Global warming is a critical challenge for the world. Are energy companies meeting that challenge head-on? We talk to Gale E. Klappa, Executive Chairman of WEC Energy Group, about why they are committed to an 80% reduction in carbon emissions by 2050.
It is uncontroversial to say that the world is undergoing significant climate change. According to scientists at NASA’s Goddard Institute for Space Studies (GISS), average global temperatures have increased by around 0.8° Celsius since 1880 – and two-thirds of that warming has occurred since 1975.
Most scientists agree that global warming is predominantly made by people and that the situation is rapidly becoming severe. The World Ocean Network says that global atmospheric concentrations of carbon dioxide have increased from 280 ppm in the pre-industrial era to a measurement of 379 ppm in 2005. From 1995 to 2006, all but one of those years were the warmest on record since 1850.
The Paris Agreement, which by March 2019 had been signed by 195 UNFCCC members, committed those countries to take steps to limit temperature increases to 1.5% and certainly no more than 2%. But are energy companies taking note?
It seems that they are. WEC Energy Group, a U.S. coal and gas power company, has thrown its lot in with renewables. While maintaining its existing coal and gas-based business, it is transitioning toward significant reductions in its greenhouse gas (GHG) emissions over time. We talked to Gale E. Klappa, Executive Chairman of WEC Energy Group, about their ambitious plans.
Why is it important for WEC Energy Group to address climate change?
It is a pivotal
time in the energy industry. Many stakeholders – including investors, customers
and nonprofit organizations – are calling on companies to address the
challenges of climate change. At WEC Energy Group, we’ve made it a priority to
reduce carbon dioxide emissions while maintaining reliable, cost-effective and
resilient infrastructure.
Recent and planned investments in renewable energy, air quality control
systems, power grid upgrades, and modernisation of our natural gas delivery
networks, are helping us to significantly improve our environmental
performance.
Do you see world government and energy companies addressing the balance between traditional energy sources and renewables?
When we set our company goals for carbon emissions reduction, we took into account the objectives of the Paris Agreement, and we continue to support research on the best pathways to a low-carbon economy.
For example, we have collaborated with the Electric Power Research Institute (EPRI) and others to assess potential transitions through 2050 – consistent with limiting warming to 2 degrees Celsius.
This assessment highlighted the potential for further carbon reductions in power generation as well as electrifying end uses in transportation, buildings and industry.
What are your current renewables projects? Did you set any goals and have they been met?
We are committed to making renewable energy a key part of our energy mix.
We have installed 438 MW of new wind generation and 50 MW of new biomass. Our plans include further investments in renewables, specifically adding 350 MW of utility-scale solar and up to 185 MW in renewable pilot programs.
I’m pleased to say that large-scale solar has become a much more viable option for companies like ours. Over the past few years, utility-scale solar has increased in efficiency and prices have dropped by nearly 70%. This price drop means it is now a cost-effective option for our customers, an option that also fits well with our summer peak demand curve and with our plan to significantly reduce carbon dioxide emissions.
At the close of 2018, the Public Service Commission of Wisconsin also approved two innovative renewable energy pilot programs.
The first is Solar Now, which is being piloted. What it means is that commercial and industrial customers who allow us to construct solar photovoltaic systems at their facilities will receive monthly payments for the energy they produce, while we retain the power generated and distribute it throughout our network.
The second pilot is called Dedicated Renewable Energy Resources. Through this program, we will partner with large commercial and industrial customers that have set ambitious renewable energy goals and build specific renewable resources to serve their individual needs.
How does your action around climate change tie into corporate responsibility and your values as a company?
Our pursuit of realistic GHG emission goals is entirely consistent with our values.
We believe that effective corporate governance is an essential driver of shareholder value and a key component of sustainability.
Senior management has primary responsibility for managing risk, and it addresses this responsibility by seeking and evaluating input from across the enterprise.
Our vice president – environmental provides regular updates on environmental issues, including regulatory matters, to the Audit and Oversight Committee of our board of directors through formal quarterly reports. Oversight of climate change risks, opportunities and strategies as a whole remains within the purview of the full board.
Further, we engage with policymakers and other stakeholders to improve transparency and results. These efforts help us identify opportunities for research, development, demonstration, collaboration, investment and piloting.
Do you plan to escalate your efforts around addressing climate change in response to recent forecasts?
We announced our generation reshaping plan in 2016 in response to the changing economics in the energy industry as well as growing worldwide efforts to reduce carbon emissions. As we leverage current technology and retire older coal-fuelled generation, we anticipate meeting our 40% CO2 reduction goals well in advance of our 2030 target.
In light of that progress, we adopted an even more aggressive goal – an 80 percent reduction in CO2 by 2050.
We’re confident in our ability to achieve our 80% reduction goal, but it will require significant effort and continuing improvement in technology. That is our challenge. We will evaluate these factors and update our plan as technology, policy and markets evolve.