Utilities Are Promising Net Zero Carbon Emissions, But Don’t Expect Big Changes Soon

On the western shore of Lake Erie in Michigan, the Monroe Power Plant has been burning coal since the mid-1970s. Its owner, DTE Energy, has no intention of shutting down the massive power plant any time soon, despite its new pledge to cut its company-wide carbon emissions to net zero.

DTE’s plans for the Monroe plant are emblematic of a problem surfacing as a growing number of utilities promise to significantly cut their planet-warming emissions: a lack of urgency.

The timing matters. A recent report by the UN’s Intergovernmental Panel on Climate Change warned that to keep global warming under 1.5 degrees Celsius—the aim of the Paris climate agreement—human-caused emissions of carbon dioxide will have to fall to net zero by mid-century. Since CO2 emissions build up in the atmosphere and remain there for centuries, those cuts can’t wait until 2050. They have to start now and should be down by nearly half by 2030 for the least disruptive transition, the IPCC shows.

One way to quickly assess the seriousness of a utility’s emissions-reduction plan is to look at how it deals with coal-fired power plants, which are the leading sources of carbon emissions from the power sector, said Daniel Cohan, a Rice University environmental engineering professor.

“Any plan that leaves a substantial amount of coal around isn’t a serious climate plan,” he said.

Most of the country’s largest investor-owned utilities have released carbon-reduction plans in recent months, often in response to intensifying demands from shareholders and customers to address climate change. The announcements reached an inflection point last month when Duke Energy, the utility behemoth that generates more electricity than any other U.S. company, issued its plan to get to net-zero carbon by 2050. DTE followed a week later.

The plans tend to have ambitious long-term targets, but many of the utilities, like Detroit-based DTE, wait decades to make major changes rather than starting an ambitious phase-out quickly, and some expect to rely on carbon capture technology. That’s drawing criticism from analysts and environmental advocates.

DTE pledged to get its operations to net-zero carbon emissions by 2050, yet it still intends to run the Monroe plant, one of the largest coal-fired generators in the country, until 2040.

Southern Company has said its system will be “low to no carbon” by 2050, but its Georgia Power subsidiary told regulators this summer that the corporate carbon pledge has played no role in the drafting of a separate plan for Georgia power plants.

On the other end of the spectrum is Xcel Energy, which has used its net-zero carbon plan as the basis for proposals for power plants in Colorado and Minnesota. Xcel has an interim goal to cut its carbon emissions by 80 percent from 2005 levels by 2030. In contrast, DTE and Duke only aim for 50 percent from 2005 levels by 2030.

One reason Xcel can aim for such an ambitious interim goal is that it has done much of the work already. Its 2018 emissions were down more than a third from 2005.

Pace of Emissions Cuts Slowing?

The plans are statements about a company’s intentions. The more substantial commitments come in the form of long-term planning documents that utilities file with regulators in the states where they do business, showing which power plants would open and close over the next one to two decades.

“There’s always the risk that these targets will just be ignored, but having them announced is significant if it empowers citizens’ groups, regulators and others to hold these companies accountable,” Cohan said.

While companies often frame the plans as major progress, some of the plans actually slow the utilities’ pace of carbon dioxide emissions reductions, according to an analysis from Energy and Policy Institute, an environmental watchdog group.

Most utilities have significantly reduced their CO2 emissions since 2005. One reason was an economic shift as natural gas became a less expensive fuel than coal, leading to a boom in construction of natural gas plants and the closing of many coal plants. Natural gas plants also emit greenhouse gases, but they have lower CO2 emissions than coal.

To maintain this pace in the 2020s, companies would need to continue to close coal plants and also their older and less efficient gas plants, and replace them with renewable sources and energy storage. Many of the companies are not doing this fast enough, said David Pomerantz, executive director of the Energy and Policy Institute.

“I think they’re hoping they get plaudits for a nice-sounding goal and then people stop paying attention,” he said. “Once you start looking under the hood, you see some really big problems.”

DTE and the Clash Over Coal

DTE released its net-zero plan at the same time that it has a separate proposal before Michigan regulators to set a long-term plan for its power plants. The latter plan shows that DTE has not done a cost analysis of whether it should close the Monroe coal plant before the current retirement year of 2040.

Environmental groups have said in testimony before state regulators that it likely would be more expensive for DTE to continue to run Monroe and one other coal-fired plant than to replace them with a portfolio of renewable energy, energy efficiency and battery storage.

The Monroe plant is DTE’s leading source of carbon emissions and the main reason the company has the third-highest carbon emissions per unit of electricity of any U.S. utility, according to an analysis of 2017 data by M.J. Bradley and Associates. Only Ameren and AEP were higher.

The clash comes down to the pace of the transition away from fossil fuels, with DTE arguing for a gradual shift that would then accelerate after 2040.

“Carbon emissions don’t just matter as a moment in time—they’re cumulative,” said Michael O’Boyle, director of electricity policy for Energy Innovation, a clean energy think tank. “Yes, it’s important to get to a certain target at a certain date, but what you do between now and then matters a lot.”

Asked about Monroe, DTE spokesman Eric Younan said the plant is essential for maintaining the reliability of the grid during the transition to cleaner energy, and he highlighted investments the company has made to reduce pollution and improve efficiency there.

Duke Still Plans More Natural Gas Plants

Duke also faces criticism. The company’s net-zero plan was released at a time when the company had a long-term plan before regulators in North Carolina that called for construction of about 10,000 megawatts of natural gas power plants by 2033, more than double the renewable capacity it is proposing.

Philip Sgro, a Duke spokesman, says building natural gas plants “is critical to our ability to continue to retire coal and keep electricity reliable and affordable for customers.”

Considering that natural gas plants can operate for 30 or more years, Duke’s plan looks incompatible with the idea of net-zero carbon by 2050, O’Boyle said.

“Any attempt to get close to zero that also, on the other hand, involves building new gas is undermining itself,” he said.

Increasing Pressure from Investors and States

The pressure on utilities to cut emissions is coming from several directions, with shareholders, customers and some state regulators demanding that the companies take action.

Also, some of the utilities operate in states with new laws calling for a transition to carbon-free energy. Hawaii, California, Nevada, New Mexico and New York have all passed laws that set targets for 100 percent carbon-free energy production, or net-zero carbon for the economy as a whole.

In February, a group of institutional investors representing $1.8 trillion in assets signed a letter calling on the country’s 20 largest utility companies to set deadlines for reaching net-zero carbon.

“The climate crisis is an imminent threat not only to our planet, but to pensions systems, and ultimately, our beneficiaries,” Scott Stringer, the New York City comptroller, said in a news release about the letter. “Delaying climate action is like denying climate change—it’s not an option for these companies or for anyone else.”

Following this kind of advice is ultimately good for the companies, O’Boyle said.

“Retiring coal is not always an altruistic action,” he said. “It’s usually the economically right thing to do, and a lot of them have done it.”