Duke Energy

In 2018, Duke Energy’s emissions intensity – that is, the amount of greenhouse gas emissions produced for every unit of electricity – was higher than in 2013. Replacement of coal power with gas has not yet reduced emissions enough to compensate for a significant reduction in hydropower in 2016. Gas power overtook coal in 2018, but coal still provides 30% of power (gas 32%). There is opportunity for the company to reassess its long-term commitment to gas and to ramp up investments in renewables, which currently account for less than 6% of overall power (including the remaining hydro).

Duke Energy’s gas-heavy business model does not put it on track for low-carbon business alignment. The business segment covering renewables deployment as well as storage and energy management services needs to grow rapidly to reduce the company’s dependency on higher carbon activities. Furthermore, links between executive remuneration and fossil fuel capacity growth have not been cut, and the company is committed to expanding gas infrastructure, including via controversial projects such as the Atlantic Coast Pipeline.

Duke Energy’s spend on mitigation R&D, compared to total capital expenditure, is not high enough to demonstrate financial commitment to low-carbon technology innovation. Yet the company plans to continue gas generation into the foreseeable future, which means that permanent greenhouse gas capture and storage will certainly be required at its plants. Moreover, Duke Energy will need carbon removal technologies to meet the 2050 carbon intensity required under the well-below 2-degrees scenario, but there is no focus on these technologies in the company’s reporting for 2018.

Duke Energy recently announced that it aims to achieve net-zero emissions by 2050. However, to align with its company pathway under the well-below 2-degrees scenario, net-negative emissions intensity will be required by the late 2040s.

Duke Energy plans to retire a further 2 GW of coal power by 2024 (equivalent to ~4% of 2018 total capacity) and invest $11 billion over the period 2017-2026 in new gas, wind and solar capacity. The company is strongly committed to gas for the foreseeable future and is investing in gas infrastructure, e.g. the Atlantic Coast Pipeline project, as well as new gas power plants. This will lock in fossil fuel emissions for many years to come, but the company has not clearly explained how it plans to avoid these emissions.

Duke Energy is proceeding through a programme of coal plant retrofitting to burn gas (e.g. Cliffside, North Carolina). Some coal is being fully retired and replaced with gas (e.g. Citrus County, Florida). The company is developing plans to deploy battery storage projects (300 MW in the Carolinas plus 75 MW in other regions over the next 15 years) and rolling out smart metering to support low-carbon energy-as-a-service business options. Renewables procurement projects are being scaled up.

The proportion of coal in Duke Energy’s generation mix reduced from ~40% to ~30% over the period 2013-2018. Some coal plants have been retrofitted to allow them to burn gas as well as coal (e.g. Cliffside, North Carolina) and several have been retired (e.g. Anderson County, South Carolina). Approximately 62% of customers now have smart meters. The company has a track record of lobbying for policies to support development of gas infrastructure. It is undecided on some areas of clean energy policy and on carbon tax.

In the short to medium term, Duke Energy is achieving emissions reductions by replacing coal with gas. Greater action will be needed to reach the emissions intensity required by 2050. Without significant financial commitment to R&D to advance permanent greenhouse gas capture and storage, it is difficult to see how the company will achieve this. Low-carbon business models such as renewables, storage and energy management services need to grow rapidly, but executive remuneration is still linked to fossil fuel capacity growth. Lack of climate change expertise at board level as well as lack of a clear trade association engagement policy also call into question the company’s consistency on climate issues.