Many U.S. electric utilities plan slow decarbonization over next decade
The country’s top emitting utilities are on decarbonization pathways that are too slow to meet the climate goals set forth by President-Elect Joseph Biden.
Biden has promised to achieve a zero-carbon power sector by 2035 en route to reaching an economy-wide target of net-zero emissions by 2050. Most of the country’s largest investor-owned utilities are on trajectories to phase out their use of coal and gas far too slowly to meet that 2035 target, according to an analysis of utilities’ decarbonization goals by the Energy and Policy Institute.
Major utilities and their trade associations have spent decades lobbying against state and federal climate policy and promoting denial and disinformation campaigns. During the Trump Administration, the utility trade association Edison Electric Institute – as well as individual utilities like American Electric Power (AEP), Duke Energy and FirstEnergy – supported the president’s effort to roll back regulations aimed at reducing carbon emissions.
But utilities also faced significant new pressure from investors and customers to embrace decarbonization, in addition to rapidly changing economics that favored clean energy, and almost all investor-owned utilities have attempted to show that they are responding to the new dynamics. In 2019 and 2020, most of the country’s top emitting utilities coalesced to set goals of reducing their carbon pollution to “net-zero” by 2050.
Beneath utilities’ “net-zero” framing and the consensus target date of 2050, however, the actual trajectories at which the utilities are promising to decarbonize – the shapes and slopes of their reduction curves – vary considerably, according to an updated analysis of the targets by the Energy and Policy Institute. The degree to which the utilities are relying on carbon offsets and accounting tricks and loopholes also varies widely.
A few large utilities, predominantly in the Upper Midwest and the West, are pursuing emissions reductions at a rapid enough pace that they could conceivably hit the Biden target of net-zero emissions by 2035, or are at least putting themselves in position to be within the ballpark.
But other utilities – and particularly some of the country’s largest polluters, like AEP, Duke Energy and Southern Company – have set pathways to decarbonize at a slow rate during the crucial next decade, and are planning to speed up only after 2030. Those pathways are incompatible with the Biden goal, setting up a potential clash with the Administration that might challenge the green image the utilities have been attempting to cultivate in recent years.
Many of those same slow-moving utilities have not yet aligned their actual business plans with their decarbonization pathways, as they continue sinking money into new gas plants and forestalling the retirement of largely uneconomic coal plants.
A recent report from Deloitte similarly found “significant gaps” between 22 utilites’ net-zero commitments and their respective fossil fuel retirements and additions. The report also detailed how the utilities need to considerably deploy more renewable energy and energy storage, to build transmission lines, and to harness demand response and distributed solar generation – which large utilities still often seek to curtail – toward their net-zero goals.
“The math doesn’t add up yet,” Deloitte wrote of the gaps.
EPI’s updated analysis further reveals how several utilities have used accounting tricks to keep emissions off their books, and notes how some utilities with net-zero carbon commitments continue to allow some of their operating subsidiaries to ignore the parent companies’ decarbonization goal entirely.
Graphs illustrating the utilities’ decarbonization trajectories, along with comparisons to trajectories that would be necessary to meet the Biden 2035 goal, are here. The underlying data behind this analysis is available here.