Addressing Climate Change

As a provider of gas and electricity to millions of Californians and an emitter of greenhouse gases, PG&E is keenly aware of its responsibility to both manage its emissions and work constructively to advance policies that put our state and the country on a cost-effective path toward a low-carbon economy, including our early and active support for California’s landmark Global Warming Solutions Act (AB 32).

PG&E’s commitment to addressing climate change is an integral part of our business. This ranges from our role as a national advocate for aggressive energy efficiency programs to our efforts to expand renewable energy supplies and provide new tools and incentives to help our customers understand, manage and reduce their energy use.

Reporting Our Impacts

We believe it is critical that investors, customers, policymakers and other stakeholders have access to information that allows them to assess and understand a company’s risks and opportunities associated with climate change. PG&E reports its greenhouse gas emissions to the California Air Resources Board (ARB) and U.S. Environmental Protection Agency (EPA) on a mandatory basis and to The Climate Registry on a voluntary basis as described below.

Mandatory Emissions Reporting

Since 2009, PG&E has complied with AB 32’s annual greenhouse gas emissions reporting requirements, reporting combustion emissions from our electric generation facilities and natural gas compressor stations to the ARB.

For our 2011 emissions, PG&E began reporting the greenhouse gas emissions from natural gas supplied to customers and the fugitive emissions from our natural gas distribution system and compressor stations. In 2015, as part of California’s cap-and-trade system, PG&E anticipates a compliance obligation associated with the natural gas supplied to customers, less the fuel that is delivered to covered entities. The following table shows the greenhouse gas emissions data PG&E reported to the ARB under AB 32.

PG&E Emissions Reported to the California Air Resources Board: CO2 Emissions from
Owned Power Generation1 and Operations
2009 2010 2011
Total CO2 Emissions (metric tonnes) 1,401,487 1,545,892 2,024,206
Humboldt Bay Power Plant2 390,339 276,811 N/A
Humboldt Bay Generating Station3 N/A 59,111 216,417
Gateway Generating Station4 1,011,147 1,209,970 1,042,896
Colusa Generating Station5 N/A N/A 764,894
 
CO2 Emissions Rates (lbs/MWh)
Humboldt Bay Power Plant 1,558 1,591 N/A
Humboldt Bay Generating Station N/A 1,004 1,022
Gateway Generating Station 895 861 868
Colusa Generating Station N/A N/A 851
Fossil Plants 1,016 943 875
All Plants 110 106 126
 
Other CO2-equivalent Emissions (metric tonnes)
Natural Gas Compressor Stations6 255,277 235,789 237,985
Fugitive Natural Gas Emissions7 N/A N/A 244,951
Customer Natural Gas Use8 N/A N/A 39,049,732

1 PG&E’s utility-owned generation comprised more than 40 percent of our delivered electricity in 2011. PG&E also reported N2O and CH4 emissions from each of our generating stations.

2 The Humboldt Bay Power Plant facilities, two operating fossil fuel-fired plants and two mobile turbines, were retired at the end of September 2010.

3 Humboldt Bay Generating Station became operational in September 2010.

4 Gateway Generating Station became operational in January 2009.

5 Colusa Generating Station became operational in December 2010 and was exempt from CO2 reporting for 2010.

6 Includes compressor stations emitting more than 25,000 metric tonnes of CO2-e annually.

7 Includes fugitive emissions from PG&E’s compressor stations and gas distribution and transmission system.

8 Includes emissions from the combustion of natural gas delivered to all entities on PG&E’s distribution system, with the exception of gas delivered to other natural gas local distribution companies. This figure does not represent PG&E’s compliance obligation under AB 32, which will be equivalent to the above reported value less the fuel that is delivered to covered entities as calculated by ARB.

Beginning with our 2010 emissions, PG&E also reported the greenhouse gas emissions from our facilities and operations to the U.S. EPA under its mandatory reporting requirements. Our 2011 emissions report will also include emissions from natural gas delivered to customers and fugitive emissions from our natural gas distribution system, including compressor stations. However, differing from ARB’s reporting requirements, the U.S. EPA regulations exclude PG&E accounting for natural gas delivered to “large” end users (those that consume more than 460 million cubic feet of natural gas annually).

