NC Carbon Plan

Duke Energy says, “The Carolinas Carbon Plan will serve as a road map for reducing carbon emissions from power generation.”

• In October 2021, the N.C. General Assembly passed, and Gov. Roy Cooper signed a bipartisan energy bill into law that requires the N.C. Utilities Commission (NCUC) to develop a plan by the end of 2022 that would reduce carbon dioxide emissions in the state to 70% below 2005 levels by 2030 and achieve carbon neutrality by 2050.

  Duke Energy is a monopoly utility company that provides electricity to more than two million North Carolina families. They inherently make choices based on profit motive, not ESG (Environmental, Social, and Governance) goals. They will always put profit ahead of people and the environment.

  The NCUC instructed Duke Energy to file a draft NC Carbon Plan by May 16, 2022. The plan will have far-reaching implications for the Tar Heel state’s economy, climate efforts, and public health.

Duke Energy says, “The Carolinas Carbon Plan will serve as a road map for reducing carbon emissions. Guided by stakeholder input, the plan will target 70% carbon reduction in the 2030 time frame, as compared to 2005 levels, and achieve net-zero carbon emissions by 2050.”

• Giving a “2030 time frame,” instead of committing to hitting the 70% target by 2030, is like saying you’ll be fashionably late, except this time, being late comes with unknown increases in climate related costs. There is no room for being late to keep warming to 1.5 degrees Celsius. That is why it is imperative we hit the targets mandated under HB 951.

  Some utilities have disingenuous definitions of “net-zero carbon emissions” that do not actually mean carbon-free. For example, Dominion Energy’s 2019 Integrated Resource Plan explains on page 2 of the executive summary, “Net zero does not mean eliminating all emissions, but instead means that any remaining emissions are balanced by removing an equivalent amount from the atmosphere. For example, this can occur through carbon capture, reforestation, or negative-emissions technologies such as renewable natural gas.” Duke Energy has a number of renewable natural gas projects completed, underway, or planned. These are not carbon free (or negative-emission) projects, and as such, should not be considered in the NC Carbon Plan.

Duke Energy says, “We’ve already made incredible progress, retiring two-thirds of the coal plants in the Carolinas and reducing emissions by more than 40% since 2005. We are committed to bringing our customers and communities affordable, reliable and clean carbon-free energy as quickly as possible.”

• Duke Energy should build out clean, non-emitting, generation sources like wind, solar, and battery storage as quickly as possible while preserving low rates and protecting those who can’t afford increased costs on their electric bill. As such, they should retire the remaining coal fleet and replace that generation capacity with carbon-free electricity.

No. South Carolina does not have a Carbon Plan. Duke Energy says they do not plan to move their emitting sources of energy generation south. However, studies like one compiled by The Brattle Group in slides 15, 16, 94, and 95 of their slide deck, indicate that Duke will likely claim that, to preserve energy reliability, it must replace coal with more methane gas.

It is entirely possible that Duke Energy will try to build out methane-fueled plants in South Carolina. Since solar generation is now generally cheaper than other sources of electricity generation, methane or other fossil fueled generation sources may not survive. However, once Duke builds a new methane-burning plant, customers will be on the hook to pay for it, even if it has to close early due to changing economics or carbon policies. Most large fossil fuel plants are financed with 30+ year long agreements, an Energy Innovation report estimated that cost of early closures at $4.8 billion.

Regulators. In fact, HB 951, the North Carolina law that requires this process, mandates that the Utilities Commission create the plan themselves. People Power NC and CleanAIRE NC affirms as its first key principle in 12 Principles for a Carbon Plan in the Public Interest that the plan is the sole responsibility of the Commission.

We believe in the event that Duke Energy’s plan does not hit the statutory emission reduction levels, the Commission must send Duke back to the drawing board.

A 2021 report by Energy Innovation shows that a strong national clean electricity policy will avoid health and climate damages to the tune of $100-250 billion through 2030-35, and $1-3 trillion through 2050. It will also prevent between 85,000 to 300,000 premature deaths through 2050. The report demonstrates benefits to grid reliability, job growth, and energy affordability. While the NC Carbon Plan is specific to North Carolina, it positions our state to be a leader in the transition.

Additionally, a joint study by Duke University and UNC-Chapel Hill developed using extensive modeling and broad stakeholder input shows that if North Carolina joins the Regional Greenhouse Gas Initiative (RGGI), a campaign currently underway at the NC Department of Environmental Quality, and uses the resulting revenues to fund direct residential bill assistance, the state could see lower residential electricity bills (page 114). When revenues are used for bill assistance plus energy efficiency investments, it drives job creation (page 114).

Including policies like RGGI in the NC Carbon Plan can also “improve health outcomes in fenceline communities…[by making] relatively deep reductions in local air pollutants, including coal retirements,” and “is important when considering equity in policy design” (page 6).

Duke Energy says, “It is too early to determine the potential cost.”

• This answer is not sufficient; policy design does matter. If designed correctly from the start, the NC Carbon Plan can effectively reduce rates. It can also increase rates if designed improperly. The NC Carbon Plan will contain key decisions affecting Duke Energy’s upcoming rate filings that are anticipated to be filed late 2022/early 2023.

  The People Power NC Alliance has advocated in principle 9 that the NC Carbon Plan should “Lead to Fair and Affordable Rates.” There are numerous ways to keep rates affordable, such as including energy efficiency requirements in the NC Carbon Plan, or as some groups have suggested using RGGI revenues for efficiency projects and bill assistance programs.

People Power NC’s 7th principle is “Allow No New Gas.” The Brattle study confirms on pages 20 and 99 that unless additional solar generation or additional wind is considered, it will be very difficult to meet the 2030 target of 70% carbon reduction.

The study states: “Duke’s proposed limits on annual solar installations is likely to increase compliance costs of H951 or prevent achieving the 2030 target” [sic].

Confirming this possibility, Duke’s latest Integrated Resource Plan on page 16 called for building as much as 9600 MW of new methane-burning power plants, so it is highly likely the NC Carbon Plan will likely include a significant investment in new gas plants.

Though methane gas emits less carbon dioxide than coal when burned, it still emits a lot. New methane-burning power plants built today will have a useful life of several decades, so ratepayers will either be paying to retire those units early, or still be emitting CO2 well past 2050. More importantly, methane is a climate pollutant up to 100 times more potent than CO2. A March 2022 study published in Environmental Science & Technology shows as much as 9.4% of the methane being extracted today may be leaking unburned into the atmosphere. Earlier research found that any leakage over 3% made methane gas worse for the climate than coal.

In announcing publication of the Sixth Assessment Report on Mitigation of Climate Change in April, UN Secretary General António Guterres called investments in new fossil fuel infrastructure “moral and economic madness.” Clearly, increased burning of methane gas is diametrically opposed to the climate-protective intent of HB 951.