Is Duke Energy a green leader? That's up for debate.

Is Duke Energy a green leader? That's up for debate.

Aug 1, 2019, 12:48pm EDT

Duke Energy Corp. (NYSE: DUK) put out its 13th Annual Sustainability Report this spring, promoting $1.6 billion in clean energy bonds, new efforts to cut water consumed in power production and progress in reducing carbon emissions.

"Duke Energy has been leading the charge to a cleaner energy future," Chief Executive Officer Lynn Good exulted in the report's Message from the CEO. "We're looking at ways to accelerate the move to cleaner energy because we know it's right for our customers, our communities and society at large."

One week later, the Environmental Working Group put out a report titled Public Energy Enemy No. 1. That report, the group says, explains "why Duke, America's biggest electric utility, is also the worst for the environment."

So, is Duke an environmental hero or villain?

"Both opinions are wrong and overly simplistic," says David Rogers, the N.C. representative of Sierra Club's Beyond Coal Campaign.

The mixed messages and actions are many:

• The 2014 coal-ash spill on the Dan River — leading to federal charges, legislation and increased scrutiny of Duke's nation-leading stores of coal-ash waste — stirred outrage over Duke's environmental commitment. For some, it became a national symbol for intransigence on the coal ash issue.

• Duke's role in North Carolina's second-in-the-nation ranking for solar capacity and its commercial operations that include some of the nation's largest wind farms have given the company national prominence as a champion of renewables. Not all see that as the whole story.

• Its recent emphasis on development of natural gas plants has reduced greenhouse gas emissions as the company shuts down coal-fired plants. But critics worry about the continued carbon from burning gas.

The Charlotte Business Journal talked to the company and to groups such as the Sierra Club that have a history of both opposition to and collaboration with the energy giant. Some have found common ground with Duke on a new pilot for electric vehicle charging. Some have worked with Duke on its controversial grid modernization program that could encourage more renewables and lead to smarter energy use. Going back as far as the 2007 law that established minimum requirements for renewable energy use by North Carolina utilities, these groups have taken opportunities to engage with Duke on their environmental priorities.

They have also been more than willing to call Duke out on issues where they disagree.

"I am very proud of Duke's environmental stewardship and performance record," says Diane Denton, until recently the director of federal environmental and energy policy for Duke who is now its state energy policy director for North Carolina. "It's not perfect. We have had some issues. We are certainly all familiar with those."

Here's where the two sides stand on the major environmental issues of the day.

Climate and carbon

Duke is the largest emitter of carbon among the nation's 100 largest utilities. The sustainable investment group Ceres publishes an annual report benchmarking emissions in the power industry, and the 2019 report (based on 2017 statistics) pegged Duke's emission at 104.6 million tons annually.

But ranked by the amount of carbon needed to produce a megawatt-hour of electricity — called "carbon intensity" — Duke fares much better. It ranks 54th, emitting 945 pounds of carbon for each megawatt-hour. That is less than half the rate of the worst-performing power company,

That is the key number to consider, Denton says. In 2006, the carbon intensity (accounting for the addition of Progress Energy) was about 1,323 pounds per megawatt-hour, based on Ceres figures for that year.

Last year, Duke's total carbon emissions were down 31% from their peak in 2005 — the industry benchmark year for reduction targets. Duke's goal of 40% reduction by 2030 was among the industry's most ambitious when it was announced in 2017.

But not any longer.

Dionne Delli-Gatti, Southeast clean energy director the Environmental Defense Fund, says many companies have accelerated their carbon reduction plans. She cites Minnesota-based Xcel Energy Inc., which recently adopted plans to reduce carbon emissions by 80% by 2030 on its way to eliminating them by 2050.

"We would like to see a commitment to retiring coal faster," Delli-Gatti says. "And we would like to see them not rely so much on natural gas to replace coal."

Plant retirements

Duke and its predecessor companies have retired 49 coal plants across six states. Duke still operates 13 coal plants, including seven in the Carolinas. Two coal plants are slated to retire this year, and current plans call for completely phasing out coal by 2048.

"That is not what we need from them as a leading utility, given the reality of the current situation on climate change," says Rogers of the Sierra Club.

