Dominion Energy ramps up climate goal by adding Scope 3 emissions

Dominion Energy Inc. said Feb. 11 it is broadening its climate commitment to include elusive Scope 3 emissions in its strategy to reach net-zero greenhouse gas emissions by 2050.

The new goal comes with a heavy emphasis on Dominion's natural gas business. Going forward, the company will reduce carbon emissions from the fuel the company uses to run its natural gas-fired power plants and fill its natural gas distribution systems. The company will also tackle carbon pollution from consumption by Dominion Energy's natural gas customers.

In addition, the new climate goal will include electricity the Virginia-headquartered utility purchases to supplement its own generation of power, another Scope 3 source.

"Reducing emissions as fast as possible and achieving net-zero emissions company-wide requires immediate and direct action," Dominion Chairman, President and CEO Robert Blue said during the company's fourth-quarter 2021 earnings call Feb. 11. "That's why the company continues to take meaningful steps to address Scope 3 emissions."

Such emissions, which are not directly within the company's control, made up 44% of Dominion's greenhouse gas emissions in 2019, according to the company's 2021 climate report. Indirect emissions are the hardest ones to rein in and why only a handful of U.S. utilities have thus far ventured into Scope 3 territory when making climate commitments. For many companies, Scope 3 emissions make up the largest share of their carbon footprint.

Dominion acknowledged the rarity of its latest climate move, saying in a press release the company's net-zero commitments "are among the boldest yet in the utility sector." The focus on natural gas was also highlighted as a win by observers.

"Achieving zero-emissions electricity and reducing methane emissions from natural gas are must-have elements of meeting Paris Agreement goals," Nat Keohane, president of the Center for Climate and Energy Solutions, said in a statement referring to the international climate treaty. "Dominion's expansion of its net-zero target is a step toward meeting those objectives and provides an important signal to the marketplace."

However, Dominion is not the only utility tackling Scope 3 emissions. Duke Energy Corp. on Feb. 9 included certain Scope 3 emissions in an updated plan to get to net-zero by 2050.

Hydrogen in the mix

Notably, the utility is banking on strengthened federal and state policies as well as technology breakthroughs to meet its Scope 3 goals, none of which can be guaranteed.

At the federal level, Dominion said it will support federal methane regulations to rein in releases from oil and natural gas production. It also plans to work with policymakers and regulators to advance renewable natural gas supplies and to strengthen energy efficiency programs.

To tackle Scope 3 emissions from its supply chain, Dominion will require upstream suppliers to improve greenhouse gas emission disclosures and climate goals.

Like other utilities, Dominion is also counting on emerging hydrogen technology to tackle emissions from its natural gas business. The utility found in a recent Utah pilot project that gas distribution systems and appliances can function well with a 5% hydrogen blend and is now looking to expand its research to North Carolina.

To green its own fleet in time for the 2050 deadline, the company is investing heavily in offshore wind. The 12-MW Coastal Virginia Offshore Wind project 27 miles off the coast of Virginia Beach, Va., began to produce power in 2020. By 2026, Dominion expects to have 180 wind turbines in federal waters, each capable of producing 14 MW.

Earnings results

Along with the earnings results, Dominion on Feb. 11 announced the sale of its West Virginia natural gas utility, Hope Gas Inc., to an infrastructure investor for $690 million, with closing expected late this year.

The company reported operating earnings of 90 cents per share in fourth-quarter 2021, compared to 81 cents per share in the fourth quarter of 2020. Operating earnings for full-year 2021 were $3.86 per share, compared to $3.54 per share in 2020.

For 2022, Dominion gave an expected operating earnings range of $3.95-$4.25 per share.