By - Jim Vess

Utilities are pledging zero-carbon emissions, but “the math doesn’t yet add up”

Energize Weekly, September 30, 2020

A growing number of investor-owned utilities (IOUs) have pledged to sharply reduce their carbon emissions or even cut them to zero, but two studies have found a gap between the pledges and those utilities’ performance.

Forty-three of the country’s 55 IOUs have emission-reduction targets, and 22 have net-zero or carbon-free electricity goals, according to a study by Deloitte’s Energy, Resources & Industrials industry practice.

The utilities say they plan to reach these decarbonization goals by closing coal-fired plants, adding wind and solar generation, as well as battery storage, and developing greater grid efficiency.

Deloitte, however, found that “there are significant gaps between decarbonization targets and the scheduled fossil-fuel plant retirements, renewable additions, and flexibility requirements needed to achieve full decarbonization.”

“The math doesn’t yet add up,” the consultants warned.

And the pace of emissions reductions appears to be slowing, according to a report by the Energy and Policy Institute, a non-profit focused on clean energy.

“Many of the nation’s largest utilities are planning to slow down their efforts to decarbonize their electricity generation over the next decade compared to the previous one, threatening the ability for the U.S. to respond to the climate crisis,” the institute’s study said.

The institute looked at the 22 biggest carbon dioxide-emitting IOUs and found 11 looked to be slowing their rates of carbon dioxide (CO2) emission reductions between 2017 and 2030.

Duke Energy and American Electric Power (AEP) both appeared to have slackened their pace. Between 2005 and 2017, AEP reduced CO2 emissions by about 4.58 percent a year, and from now to 2030, the cuts are projected to average 0.6 percent annually. Duke reductions for the same periods are 2.6 percent and 1 percent.

“The slowdown is surprising for several reasons: renewable energy sources like wind and solar are now the lowest-cost ways to generate electricity in vast swaths of the country, cheaper than coal and in many cases, gas,” the study said.

The U.S. Energy Information Administration (EIA) also projects the electricity sector’s emissions hitting a plateau “rather than acceleration as would be needed to achieve decarbonization by 2050,” Deloitte said.

The biggest emission reductions so far have come from closing coal-fired generating plants.

“Coal retirements are the low-hanging fruit for decarbonization as the rationale for this solution is primarily cost competitiveness,” the Deloitte study said. It estimated that 79 percent of the U.S. coal fleet is not competitive.

Between 2010 and 2019, at least 546 coal-fired power plants with about 102 gigawatts (GW) of capacity were closed, and at least another 17 GW of coal-fired capacity are slated to be closed by 2025, according to the EIA.

While there are no announced retirements for 74 percent of the country’s remaining 196 plants, with about 182 GW of capacity, 99 of those plants have been running in 2020 at more than 30 percent below capacity, according to analysis by BTU Analytics.

“Putting regulatory change aside, economic forces are likely to continue to force retirements from this subset of plants due to potentially declining financial performance among other things,” the BTU Analytics study said.

The regions with the most low-utilization coal-fired plants are the Southeast; the PJM Interconnection, serving mid-Atlantic and Midwestern states; and the Midcontinent Independent System Operator (MISO).

“There is a large gap between current coal capacity and scheduled retirements over the next eight years,” Deloitte said. 

Utilities have replaced coal-fired capacity with a combination of renewable generation (mainly wind and solar) and natural gas – mainly natural gas and that, the Energy and Policy Institute said, has contributed to the slowing of carbon-emission reductions.

Duke Energy, for example, reduced its carbon footprint between 2005 and 2017 by closing old coal-fired plants, but plans to add 9.5 GW of new natural gas by 2033, the Energy and Policy Institute said.

In September, the Southern Company released its plan for achieving net-zero carbon emissions by 2050, but the utility remains committed to using natural gas.

“Natural gas also continues to be an important, affordable fuel source for our commercial and industrial customers,” Thomas Fanning, Southern’s CEO, wrote in an introduction to the plan. “Unless and until technology emerges that can affordably and efficiently replace it, natural gas remains an appropriate and responsible fuel source.”

Alabama Power, a Southern subsidiary, for example, plans to build 1.9 GW of new natural gas-fired generation. It is also seeking to build up to 400 megawatts of solar.

“Natural gas plant construction is booming to fill the gap left by current and anticipated coal retirements,” Deloitte said. “However, the emissions from these plants will also need to be eliminated or offset to reach decarbonization goals.”

Between 2007 and 2019, Southern’s CO2 emissions were cut 44 percent, the company said, as coal-fired generation dropped to 22 percent of the energy mix in 2019 from 67 percent in 2007, while renewables rose to 12 percent from 1 percent.

Still, Southern is the single largest IOU source of CO2 with annual emissions of nearly 97 million metric tons, based on 2018 and 2019 data. That was 14 percent higher than Duke Energy and almost double those of Xcel Energy – the next two largest emitters.

Southern’s plan leans on improvements in carbon capture technology, forest and soil management, direct carbon capture from the air and biomass to get to net zero-carbon emissions.

New and emerging technologies appear to be a key driver for many utility companies in meeting or adopting carbon-reduction goals.

Deloitte surveyed 600 IOU executives and “senior corporate leaders” as part of its evaluation, and 55 percent cited “technological innovation as a key factor that would be most likely to make them change their goals, or set goals if they do not have any yet.”

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