Voluntary Emissions Reporting

PG&E was a charter member of the California Climate Action Registry and voluntarily reported its greenhouse gas emissions to the organization annually from 2002 through 2008. PG&E has since voluntarily reported its greenhouse gas emissions to The Climate Registry, a successor non-profit entity that has reporting and measurement standards applicable to most industry sectors across North America.

In 2010, the total CO2 emissions from PG&E’s delivered electricity declined by about 25 percent from the prior year to 15.6 million metric tonnes, as reported to The Climate Registry. This decline owed, in large part, to an increase in the amount of zero- and low-emitting electricity in our power portfolio (including hydro) and the expanded use of cleaner fossil-fueled electricity, including two new, state-of-the-art natural gas-fired plants that PG&E brought into service in 2010. Several factors affect PG&E’s power mix and emissions from year to year, including demand growth, the weather and the availability of hydro power.

In 2010, PG&E’s independently verified CO2 emissions rate associated with the electricity delivered to customers was 445 pounds of CO2 per MWh, about 23 percent lower than the prior year. PG&E’s emissions rate was about 30 percent cleaner than the California average and more than 60 percent cleaner than the national utility average. Our emissions rate takes into account emissions from both PG&E-owned power generation and power purchased from third parties.

Beginning in 2010, PG&E expanded its voluntary greenhouse gas emissions inventory to include the emissions associated with the natural gas that we delivered to customers. This is an emerging area that PG&E will continue to explore in light of evolving reporting requirements and best practices for this aspect of our business.

Click on the links below to review PG&E’s greenhouse gas emissions data reported to The Climate Registry.

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1 Because PG&E purchases a portion of its electricity from the wholesale market, we are not able to track some of our delivered electricity back to a specific generator. Therefore, there is some unavoidable uncertainty in PG&E’s total emissions and emissions rate for delivered electricity.

2 The emissions associated with this electricity are considered Scope 3 per The Climate Registry’s Electric Power Sector Protocol for the Voluntary Reporting Program, Annex I to the General Reporting Protocol, June 2009, Version 1.0.

3 PG&E voluntarily reported an additional 35.85 million metric tonnes of Scope 3 CO2-e emissions from the natural gas that it delivered to customers in 2010. This figure represents the emissions from the combustion of natural gas delivered to all entities on PG&E’s distribution system, with the exception of gas delivered to other natural gas local distribution companies, as well as gas delivered to PG&E facilities such as power plants, compressor stations, and offices, the emissions of which are reported separately. Because this figure is not third-party verified, it is not included in the table above.

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1 Prior to 2009, PG&E did not account for the process greenhouse gas emissions from geothermal generation.

2 PG&E voluntarily reported an additional 35.85 million metric tonnes of Scope 3 CO2-e emissions from the natural gas that it delivered to customers in 2010. This figure represents the emissions from the combustion of natural gas delivered to all entities on PG&E’s distribution system, with the exception of gas delivered to other natural gas local distribution companies, as well as gas delivered to PG&E facilities such as power plants, compressor stations and offices, the emissions of which are reported separately. Because this figure is not third-party verified, it is not included in the table above.

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1 Because PG&E purchases a portion of its electricity from the wholesale market, we are not able to track some of our delivered electricity back to a specific generator. Therefore, there is some unavoidable uncertainty in PG&E’s total emissions and emissions rate for delivered electricity.

2 PG&E voluntarily reported an additional 35.85 million metric tonnes of Scope 3 CO2-e emissions from the natural gas that it delivered to customers in 2010. This figure represents the emissions from the combustion of natural gas delivered to all entities on PG&E’s distribution system, with the exception of gas delivered to other natural gas local distribution companies, as well as gas delivered to PG&E facilities such as power plants, compressor stations, and offices, the emissions of which are reported separately. Because this figure is not third-party verified, it is not included in the table above.

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1 PG&E emits no perfluorocarbons (PFCs).

2 PG&E voluntarily reported an additional 35.85 million metric tonnes of Scope 3 CO2-e emissions from the natural gas that it delivered to customers in 2010. This figure represents the emissions from the combustion of natural gas delivered to all entities on PG&E’s distribution system, with the exception of gas delivered to other natural gas local distribution companies, as well as gas delivered to PG&E facilities such as power plants, compressor stations, and offices, the emissions of which are reported separately. Because this figure is not third-party verified, it is not included in the table above.

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1 Source: U.S. Environmental Protection Agency eGRID2012 Version 1.0, which contains year 2009 information configured to reflect the electric power industry’s current structure as of May 10, 2012.

