Southern Company Steps Up With ‘Net Zero' Target; Gas Stranded Asset Questions Remain

Today at Southern Company’s annual general meeting, management announced a new climate target to achieve net-zero emissions by 2050. This improves upon its previously vague target of “low to no emissions” by 2050. The new commitment puts Southern Company among the growing cohort of U.S. power utilities that have set net-zero-by-2050 or equivalent decarbonization targets, including some of the largest investor-owned power utilities such as Xcel Energy, NRG, PSEG, Pinnacle West, Duke Energy, and Dominion Energy.

Earlier this year, As You Sow withdrew a shareholder proposal filed with Southern Company that raised the risk of natural gas stranded assets, noting that the global warming impacts of natural gas jeopardize achievement of critical climate goals. After productive dialogue with Southern Company and its commitment to provide further transparency regarding its natural gas fleet and climate strategy, As You Sow withdrew the proposal.

“We commend Southern for committing to net-zero emissions and look forward to more clarity on how it will achieve this new target, especially with regard to its large natural gas fleet,” said Lila Holzman, Energy Program Manager of As You Sow. “Shareholders are increasingly concerned that utilities may experience stranded assets and early retirements of natural gas infrastructure similar to what we’ve seen with coal-fired assets. Southern must clarify how it will avoid this as it works to achieve its climate target.”

Net-zero-by-2050 targets for power utilities recognize the importance of Paris alignment, but concerns remain about some utilities’ plans — or lack of plans — to achieve such goals, as well as the scope of utilities’ emissions covered by the targets. While there is a clear positive trend of moving away from high-carbon, coal-fired power in the U.S., there has been an accompanying boom in construction of natural gas power plants and infrastructure that is incompatible with achieving alignment with the Paris Climate Agreement. This issue was described in depth in As You Sow and Energy Innovation’s recent report, Natural Gas: A Bridge to Climate Breakdown.

Carbon Tracker’s assessment of Southern Company shows that the power utility’s current energy mix plans are insufficient to achieve the Paris Agreement’s 1.5°C (net-zero-by-2050) target. Carbon Tracker further highlights that as much as 42 percent of Southern’s gas generation could be replaced cost-effectively today with utility-scale solar or onshore wind, and this could rise to 100 percent of generation by 2030, as renewable energy technology costs continue to fall.

“Investors need answers about the future viability of Southern’s natural gas assets as renewable clean technologies undercut them on cost, their climate footprints loom large, and carbon capture technology remains uneconomic,” said Holzman. “Southern’s net-zero target is an important step in the right direction, but not all its supply chain emissions are covered by the target. If Southern incorporated its full carbon footprint in such a target, it would quickly recognize the need, and begin planning, to move away from natural gas.”

To learn more about As You Sow’s work on climate change, click here.

About As You Sow
As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies. See our resolutions here.