"We have that obligation to balance all the perspectives," Denton says. "While we hear the desire to get out of coal almost immediately, for us a lot of times that can be replacing coal with natural gas, which is accomplishing our reduction in natural gas objectives but also maintaining reliability for the system at a much lower cost."

The latest calculations by climate scientists are that the world must zero-out carbon emissions by 2050.

Duke's proposals to build additional gas plants — with life cycles up to 40 years — into the 2030s is an admission the utility won't reach the zero target year, Rogers says.

Bill Walker, vice president of the Environmental Working Group and co-author of the Public Energy Enemy report, contends the industry contention that natural gas is a "transition fuel" to cleaner energy, has been discredited.

"From its production to its transportation to its use, natural gas is bad for the environment," he says. Hanging on to it for as long as Duke plans to is a major strike against Duke's environmental commitment.

"We understand that they have an obligation to maximize profits," he says. "But by staying behind the curve in the transition to cleaner energy, they are not serving the long-term interest of their investors or their customers."

Delli-Gatti says she sees some hope Duke will increase its commitments to clean energy alternatives and speed its reductions in carbon emissions. She notes Stephen De May, Duke's N.C. president, said at the State Energy Conference this year that those goals were under review.

"We are absolutely looking at whether we can move faster," Denton says.

Efficiency and clean energy

Duke makes much of the amount of solar on its systems in the Carolinas and the rapid growth planned in Florida.

The Southern Alliance for Clean Energy says in its most recent Solar in the Southeast report that Duke utilities in the Carolinas and Florida account for more than half the solar energy in the region. Last year, Duke Energy Carolinas and Duke Energy Progress were two of just four utilities rated above the regional average for solar on the grid. By 2022, Duke Energy Florida will join them.

The Southern Alliance for Clean Energy also consistently rates Duke's Carolinas utilities as best in the Southeast for promoting energy efficiency and conservation.

Executive Director Stephen Smith says those are significant and consistent accomplishments. But he notes the Southeast, dominated by monopoly markets, tends not to be a leading player in renewables.

"I see Duke in the middle of the pack nationally," he says. "Not a leader or a laggard."

Federal and state regulations that controlled the development of solar in the Carolinas until this year was in many ways the "secret sauce" that catapulted the state to a (distant) second for solar behind only California. North Carolina has now moved to a competitive bidding system for much new solar construction.

SACE Deputy Director John Wilson says Duke's strength in these areas grows from its significant technical competence. Duke is out front in solar and efficiency because of the 2007 renewable energy standards, not because Duke pushes them, he says. "You don't see Lynn Good, saying, 'We want more solar and here are five ways we can do it.'"

Denton cites the competitive bidding process as a way to build on the Carolinas' leading role in solar while pushing down the costs of clean energy for customers. "We see that as an absolute positive."

Lauren Bowen, who heads the regional solar initiative for the Southern Environmental Law Center, like many, sees Duke's track record in solar as mixed. She says the company does deserve credit for its role in adopting solar in the Carolinas and now in Florida.

But she also thinks Duke has put up obstacles in an effort to protect its monopoly position in power production and sales.

She notes the competitive bidding process also opened the way for Duke's utilities and its commercial subsidiary, Duke Energy Renewables, to participate in the state's market for solar.

How much credit Duke deserves on solar hinges on whether the bidding process delivers on its promise to produce up to 2,660 megawatts of new solar through 2023. "There are still questions about what it looks like when all of this is worked out," Bowen says. "If it works out in the long run and encourages solar, it will be positive."

Environmental groups contend it is still necessary to nudge Duke toward environmentally friendly and sustainable action. "If it had been left up to Duke alone, I don't think we would be second in the nation for solar," Bowen says.

And that brings the question back around to Duke's leadership in a quickly changing industry where the basic regulatory compact Duke depends on — a monopoly status in return for reliable and affordable power that allows for profits to reward it shareholders — is increasingly tested.

Smith, of the Southern Alliance for Clean Energy, sees Duke as all over the map on this — and much of the divide is generational. He says there are younger executives at the company with their "hair on fire" for faster change and "gray hairs with their head in the sand."

He is particularly perplexed by the role of CEO Lynn Good on environmental issues. "Jim Rogers (her predecessor) had a lot of thoughts, but at least he was good at articulating a vision. I struggle to see her vision on these important matters."