2 Because PG&E purchases a portion of its electricity from the wholesale market, we are not able to track some of our delivered electricity back to a specific generator. Therefore, there is some unavoidable uncertainty in PG&E’s total emissions and emissions rate for delivered electricity.

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Since 2005, PG&E has also voluntarily reported greenhouse gas emissions to the Carbon Disclosure Project (CDP), an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world. Thousands of companies from across the world measure and disclose their greenhouse gas emissions and climate change strategies through the CDP. In 2011, PG&E was once again named to the CDP’s Carbon Disclosure Leadership Index for companies in the S&P 500.

Addressing Our Own Carbon Footprint

PG&E understands the imperative of reducing emissions from our sector. While some companies have set voluntary greenhouse gas reduction goals, PG&E has refrained from doing so due to impending state mandates. AB 32 requires the gradual reduction of greenhouse gas emissions in California to the 1990 level of 427 million metric tons of CO2-equivalent by 2020. In addition, separate from AB 32, PG&E’s facilities in the nine-county San Francisco Bay Area now pay a greenhouse gas emissions fee of 4.8 cents per metric tonne CO2-equivalent on emissions from facilities such as fossil-fueled power plants, natural gas compressor stations and emergency generators.

We continue to work to minimize our carbon footprint. Ongoing efforts include the following:

Last year, we continued to offset all of the greenhouse gas emissions associated with the energy used in PG&E’s offices and maintenance buildings by enrolling in our ClimateSmart™ program. In 2011, this amounted to more than 53,000 metric tonnes of CO2 reductions. This climate change education and demonstration program successfully concluded at the end of 2011 because its core goals were met. In particular, the program helped to inform key aspects of California’s climate change infrastructure, which will be needed as the state transitions to a low-carbon economy. This includes supporting and “road testing” important greenhouse gas offset protocols allowed under AB 32.

  • We are fully committed to meeting the state’s Renewable Portfolio Standard (RPS) requirement to deliver 33 percent renewable energy by the end of 2020. By the end of 2011, 19 percent of the electricity we delivered to our customers came from RPS resources, primarily from contracts with renewable energy companies.
  • As we move to a smarter grid that integrates more renewable energy sources, we are piloting energy storage projects, including working toward siting of a large-scale Compressed Air Energy Storage project. We also installed a 2 MW advanced, large-scale sodium sulfur battery at our Vaca-Dixon substation.
  • We have commissioned three clean, highly efficient and flexible natural gas-fueled generating facilities since early 2009.
  • PG&E has a goal to reduce energy use by 15 percent in MMBTUs at PG&E offices and service yards by 2014 from a 2009 baseline, equivalent to avoiding approximately 4,000 metric tonnes of CO2. In 2011, we reduced energy use by 4.8 percent—or about 383,150 MMBTUs—exceeding our 4.2 percent target. In 2012, our goal is to achieve an additional 3 percent reduction.
  • PG&E continues to deliver emissions reductions as we advance the use of lower-emission transportation technologies in our fleet. In 2011, PG&E’s use of natural gas in our fleet vehicles resulted in about 2,100 metric tonnes of avoided CO2 emissions on a “well-to-wheel” basis. We expect further reductions as a result of increasing use of plug-in vehicle technologies.
  • To better understand the greenhouse gas footprint of the products and services we purchase, PG&E collaborated on a multi-year project with researchers at the University of California, Berkeley and Climate Earth. The study yielded greater visibility into the greenhouse gas emissions of our supply chain and identified opportunities to reduce emissions.

Since 1998, we have reduced our sulfur hexafluoride (SF6) emissions rate by 86 percent and our total SF6 emissions by 72 percent. SF6 is an extremely potent greenhouse gas, approximately 23,900 times as potent as CO2 on a per ton basis, and is used as an electrical insulating material in high-voltage circuit breakers and gas-insulated substations. PG&E achieved these reductions in partnership with the U.S. EPA by implementing SF6 tracking, early detection measures for circuit breakers and an active breaker replacement program. Looking forward, we will comply with ARB’s new SF6 requirement that the maximum annual SF6 emissions rate for PG&E’s gas insulated switchgear decline from 10 percent in 2011 to 1 percent in 2020 and beyond; our 2011 emissions rate was 1.7 percent.

