The U.S. electric power sector remains a major contributor to the nation’s carbon dioxide (CO2) emissions, having accounted for 32% of the total U.S. energy-related CO2 emissions in 2019. Thus, as the U.S. economy is progressing toward a greener environment, Utilities have accelerated their CO2 emission rate over the last decade.
Notably, carbon emissions from the U.S. power sector dropped 8% year over year in 2019, per a report by Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States, as stated in a MarketWatch release.
Factors Driving Decarbonization
In the United States, most utilities have significantly reduced their CO2 emissions since 2005. This has been possible due to sustained and low natural gas prices and declining costs for renewable generation along with technological innovations that have promoted energy storage.
Also, improvements in power plant efficiency and shifts in investments within the power sector in clean energy have been boosting decarbonization in the sector. Further, state energy policies like renewable standard portfolio as well as subsidies offered by the government like production and investment tax credits have helped utilities accelerate carbon emission reduction goals.
Did COVID-19 Impact CO2 Emission-Reduction Goals?
While most industries are being affected by the coronavirus outbreak and its lingering impacts, U.S. CO2 reduction emission goals have been benefitted. Since business activities have been lower than usual, demand for electricity has fallen, resulting in a decline in CO2 emission.
Surprisingly, coronavirus is expected to boost CO2 emission reduction goals, at least over the short term. Notably, the U.S. Energy Information Administration (EIA) forecasts a 3.6% fall in U.S. electricity consumption in 2020 compared with 2019.
Utilities in Focus
Considering the afore-mentioned projections, it is evident that CO2 emission-reduction efforts are set to ramp up. Let's look at a few utilities, each carrying a Zacks Rank# 3 (Hold), which have made considerable progress toward lowering carbon footprint.
Duke Energy Corp.'s (DUK - Free Report) subsidiaries, Duke Energy Progress and Duke Energy Carolinas, submitted their Integrated Resource Plans (IRPs) in September 2020 with state regulators, which on approval will enable the company to achieve its near-term carbon reduction goal of at least 50% by 2030 and long-term goal of net-zero by 2050 in the Carolinas. In line with executing such plans, it expects to install more than 15,000 MW of additional energy storage by 2030.
Edison International’s (EIX - Free Report) subsidiary, Southern California Edison (SCE), has provided 48% carbon-free electricity to customers in 2019. The company aims at achieving 100% carbon-free electricity by 2045. Earlier, in June, the company revealed that it already reached nearly 50% of its 2045 carbon-free energy goal.
In August, NextEra Energy’s (NEE - Free Report) subsidiary, NextEra Energy Resources, announced plans to add 700 megawatt (MWs) of fully-contracted battery storage projects in California by 2022. Such investments will assist NextEra Energy in reaching its alternate energy production goal and lowering carbon emissions from the production process. These initiatives will also help it achieve the plan of reducing the carbon dioxide emissions rate to 67% by 2025 from a 2005 base.
Xcel Energy (XEL - Free Report) was the first major U.S electricity provider with a vision to serve customers with 100% carbon-free electricity by 2050 and to reduce carbon emissions by up to 80% by 2030, from 2005 levels. The company recorded its largest one-year decline in carbon emissions in 2019, reducing carbon emissions by 44%.
DTE Energy (DTE - Free Report) is committed to achieve its net-zero carbon emission target by 2050. In September 2019, the company announced its goal to achieve net zero carbon emissions by 2050 for DTE Electric. In June 2020, it expanded its net zero goal to include DTE Gas as well, which will reduce its greenhouse gas emissions to net zero levels. By 2050, the DTE Gas Net Zero Plan will reduce carbon emissions by 6 million metric tons per year.
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