Climate Action Makes (Business) Sense for U.S. Utilities

Michigan’s DTE Energy recently pledged to reduce carbon pollution by more than 80 percent by 2050. Another Michigan utility, Consumers Energy, committed to phase out coal generation over the next two decades and generate at least 40 percent of its energy with renewable resources. Duke Energy, with customers in six states in the Southeast and Midwest, has committed to reducing its carbon emissions 40 percent by 2030. But why are these and many other utilities doing this now, when the Trump administration is working to roll back climate and clean energy action?

Because it just makes good business sense.

When President Trump announced his intention to pull the U.S. out of the Paris Climate Accord, there were concerns that America’s utilities would change course and abandon action on climate. Instead, the Edison Electric Institute (EEI), which represents the nation’s investor-owned electric utilities serving 220 million Americans (two-thirds of the population), said that it expected the industry’s emissions to continue their decline. And in fact, EEI recently renewed its commitment to a cleaner energy future, including reductions in greenhouse gas emissions.

The solutions for climate action are the best investments

Programs to help customers save energy, and solar and wind energy are cheaper in most places than almost any other resource to meet customer energy needs, including coal and gas, and getting cheaper all the time. They also happen to be the most effective solutions to reduce carbon pollution, allowing us to meet our carbon reduction targets at lowest cost, while dramatically reducing our reliance on polluting and more expensive fossil fuels to power America’s homes and businesses.

Utilities know this. That is why a recent survey by Utility Dive of more than 600 U.S. and Canadian electric utility executives confirms that they do not expect to change course in their commitment to a cleaner energy future. More than 80 percent of respondents from each region expect moderate or significant increases in utility-scale solar generation, distributed (or onsite) generation like rooftop and community solar panels, and energy storage.

Recent climate commitments

The fact that utility commitments to clean energy and carbon reduction are not just sticking, but are still being announced after more than a year of assaults by the Trump administration, illustrates that utilities are not veering from the clean energy path. Here is a sample of the commitments made by utilities representing nearly 49 million customers:

• Consumers Energy in Michigan pledged to cut carbon pollution 80 percent by 2050, phase out its coal generation within two decades, and replace it with at least 40 percent renewable energy by 2040.
• National Grid, with customers in New York, Massachusetts, and Rhode Island, maintains its commitment to reduce its carbon pollution 80 percent by 2050 from 1990 levels.
• Xcel Energy, with utilities in Colorado, Minnesota and six other states, has set near-term goals of a 45 percent reduction in carbon emissions and 40 percent renewable generation by 2021, with a 60 percent reduction in carbon and 60 percent renewables by 2030.
• Ameren Missouri established a goal of reducing carbon emissions 80 percent by 2050, and committed to increasing its energy generated from wind (700 megawatts by 2020) and solar generation (50 MW by 2025).
• Duke Energy, with customers in North and South Carolina, Ohio, Kentucky, Indiana, and Florida, announced a goal to reduce carbon pollution 40 percent by 2030 and invest in cleaner electricity generation.
• Already working to meet California’s target for an 80 percent reduction in carbon emissions by 2050, Southern California Edison proposed increasing the use of large-scale, carbon-free generation such as wind, solar and large hydroelectric power plants to at least 80 percent of electricity delivered to customers by 2030.
• American Electric Power (AEP), which serves customers in 11 Southeast and Midwest states, set a goal to slash carbon emissions 80 percent from 2000 levels by 2050 through investments in energy efficiency, renewable resources, and other cleaner energy investments.
• MidAmerican Energy in Iowa has established a goal of 100 percent renewable energy (with 95 percent expected in 2021 for its portfolio).
• PPL Corporation announced its goal to reduce carbon emissions 70 percent by 2050, which will require near elimination of its Kentucky coal fleet and improved efficiency in its U.K. and United States operations.
• WEC Energy Group, based in Wisconsin, set the goal of a 40 percent reduction in carbon emissions from 2005 levels by 2030.
• DTE Energy in Michigan committed to a 30 percent reduction in carbon pollution by the early 2020s, 45 percent by 2030, 75 percent by 2040 and more than 80 percent by 2050. The company will achieve these reductions by incorporating substantially more energy efficiency, renewable energy, and other cleaner sources. DTE also announced the shutdown of 11 coal plants by the early 2020s.
• First Energy, serving customers in Maryland, New Jersey, New York, Ohio, Pennsylvania, and West Virginia, committed to reducing carbon pollution at least 90 percent from 2005 levels by 2045.

Utilities are backing up their long-term pledges by taking actions now to slash their emissions. Carbon pollution from the power sector has fallen by 28 percent since 2005, with reductions expected to continue over the next several years as utilities double down on their investments in clean energy resources. The cost declines of renewables continue to outpace expectations, and utilities are often making big clean energy investments while delivering economic benefits for their customers at the same time. In Colorado, for example, Xcel’s new 600 megawatt wind farm is expected to save customers over $1 billion over the project’s 25-year lifetime. In Iowa, MidAmerican is building a new wind project—as part of its path to 95 percent renewables by 2021—without raising customer rates. And in New Mexico, the CEO of a co-op that is building a community solar project declared that the installation “delivers renewable power to our members while also saving them money.”

With the business case so clear, in spite of the uncertainty created by the current administration’s actions, wouldn’t it make more sense for the nation’s electric customers, utilities, and the health of our economy to establish a clear economy-wide carbon policy that encourages all utilities to join in?