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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The consulting firm Deloitte (London, England) has a message for U.S. electricity providers: Your decarbonization math doesn't add up, at least not yet.
Actually, that message applies only to a subset of U.S. electric utilities: the investor-owned ones that have publicly committed to 100% clean energy or net-zero emissions by 2050. The Deloitte report, Utility Decarbonizing Strategies: Renew, Reshape and Refuel to Zero, did not consider municipally-owned electric utilities, electric cooperatives and the industry-owned utilities (IOUs) that have either not adopted any decarbonizing goal or adopted a goal that is less than 100% carbon free or net-zero carbon. Roughly three in four U.S. customers get their electricity from an IOU.
Of the 53 investor-owned utility parent companies surveyed by the consulting firm, 43 had adopted carbon emission-reduction targets. But only half of those companies, 22, had adopted a net-zero or carbon-free electricity goal by 2050. Twelve companies adopted no decarbonization goals, and another 21 utilities adopted carbon-reduction goals that were short of full decarbonization.
Click on the image at right to see a breakdown of decarbonization goals adopted by 53 U.S. investor-owned electric utilities.
The electricity industry needs to decarbonize by 2050 in order to keep global temperatures to less than 1.5 degrees (Celsius) above what they were during pre-industrial levels, Deloitte said. Because its report, released September 21, covered only a subset, albeit a large one, of all electricity generators, it is a best-case scenario of the decarbonization challenge facing the broad electricity industry.
Some of the largest U.S. IOU emitters of carbon dioxide (CO2), including Southern Company (NYSE:SO) (Atlanta, Georgia), Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) and Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia), have adopted 100% carbon free or net-zero carbon goals by 2050. The Deloitte report calls these firms the "zero percenters." The report does not list the IOUs that are not "zero percenters."
Utility Decarbonizing Strategies noted: "The zero percenters' current levels of carbon abatement fall short of their potential in the nine action areas lying at the intersections of the three trends and proposed strategies to renew, reshape and refuel. There are significant gaps between decarbonization targets and the scheduled fossil-fuel plant retirements, renewable additions and flexibility requirements needed to achieve full decarbonization. The math doesn't yet add up."
Click on the image at right to see a snapshot of trends and strategies open to electric utilities seeking to decarbonize their electricity.
So, despite the retirement of roughly 92,000 megawatts of U.S. coal-fired generating capacity between 2010 and 2019, and another 10,000 MW of unit retirements expected this year, the industry needs to do far more. Specifically, the Deloitte report said the industry needs to accelerate the closure of gas-fired generation as well.
Over the next decade, Deloitte sees three trends affecting the electricity business:
It's a huge challenge, one that Deloitte called an "arduous journey," made more difficult because this transition "would be the first one to unfold over just three decades, versus the two to three generations needed for the transitions from wood to coal, from coal to oil, and from oil to natural gas."
The report cites a projection from the U.S. Energy Information Administration (EIA) (Washington, D.C.) that, despite utilities' decarbonization efforts to date, the industry's CO2 emissions are expected to flatten out, rather than significantly decline to stop global warming.
The Deloitte report expresses no doubt that the 22 "zero percent" IOUs it focused on can close the gap between goals and actions. For all electric utilities -- zero percenters and otherwise -- the steps taken in the 2020-2030 period are expected to be relatively straightforward, because solar and wind generation are now established technologies. Farther out, the steps get harder, more expensive and dependent on advances in various technologies.
As electricity companies consider decarbonizing, the report identified drivers that could change the trajectory or velocity of change, including: decarbonization policies (such as a potential carbon tax); customer pressures for cleaner energy; and the investment community's growing interest in supporting low- and no-carbon energy solutions.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook-Twitter-LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Actually, that message applies only to a subset of U.S. electric utilities: the investor-owned ones that have publicly committed to 100% clean energy or net-zero emissions by 2050. The Deloitte report, Utility Decarbonizing Strategies: Renew, Reshape and Refuel to Zero, did not consider municipally-owned electric utilities, electric cooperatives and the industry-owned utilities (IOUs) that have either not adopted any decarbonizing goal or adopted a goal that is less than 100% carbon free or net-zero carbon. Roughly three in four U.S. customers get their electricity from an IOU.
Of the 53 investor-owned utility parent companies surveyed by the consulting firm, 43 had adopted carbon emission-reduction targets. But only half of those companies, 22, had adopted a net-zero or carbon-free electricity goal by 2050. Twelve companies adopted no decarbonization goals, and another 21 utilities adopted carbon-reduction goals that were short of full decarbonization.
The electricity industry needs to decarbonize by 2050 in order to keep global temperatures to less than 1.5 degrees (Celsius) above what they were during pre-industrial levels, Deloitte said. Because its report, released September 21, covered only a subset, albeit a large one, of all electricity generators, it is a best-case scenario of the decarbonization challenge facing the broad electricity industry.
Some of the largest U.S. IOU emitters of carbon dioxide (CO2), including Southern Company (NYSE:SO) (Atlanta, Georgia), Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina), Xcel Energy Incorporated (NASDAQ:XEL) (Minneapolis, Minnesota) and Dominion Energy Incorporated (NYSE:D) (Richmond, Virginia), have adopted 100% carbon free or net-zero carbon goals by 2050. The Deloitte report calls these firms the "zero percenters." The report does not list the IOUs that are not "zero percenters."
Utility Decarbonizing Strategies noted: "The zero percenters' current levels of carbon abatement fall short of their potential in the nine action areas lying at the intersections of the three trends and proposed strategies to renew, reshape and refuel. There are significant gaps between decarbonization targets and the scheduled fossil-fuel plant retirements, renewable additions and flexibility requirements needed to achieve full decarbonization. The math doesn't yet add up."
So, despite the retirement of roughly 92,000 megawatts of U.S. coal-fired generating capacity between 2010 and 2019, and another 10,000 MW of unit retirements expected this year, the industry needs to do far more. Specifically, the Deloitte report said the industry needs to accelerate the closure of gas-fired generation as well.
Over the next decade, Deloitte sees three trends affecting the electricity business:
- Fossil fuel use will fade
- Solar- and wind-generated energy will accelerate, and
- Infrastructure will see innovations, such as the rise of a wide range of energy-storage technologies
It's a huge challenge, one that Deloitte called an "arduous journey," made more difficult because this transition "would be the first one to unfold over just three decades, versus the two to three generations needed for the transitions from wood to coal, from coal to oil, and from oil to natural gas."
The report cites a projection from the U.S. Energy Information Administration (EIA) (Washington, D.C.) that, despite utilities' decarbonization efforts to date, the industry's CO2 emissions are expected to flatten out, rather than significantly decline to stop global warming.
The Deloitte report expresses no doubt that the 22 "zero percent" IOUs it focused on can close the gap between goals and actions. For all electric utilities -- zero percenters and otherwise -- the steps taken in the 2020-2030 period are expected to be relatively straightforward, because solar and wind generation are now established technologies. Farther out, the steps get harder, more expensive and dependent on advances in various technologies.
As electricity companies consider decarbonizing, the report identified drivers that could change the trajectory or velocity of change, including: decarbonization policies (such as a potential carbon tax); customer pressures for cleaner energy; and the investment community's growing interest in supporting low- and no-carbon energy solutions.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook-Twitter-LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
