When PEC first started talking about deep decarbonization, we received questions like “why go so extreme?” or “is that even possible?” Perhaps it does sound more like a fantasy than a business strategy on first blush, but we believe deep decarbonization presents a pathway that allows our society to meet necessary climate targets in the most economic and socially beneficial way possible, by setting the end goal, then determining the best way to achieve it. And we’re not alone.
A recent Utility Dive article highlights how the perspective of utility companies towards deep decarbonization has changed from 2015 to today. At this year’s annual convention of the Edison Electric Institute, a trade group of investor-owned electric utilities, Gerry Anderson, CEO of Michigan utility DTE Energy, presented on his company’s recent carbon planning. By modeling the company’s future portfolio to determine compliance with the Clean Power Plan, the company found it could affordably reduce carbon emissions by 80% below 2005 levels by 2050.
Our sector would be well served to get out in front of this and let the world know that we’ve got this one — we will deal with this issue.
And as a result, we really ought to be in a position to pull in the transportation sector’s energy demand and general industry’s energy demand as well.
– Gerry Anderson, DTE Energy
DTE is not an isolated example– utilities across the country perceive decarbonization efforts as a growth opportunity. We see this occurring already in Pennsylvania. Examples include Duquesne Light’s work with microgrids and PECO’s efforts to advance electric vehicles. First Energy, the parent company of four Pennsylvania distribution companies, has set a carbon reduction target of at least 90% below 2005 levels by 2045.
The article indicates that “a diverse zero-carbon portfolio of resources, including things like advanced nuclear and carbon capture and sequestration, will present the cheapest option for deep decarbonization.” This portfolio will also rely on the growing renewable energy and energy efficiency sectors. This echoes the findings of PEC’s March conference on this topic.
In the absence of regulatory mandates, this transition is being driven by shareholders and customers, according to Anderson. But the lack of policy slows the transition. Clear policy directives guide long term investments. In their absence, the power sector may invest in technologies that will impede deep decarbonization efforts.
“The more we invest in capital stock that is inconsistent with deep decarbonization, the more we are creating incumbents who will fight against addressing decarbonization,” says Sue Tierney of the Analysis Group.
Stay tuned for the release of PEC’s white paper from our March conference later this month. Read the full Utility Dive article here.