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New York — Southern Company formally revamped its carbon-reduction strategy to target net-zero emissions by 2050, but the utility's management held back from promising more aggressive actions on renewables and fossil fuels.

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During the company's annual meeting held virtually on Wednesday, Southern Chairman, President and CEO Tom Fanning announced the new zero-emissions goal, which will apply to its electric subsidiaries Georgia Power, Alabama Power and Mississippi Power and to its natural gas operations, such as Southern Company Gas. The utility still aims to reduce emissions by 50% by 2030, though Fanning said the company could meet that goal by 2025.

New and unproven technologies, such as carbon capture and storage and direct removal of carbon from the air, will be critical to getting rid of the last remaining tons of carbon and making it "reasonably economic and much more likely to achieve," Fanning added.

"We have committed to both our 2030 and 2050 greenhouse gas reduction goals in the absence of any state or federal mandates," Fanning said. "Rather, we produce these goals because they are good for customers and communities that we are privileged to serve."

INVESTOR PRAISE

Southern, which serves more than 4 million retail electric customers, has touted a "low- to no-carbon" approach since 2018 and has changed its electric generation mix from 70% coal in 2007 to 22% coal in 2019. Renewable energy resources now make up 12% of its generation mix.

Several institutional investors praised Southern's announcement, noting the growing urgency for utilities to confront the business and environmental risks of climate change.

The net-zero emissions announcement "demonstrates Southern Company is willing to listen, and act, to address the long-term needs of all stakeholders alike — customers, employees and shareholders," Rebecca Myatt, a portfolio manager for asset management firm First State Investments Global Listed Infrastructure, said in an email. "It also shows a preparedness to embrace change and to operate their business in a different way to achieve a greater goal."

THE GAS QUESTION

Some groups want to hear more clarity on what the new target means for the Atlanta-based company's natural gas fleet, which made up more than half of its generation in 2019, and for the industry's worries about building gas plants that could become uneconomic long before their planned lifespan.

"Shareholders are increasingly concerned that utilities may experience stranded assets and early retirements of natural gas infrastructure similar to what we've seen with coal-fired assets," said Lila Holzman, energy program manager of shareholder advocacy group As You Sow. "Southern must clarify how it will avoid this as it works to achieve its climate target."

Fanning held off on more drastic measures to decarbonize its generation fleet. When asked when Southern would retire its entire coal fleet, Fanning said it is "very clear" that coal generation and its environmental issues "are out of favor," but the energy transition is more nuanced and additional factors have to be considered before dramatically changing its generation fleet.

"It's not just the idea of reducing coal. We've got to consider what happens to employees. We've got to consider what happens to the tax base in the communities we serve and the larger economic impact," he said. "We do that in conjunction with our regulators. And I think we're doing a darn good job of that."

Moreover, a system that relies on "100% sun and wind is, at this point, not practical."

Natural gas remains cheap and reliable, while "nuclear remains a foundation concept to the United States" as the company heads to the final stages of completing two long-delayed nuclear reactors at the Alvin W. Vogtle Nuclear Plant in Georgia, Fanning said.