NextEra Energy, the parent company of Florida Power & Light and Gulf Power, recently touted an award it received from Fortune as the “World’s Most Admired” utility, along with another award from a consulting firm called “Ethisphere” as a member of the “World’s Most Ethical Companies.”
Unlike almost all other large investor-owned utilities, however, NextEra has not set absolute targets for net-zero emissions that would align with keeping global warming below 2 degrees Celsius. In fact, NextEra is the only large investor-owned utility that has not set any absolute carbon reduction goal; its climate goals refer only to its emissions rates or intensity instead.
NextEra’s lack of a clear absolute carbon emissions goal came up during the company’s most recent earnings call. Julien Patrick Dumoulin-Smith, Director and Head of the US Power, Utilities & Alternative Energy Equity Research at BofA Merrill Lynch, Research Division, asked James L. Robo, NextEra Chairman, President & CEO:
“As you think about establishing targets and becoming perhaps more prescriptive and being a leader on this front, how do you think about being more specific on carbon?”
Robo responded that “all of these discussions are about percent reductions” and emphasized that they are working towards decarbonization. Robo did not commit to a specific absolute carbon goal, however.
NextEra’s intensity reduction goal signifies NextEra’s pledge to emit less carbon per unit of electricity that it sells, as opposed to a pledge tied to specific numbers, such as total metric tons.
NextEra says that it will reduce its carbon intensity by 67 percent by 2025 from a 2005 baseline. The company does say that this intensity reduction “equates to a nearly 40% reduction in absolute CO2 emissions.”
All other large utility companies that EPI has tracked have set absolute emissions reductions goals, usually pegging the long-term commitments to 2050, paired often with interim 2030 or 2040 goals. The Paris Agreement calls for limiting warming to “well below 2 degrees Celsius” with a further goal of 1.5° Celsius. The latest report from the International Panel on Climate Change (IPCC) spells out what that means for electric generation, noting that “A robust feature of 1.5°C-consistent pathways … is a virtually full decarbonization of the power sector around mid-century, a feature shared with 2°C-consistent pathways.”
While other utilities’ goals vary in ambition, and some companies are making investments that do not align with the goals, they do give investors a sense of companies’ long- and mid-term trajectories that NextEra’s 2025 intensity goal does not offer.
NextEra silent on methane
NextEra’s press statement disclosed sulfur dioxide (SO2) and nitrous oxide (NOx) rates, but it does not appear to report any data on methane leakage from its gas pipeline business throughout the nation, including the well-known Sabal Trail pipeline which brings natural gas to Florida, serving NextEra’s retail operation Florida Power and Light (FPL). Pipelines are big business for NextEra; just last September it acquired Meade Pipeline Co. and its interests in a $1.37B acquisition, as reported by the South Florida Business Journal. In Florida, NextEra also owns FPL Energy Services, Inc. (FPES), an unregulated commercial natural gas subsidiary of Florida Power & Light Company (FPL).
The American Gas Association (AGA) has partnered with Edison Electric Institute (EEI), the industry association for investor-owned electric utilities, on a “voluntary reporting template” called the Natural Gas Sustainability Initiative (NGSI). NGSI was designed to ensure, “public acceptance of using natural gas,” by giving the appearance that electric utilities are addressing methane emissions through the voluntary disclosure of leakage rates from upstream suppliers. There is no methodology suggested by the NGSI to actually reduce those upstream methane emissions or to reduce the carbon emitted when gas is burnt in power plants by utilities like FPL.
NextEra does not appear to have posted any NGSI reporting to its web site.
Separate from NextEra’s other pipeline and natural gas business, 73.2% of FPL’s 2018 electric generation came from natural gas, according to data reported on NextEra Energy’s website in 2019. A footnote on the data stated, “FPL’s 2019 Ten Year Power Plant Site Plan projects that the company will, for the first time in its history, produce more energy from solar than from coal and oil combined in the year 2020.” However, coal and oil made up just 2.7% of FPL’s 2018 generation.
Self-Selecting “Awards” from Fortune, Ethisphere
Fortune used a specific, and self-selecting, methodology to produce its “World’s Most Admired Companies” rankings highlighted by NextEra. The list was pulled from “the 1,000 largest U.S. companies ranked by revenue, along with non-U.S. companies in Fortune’s Global 500 database that have revenues of $10 billion or more,” according to the list’s “methodology” page. Fortune then narrowed to “the highest-revenue companies in each industry, a total of 680 in 30 countries.” The final results were not selected by a group of independent judges, but by executives employed by the companies in the final list of 680. The full list of contenders and rankings is not published online, leaving it up to the participating companies to share their placement if they so choose.
NextEra celebrated its inclusion in Ethisphere’s “World’s Most Ethical Companies” list as well. Ethisphere is a for-profit corporate consulting firm with a paid membership arm called the Business Ethics Leadership Alliance, or BELA. The annual list of “most ethical companies” is pulled from Ethisphere clients and BELA members, based on self-reported data from the companies, as reported by Slate and as criticized by LA Times columnist David Lazarus.
Over $8 Million spent in Florida 2018 election cycle, $2.5 million in 2019
As utilities regularly point out in their reporting disclaimers, NextEra noted that decarbonization requires a supportive policy environment. In Florida, NextEra has spent heavily to influence policy and elections but generally appears silent on policies that would help the utility reach its stated emissions rates reduction goals. In the current 2020 Florida Session, Representative Anna Eskamani and Senator Jose Javier Rodriguez proposed bills to dramatically increase the use of renewable energy in the state and to require the Public Service Commission to set state-wide standards. NextEra did not support the bills.
FPL gave approximately $8 million in Florida campaign contributions during the 2018 election cycle and is on track to continue this trend for the 2020 cycle, as reported by the South Florida Sun-Sentinel. FPL spent more than $2.5 million on Florida state-level political giving in 2019 alone, according to filings with the Florida Department of State. FPL also spent lavishly on lobbyists, with over 30 registered to represent the utility in Florida. FPL reported total lobbying expenditures of $645,000 for 2018 and $665,000 for 2019.
Header image source: Florida Power and Light YouTube.