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Critics fear the report charts a business-as-usual pathway that conflicts with the state’s energy goals.
When Duke Energy this spring unveiled its multistate outline for reaching net-zero carbon pollution by 2050, many North Carolina clean energy advocates dismissed it — arguing that the real test was the company’s 15-year generation plan for the state.
Now, with Duke wrapping up a series of virtual meetings on that plan this week, critics say the climate document and its underlying assumptions show the utility is poised to fail.
Duke is focused on its corporate goal of cutting climate pollution in half by 2030 — even though the state has a goal of 70% reductions by that same year. And a heavy reliance on yet-to-be-developed technologies after 2040 will allow the company to build a raft of new gas plants in the short term, a move clean energy advocates call catastrophic.
“Duke’s got some work to do,” said Dave Rogers, Southeast deputy director for the Sierra Club’s Beyond Coal campaign.
‘Not a serious plan’
Duke’s 2020 climate report follows the company’s pledge from last year to cut its carbon pollution to net-zero by 2050. The culmination of years of pressure from shareholders, the target aligns with scientists’ recommendations for avoiding the most dangerous impacts of climate change.
“I give Duke credit for setting these goals, which I think are good goals,” said Gudrun Thompson, senior attorney with the Southern Environmental Law Center. But, she said, “I have concerns about the assumptions they’re making as to how they’re going to get there.”
For one, Duke is banking on just 36% of its electricity coming from renewables at midcentury, “which is mind-boggling,” said Rory McIlmoil, senior energy analyst with Boone-based Appalachian Voices — especially compared to other utility projections around the country.
Minnesota’s Xcel Energy plans to produce 46% wind and solar by 2027. Arizona Public Service projects 45% renewables by 2030. Some utilities are already exceeding Duke’s 2050 goals: An analysis from the Energy and Policy Institute shows four utilities get more than 40% of their electricity from renewable energy today.
Rather than ramping up wind and solar, Duke’s climate blueprint assumes 30% of its production will come from what it calls “zero-emitting load-following resources” — a range of measures such as carbon capture and small nuclear reactors that have yet to prove commercially viable.
Duke spokesperson Randy Wheeless said the company could make substantial emissions cuts with current technology, “but to get to the finish line, there has to be something new.”
That could be, advocates say, but they question placing so much weight on unknown resources. Plus, the company appears to ignore energy-savings programs available today, including heat pumps and water heaters that can be remotely turned off when demand is at its peak. “There are some basic off-the-shelf things Duke’s not taking full advantage of,” Thompson said.
Because fossil gas plants can release 50% to 60% less carbon dioxide than coal plants, Duke envisions shuttering almost half its coal fleet by 2030 and replacing it with 11 gigawatts of gas — only to ramp back down to just below its current gas capacity by 2050.
It’s an assumption advocates find dubious: Combustion turbine plants for peak power may depreciate after 20 years, but larger, more efficient baseload plants tend to have a useful book life of 40 or 50 years.
“Putting in 40-year assets — there’s no way to match that up with a climate protective plan,” said Jim Warren, the executive director of Durham-based climate justice advocacy group NC WARN. “It’s smoke and mirrors.”
If Duke does build those new units in the 2030s then retire them two decades later, methane leaks from drilling and transporting fossil gas fueling them could cancel out their benefits. The greenhouse gas is 86 times more powerful than carbon dioxide over a 20-year period, but it’s only given a sidebar in the climate document.
“That’s troubling because methane is a very potent greenhouse gas, much more so than carbon,” Thompson said, “and the report just doesn’t seem to acknowledge that.”
Unlike Xcel and Arizona Public Service, Duke doesn’t plan to fully decarbonize, projecting that 6% of its electricity will still come from fossil gas in 2050. That will produce 8 million tons of carbon pollution — about 5% of its 2005 emissions — that the company hopes to zero out by buying carbon offsets.
“These can include modified agricultural practices, tree planting and reductions in other sectors,” a footnote in the climate document reads. “The market for carbon offsets decades in the future is very uncertain, but … we hope and believe that a robust market will emerge.”
