Pacific Gas and Electric (PG&E)

PG&E has set just one emissions target, to reduce absolute emissions by 10% by 2022, compared to 2016 levels. As part of this goal, in 2018 PG&E launched the “Million Ton Challenge”, a strategy to avoid one million tonnes of emissions by 2022. The target could not be assessed because it does not extend far enough to allow a meaningful assessment. The company has, however, committed to delivering California’s Senate Bill (SB) 100, which targets net-zero electricity generation by 2045. This goal will not drive the rapid decarbonisation required by PG&E 1.5°C pathway that expects the company to become net-zero by 2035. The company should set ambitious formal targets, with intervals of five years or less to incentivise action and demonstrate low-carbon commitment.

Although PG&E has a low emissions intensity, its continued use of gas, which represents 100% of its scope 1 emissions, has resulted in the company making no progress in reducing its emissions intensity between 2015 and 2020. With no gas phase out plan, the company is likely to further diverge from its 1.5°C pathway and exceed its carbon budget. At present, 94% of the company’s renewable capacity, representing 6,700 MW, comes from contracts with third parties. PG&E should endeavour to replace gas assets with renewable sources, rather than only supporting its generation through purchased power.

Despite demonstrating general support of federal and state-wide climate policies, such as SB 100, PG&E remains on the board of the American Gas Association (AGA). The AGA has demonstrated negative climate positioning, viewing natural gas as a major fuel source going forward. AGA’s position on climate change includes recognising natural gas as a clean and flexible energy source. Without significant carbon removals, this position is inconsistent with the low-carbon transition. PG&E can increase the credibility of its climate rhetoric by defining a clear position and policy on climate engagement with trade associations and by implementing processes to withdraw from associations that oppose climate-positive policies.

PG&E is involved in seven energy storage projects to meet its mandated energy storage procurement targets. In particular, it has partnered with Tesla to construct one of the largest utility-owned lithium-ion battery energy storage systems in the world. The facility will have a capacity of 182.5 Megawatt (MW) and is due to be completed in 2021. Overall, PG&E has contracts for utility-scale battery storage totalling more than 1.4 GW to be deployed through 2023. The company should seek to further develop storage capabilities and could take the opportunity to integrate more owned renewable energy.

PG&E is committed to California’s clean energy regulation that requires 100% of retail electricity sales to come from renewable or carbon-free resources by 2045. PG&E does not have formal targets to achieve this, with only one short-term target to reduce emissions by 10% by 2022 compared to 2016 levels.

The company provides limited detail on the steps it plans to take to achieve decarbonisation in the long term. It is involved in several energy storage projects and is focusing R&D investment on hydrogen, carbon capture, energy storage and renewable natural gas.

PG&E has a relatively low emissions intensity owing to nuclear and hydro generation, which accounted for 57% and 26% of generation in 2020, respectively. Gas accounted for 13% of generation and of all the company’s emissions. A majority of renewable energy comes from contracts with third-party companies.

Between 2015 and 2020, PG&E’s emissions intensity was not aligned with the company’s 1.5°C pathway due to fluctuations caused by varying proportions of gas-use. The company emerged from bankruptcy in 2020 following liabilities of USD 30 billion related to wildfires.

PG&E closely ties transition planning to regulatory compliance. As such, there is no indication that the company is expanding its ambition beyond California’s clean energy requirements. With no plans to phase out gas or deliver significant investment in carbon removal technologies, the company will diverge from its 1.5°C pathway.