Southern Company has spent the past year misleading investors with a “low- to no-” carbon pledge that it claimed would lead the utility sector at addressing climate change. New disclosures from the company reveal that it is reserving the right to remain among the worst carbon-polluting utilities in the country by 2050, while still technically meeting its goal.
To date, Southern Company has evaded publicly defining “low-carbon.” However, in its filing with the CDP, a corporate environmental disclosure database, Southern admitted that it defined “low-carbon” as “an 80% reduction” in greenhouse gases from a 2007 baseline. The company will still emit more than 31 million metric tons of carbon dioxide-equivalent annually should it reach its “low-carbon” target by 2050.
31 million metric tons of CO2e is equivalent to keeping 8 coal plants online, according to the Environmental Protection Agency’s Greenhouse Gas Calculator.
Assuming “Low-Carbon” goal, Southern Moves to Bottom of the Pack
Southern Company has heavily touted its low- to no- carbon pledge since its publication in April 2018. But in contradiction to public pronouncements, Southern Company is slowing down its rate of decarbonization over the next decade and leaving its steepest reductions to the 2030 to 2050 timeframe, according to an analysis from the Energy and Policy Institute.
Incorporating the company’s new definition of “low-carbon” significantly changes Southern’s performance relative to its peers, raising new questions about its truthfulness to investors. An 80% reduction from a 2007 baseline leaves Southern emitting more CO2e than every other U.S. utility studied except for American Electric Power.
Figure 1. Comparison of Southern Company’s “low-carbon” goal vs its “no-carbon” goal
Figure 2. Southern Company’s performance relative to peers at “low-carbon” goal
Note: Southern Company’s CDP filings state its 2007 baseline at 156,650,363 metric tons of CO2e, whereas its September 2018 EEI template states its 2007 baseline at 152,000,000 metric tons of CO2e. Figures and numbers cited in the article use the CDP baseline data, while the chart uses data from the EEI template for consistency with other utilities.
Telling Investors One Thing, Telling Regulators Another
Southern Company’s statements to the Alabama and Georgia Public Service Commissions also call into question the company’s fidelity to its low- to no- carbon goals. In December 2018, Alabama Power admitted that “… we don’t have a share of that, per se. That is a Southern company enterprise-wide goal.” In its 2019 IRP filings, Georgia Power said, “these goals do not change Georgia Power’s IRP planning process and did not influence the target amount of renewables proposed.”
Southern Company listed integrated resource planning as a tool it would use to plan emissions reductions in a report explaining its climate goals to shareholders.
Filings and statements from Southern also reveal that the CEOs of Alabama Power, Mississippi Power, and Georgia Power created the very “low- to no-” carbon goals that those companies now tell regulators they are ignoring.
During the 2019 Southern Company annual meeting, Fanning confirmed that the CEOs of Alabama Power, Mississippi Power, and Georgia Power serve on the Southern Company Management Council (SCMC) and “everybody knows that’s the goal [low to no carbon]. Everybody works that strategy long term.”
Southern’s disclosures to CDP outline how in 2018, the SCMC led the “recommendation for and the decision to set Southern Company’s enterprise-wide GHG reduction goals of 50% reduction in GHG emissions by 2030 (as compared to 2007) and low- to no-GHG emissions by 2050.”
The CDP filing continued: “…there are regular discussions of climate-related issues, such as resource planning across the system and at each operating company and related capital allocation decisions.
Hiding behind regulators, despite its influence over them
Investors who have spoken with the company say that Southern Co. representatives explained that they “can’t get in front of their regulators.”
That rationale ignores two key points: First, while climate change may remain controversial for some Republican public service commissioners in Alabama, Georgia and Mississippi, clean energy development is broadly supported across partisan lines.
The Georgia Public Service Commission, an all-Republican elected body, pushed Georgia Power to develop far more solar resources than the company had initially proposed in its most recent integrated resource plan. The commissioners cited solar’s low cost and economic development benefits.
Second, Southern Company’s operating companies have a massive degree of political influence over the commissions that regulate them. Southern’s suggestion that it is a passive subject to the whims of climate-hostile local regulators belies the company’s record of supporting the election of public service commissioners throughout its service territory.
Southern Company and its affiliates contributed heavily to campaigns for public service commissioners. Georgia Public Service Commission candidates Chuck Eaton and Tricia Pridemore won their elections in 2018 after large investments from people associated with Southern and affiliated companies.
Southern has worked tirelessly to influence the political and regulatory landscape at the federal level as well. In a 2017 report, the non-profit InfluenceMap identified “50 of the 250 largest listed, non state-owned, industrial corporations that are most influential in shaping climate policy today,” and placed them on a scale from most to least supportive of climate policy. Southern Company placed second from dead last based on InfluenceMap’s scoring system, ahead of only Koch Industries.
According to documents obtained by Politico, Southern was a top contributor to the Utility Air Regulatory Group, which fought Clean Air Act standards. Southern was a driving member behind climate denial groups such as the Global Climate Coalition in 1989. EEI and Southern Company spearheaded the Information Council on the Environment ad campaign in 1991, which listed as its top strategy an effort to “reposition global warming as theory (not fact).”
Fanning told CNBC in 2017 he did not believe CO2 was the primary cause of climate change.
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