The reliance on unpredictable carbon offsets and unproven technologies — combined with the business-as-usual plan on energy efficiency — means the blueprint won’t actually achieve Duke’s goal of net-zero carbon, McIlmoil said. “It’s just not a serious plan to me.”
A showdown on climate goals looming
The climate document spans Duke’s entire territory from Florida to Indiana and lacks any enforcement mechanisms. But clean energy advocates say it doesn’t bode well for the plan that really matters for North Carolina: Duke’s annual 15-year integrated resource plan, due Sep. 1.
That plan has its limitations. It doesn’t account for upstream methane emissions or Duke’s planned Atlantic Coast Pipeline — currently held up by court challenges but intended to fuel new gas plants in North Carolina. But the resource plan is subject to public scrutiny and approval by the state’s Utilities Commission, and must ensure reliable, affordable, and — to a degree — clean electricity.
The commission has ordered Duke to model compliance with its net-zero carbon target in its 2020 plan, ruling in April that it would “likely require aggressive restructuring of the [the company’s] resource portfolios.” Last August, the panel also directed Duke to present a pathway to meet the state’s goal of cutting greenhouse gas emissions from the utility sector 60% to 70% by 2030, compared to 2005 levels. The administration of Democratic Gov. Roy Cooper later finalized a state goal of 70% reductions.
But Duke’s climate report shows the company is much more concerned with its own goal of cutting its 2005 emissions in half by 2030, and that an “aggressive restructuring” is not part of its vision — suggesting an upcoming showdown between the state’s climate targets and Duke’s.
“We’re working with [the Department of Environmental Quality]. We’re very aware of their goals,” Wheeless said. But, he stressed, the integrated resource plan “will be focused on our internal goal of 50% by 2030.”
The emphasis is striking considering that — as the commission noted in April — the company’s 2018 and 2019 resource plans would have achieved that 50% reduction target. In the latter, Duke envisioned some coal retirements, more than two dozen new gas units, and a modest increase in solar by 2034. Renewables would produce 8% of the company’s electricity generation.
Duke’s net-zero pathway doesn’t seem to require a major shift in that trajectory, especially since five of Duke’s 9 gigawatts of nuclear power capacity are located in the state.
“You’re going to still see that ongoing nuclear power. There’s going to be more renewables, and most of it’s going to be solar,” Wheeless said. But with the integrated resource plan’s submission still months away, he said, “it’s hard for me to say today there’s going to be less gas or more gas in the 2020 IRP.”
The utility has held a series of virtual meetings with clean energy businesses and advocates, customers, and other stakeholders about its resource plan this spring. But slide presentations from those gatherings only note Duke’s 50% reduction goal, not the state goal.
On its website, the company says it plans to share what it heard from stakeholders and provide guidance on what input it decided to incorporate in its resource plan on June 18. Yet most advocates are wary of what they’ll learn.
“I’m very cautious about where they are right now in the IRP process,” said Warren. But, he added with a faint note of optimism, “in fact, that’s several months away.”
‘Maybe those gas plants aren’t accepted’
Indeed, some advocates are holding out some hope for the 2020 integrated resource plan because of the utilities commission — now made up almost entirely of Cooper appointees — and because of the steadily improving economics of clean energy.
In addition to modeling around Duke’s net-zero target and the state’s more aggressive greenhouse gas reduction goals, the panel has required a number of other analyses to be part of the 2020 resource plan, including an assessment of earlier coal retirements and lower electricity demand projections.
And Duke will certainly create a scenario for meeting the 70% reductions, Wheeless said, adding, “there may be a price tag associated with it.”
Clean energy businesses and advocates say that price tag will work in their favor. According to the Solar Energy Industries Association, solar costs alone have tumbled 70% in the last decade. “We know that we’re an extremely low-cost, reliable resource,” said Maggie Clark, Southeast state affairs manager with the group.
Even Wheeless acknowledges that dynamic, noting that if the commission approves a natural gas build-out as part of Duke’s resource plan, it would still have to approve a certificate to operate for each unit.
“Every project will have to come before the commission and defend it why it makes the least-cost sense to ratepayers and to the state in general,” he said. “Maybe those gas plants aren’t accepted.”
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