Carbon emissions by electric utilities in the U.S. Southeast have been declining for more than 10 years, but utilities' plans may fall short of trajectories recommended to avoid the worst of the climate crisis, according to a June 23 report from the Southern Alliance for Clean Energy.
Total annual CO2 emissions from fossil fuel use in the Southeast have dropped about 20% from their peak in 2005, and the primary driver has been a 35%-40% reduction in the electric power sector, according to the report. Rather than continue that pace, utilities have begun a "worrying trend" of leveling off emissions reductions, starting in the near term, report authors said.
Southeast electric utilities need to decarbonize more quickly by slashing fossil fuel dependence and switching to cleaner generation to reach net-zero emissions between 2040 and 2055, the window for limiting global temperature rise to 1.5 degrees C. Fossil fuel markets are also currently volatile, according to the report, and continued investment in those fuels puts utility customers at risk of higher costs in the immediate future and throughout the clean energy transition.
Growing gas reliance
Between 2020 and 2030, Southeast electric utilities stand to more than double clean generation like wind and solar, but it will only account for about 13% of their total generation, according to the report, which drew on integrated resource plans by the utility subsidiaries of Duke Energy Corp., Southern Co., NextEra Energy Inc. and Dominion Energy Inc., as well as the Tennessee Valley Authority. Utility investment in solar will continue across the Southeast, with solar quadrupling its share of the resource mix.
Future resource plans may reflect new wind opportunities as utilities evaluate in-region and offshore resources, though a moratorium approved by former President Donald Trump will cease new offshore wind leasing for the next 10 years along some parts of the Atlantic Coast unless Congress overturns the measure.
Gas is expected to continue to make up nearly half of all generation, increasing from about 47% to about 49%. Coal is expected to be cut in half to about 6% as utilities plan some retirements while keeping some coal firing through at least 2030. Nuclear will remain the same at about 26%.
Total CO2 emissions from Southeast utilities are expected to decrease by about 15% from current levels by 2030, based on current utility resource plans. But planned emissions reductions need to be closer to 67% by 2030 to bring forecasts in line with President Joe Biden's goal of a carbon-free power sector by 2035, according to the report.
'Inconsistencies' in 2050 goals
Many Southeastern utilities have net-zero-by-2050 goals, though none examined in the report are on track to completely decarbonize by 2050, according to the Southern Alliance for Clean Energy, or SACE. If Southeast utilities continue the decarbonization pace expected from 2020 to 2030, it could take until the 2060s to beyond 2100 to decarbonize, SACE said.
"These are some of the largest power companies in the world. Many of the Southeast utilities have been in the national spotlight for their professed commitment to decarbonization," SACE Executive Director Stephen Smith said during a briefing on the report June 23. "But there are often inconsistencies between the stated goals and what we're seeing these utilities actually put in their planning documents."
As load demand rebounds from the coronavirus pandemic, some utilities may even increase emissions as high gas prices prompt some to burn more coal, according to the report.
"If utilities had acted sooner, wind, solar, and storage projects would have already been underway, avoiding some of this impact," report authors wrote. "... Most utilities reduced carbon at a higher rate in the last decade than they plan to reduce in the coming decade."
Utilities are seeing fewer emissions reductions from replacing coal generation with gas, which has become the dominant fuel in the region. Utilities looking to decarbonize at their previous quicker pace must continue to retire remaining coal plants and replace gas and remaining coal with zero-carbon generation such as wind, solar, storage and energy efficiency, according to the report.
S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.
