most carbon from their generating fleets by 2050, but they are moving at a pace that’s too slow to align with Biden’s proposal, says the report released today by the Energy and Policy Institute, a pro-renewable-energy watchdog group.

This sets up the utilities for a “potential clash” with the next administration, according to EPI — one that “might challenge the green image the utilities have been attempting to cultivate in recent years.”

Electric companies have been vocal about calling Biden’s plan ambitious, but several CEOs have said they are willing to work with the incoming administration (Energywire, Oct. 30). They see opportunities to accelerate electric vehicle deployment and to expand emerging carbon-free technologies but argue that the timeline is aggressive.

“There’s a reason we chose 2050,” said Xcel Energy Inc. CEO Ben Fowke, who is also chairman of the Edison Electric Institute, the trade group for investor-owned utilities. Fowke was speaking during Xcel’s quarterly earnings call in late October.

A September report from Deloitte pointed out “significant gaps” between electric companies’ net-zero targets and their plans to close fossil fuel plants, add renewables, and modernize the grid to support clean energy and distributed technologies. Many lack detailed road maps to their carbon-neutral futures, the report said.

EPI added its own analysis to that report, criticizing the utilities’ carbon-cutting road maps. The organization said many utilities will continue to rely on natural gas, for example, or have been slow to close the remaining coal-fired plants on their grids.

EPI also highlighted an ongoing tug of war involving large energy companies that own and operate individual power providers in different states. The parent company may have set lofty emissions reduction targets, but that goal may not show up in the electric utilities’ long-term energy plans.

What’s more, the companies continue to operate using an arcane business model that supports capital investment in large, centralized power plants instead of distributed generation and incremental investments, the report pointed out, singling out Duke Energy Corp. and Southern Co. as leading the utility sector in carbon pollution last year.

“As one of our nation’s largest energy providers, Duke Energy is committed to taking a leadership role in addressing the serious issue of climate change,” company spokesperson Phil Sgro said in an email to E&E News. This includes net-zero methane emissions in its natural gas business by 2030, he said.

Duke also has a net-zero carbon goal for 2050. It plans to hit that target through significant investments in renewable energy and storage and critical infrastructure, as well as by developing next-generation clean energy technologies, Sgro said.

“Doing so while maintaining affordability and reliability for our customers is critical, particularly as we work with our customers and communities through this challenging time,” he said.

To chart out carbon-cutting trajectories, EPI looked at 22 investor-owned utilities that had the highest carbon emissions, based upon a 2018 ranking from M.J. Bradley and Associates. M.J. Bradley gets that information from EPA data.

EPI calculated the annual rate at which the utilities were removing carbon from their systems to determine whether they would align with Biden’s goals.

The group’s analysis shows that three of the nation’s major utilities have aggressive carbon-cutting goals but are removing emissions at less than 2% a year. American Electric Power, Duke and Southern also have lofty 2030 targets, but their moves to reduce carbon are far slower than needed to meet Biden’s proposed requirements, EPI’s analysis shows.

“In general, it would be an acceleration of net zero for the United States and for the power sector,” said Southern CEO Tom Fanning in an October interview with E&E News, referring to Biden’s plan (Energywire, Oct. 30). “We stand ready to cooperate with whomever is in office as we have for decades to move this country forward.”

Achieving net-zero carbon by 2035 is doable, Fanning said, but it would require “dramatic changes” to the energy landscape in the meantime.

The question, he said, becomes: What do those changes do to the price of energy, and how does that flow through to customers’ wallets? What’s more, any energy policy — whether a carbon tax, cap-and-trade proposal or direct regulation — should be balanced with other macroeconomic policies, he said.

“We should never look at policy in a silo; we need to be holistic in our thinking about that,” Fanning said.

There are some standouts, according to EPI. NiSource Inc.’s Northern Indiana Public Service Co. (NIPSCO) said it will cut carbon emissions by more than 90% from 2005 levels by 2028. It is reducing emissions by an aggressive 8.14% a year, according to EPI’s analysis, and is on track to meet Biden’s goal.

NIPSCO made headlines two years ago when it said it would shutter all of its coal-fired power plants and replace much of the electricity with renewables (Climatewire, Sept. 21, 2018).

Despite Fowke’s comments that Biden’s plan is a “stretch” for his and other utilities, Minneapolis-based Xcel is on track to cut emissions by 5.91% a year through 2030, according to EPI’s analysis.

Xcel was out front in the utility sector with a 100% carbon-free 2050 goal and has been on a faster pace than its Midwestern peers to accelerate to clean energy. The company announced last year that it would exit coal a decade earlier than planned (Energywire, May 21, 2019).

Wisconsin-based WEC Energy Group Inc., owner of We Energies, has a net carbon-neutral goal for 2050, with interim plans to cut emissions 70% from 2005 levels by 2030. It is curbing emissions by 5.22% a year, according to EPI’s analysis.

EPI does not list individual donors but does not take money from private companies or trade associations, its executive director confirmed to E&E News. Money comes from foundations with interests in climate change mitigation and environmental protection.

Reporter Miranda Willson contributed.