Engaging Our Customers

At PG&E, we continue to work with our customers to achieve energy savings and greenhouse gas emission reductions. We offer customers a full portfolio of options, including some of the nation's leading programs and incentives for energy efficiency, demand response and solar installation.

In 2012, PG&E proposed a Green Option program that will let customers support 100 percent renewable energy for an average of a few dollars a month. PG&E has asked the CPUC to approve the Green Option by early 2013.

Through PG&E’s Sustainable Communities efforts, we are helping cities and counties across our service area implement strategic energy and climate action planning through training, resources, funding and a dedicated team of community energy managers.

Through 2011, we provided aggregated energy consumption and emissions data to more than 200 cities and nearly 40 counties—a significant portion of the communities in our service area. We have also helped local governments develop more than 200 greenhouse gas inventories (municipal and community) and nearly 50 climate action plans.

Our team of community energy managers provides on-the-ground support to help local governments reduce community-wide greenhouse gas emissions by taking advantage of PG&E programs and incentives. The team offers expertise on green building ordinances, making facilities more energy-efficient and increasing use of renewable energy.

For example, in 2011, we helped integrate energy strategies into the city of Chico’s climate action plan and greenhouse gas reduction goals. We also helped identify untapped energy savings for the city through new data management and delivery pathways and we coordinated with the local university to assist with deploying a sustainable business program.

Much of this work is done in coordination with statewide efforts such as the Statewide Energy Efficiency Collaborative (SEEC), an alliance between California’s investor-owned utilities and three non-governmental organizations (ICLEI – Local Governments for Sustainability, the Institute for Local Government and the Local Government Commission). PG&E also actively supports the Beacon Award component of SEEC, which recognizes cities and counties that reduce greenhouse gas emissions and energy use.

Advancing Responsible Climate Change Policy Solutions

With reduced near term prospects for federal climate change legislation, PG&E has focused its advocacy at the state level for appropriate policies to address climate change.

At the state level, PG&E continues to participate in the ARB’s development of the cap-and-trade program, guided by three overarching objectives: to achieve AB 32’s greenhouse gas emissions reduction goals, manage costs for customers and create a program that can be integrated effectively with emerging regional, national and international programs. Features that will help mitigate costs to customers include allocating allowances to utilities for the benefit of their customers, access to a robust supply of high-quality offsets, robust market oversight and an allowance price containment reserve that will protect entities from high allowance prices.

We believe that a well-designed, multisector market-based program, combined with cost-effective renewable resources and energy efficiency, can put the state and the nation on a path to a low-carbon economy. Such an approach can reduce greenhouse gas emissions in a way that is economically sustainable and environmentally effective, while also spurring innovation and job creation.

At the federal level, PG&E remains engaged with coalitions and organizations such as the Business Council for Sustainable Energy, Coalition for Emission Reduction Policy, Center for Climate and Energy Solutions, Alliance to Save Energy, Electrification Coalition, Edison Electric Institute, Bipartisan Policy Center and the U.S. EPA’s Clean Air Act Advisory Committee on climate and clean energy policy issues.

Understanding the Potential Physical Impacts to Our Business

PG&E commissioned its first technical study on climate change’s potential physical impacts on our operations in 1989. In the last several years, California scientists and policymakers have increased their focus on the potential impacts of climate change to the physical environment. For example, in 2009, the State of California published a Climate Change Adaptation Strategy, and in 2010, the California Adaptation Advisory Panel to the State of California published Preparing for the Effects of Climate Change: A Strategy for California, both of which reference studies on the potential physical impacts of climate change in California.

These reports have identified three main potential risks for our sector: increased electricity demand from more extreme and frequent hot weather events; reductions in hydroelectric generation due to reductions in snowpack in parts of the Sierra Nevada mountains; and impacts to facilities due to sea level rise and increased storm surges.

Since 2008, PG&E has been investigating the potential physical risks of climate change to PG&E’s system. A team has reviewed the most relevant scientific literature on sea level rise, temperature changes, rainfall and runoff patterns and storm frequency and intensity affecting California and the West to identify potential impacts on PG&E assets so that the affected business units can reevaluate the risks to facilities and develop the necessary adaptation strategies. PG&E also engages with leaders from business, government, academia and nonprofits to share information, best practices and plan for the future.

Planning for Potential Climate Change Impacts

During 2011, PG&E continued to develop strategies to mitigate the impact of our operations (including customer energy usage) on the environment and to plan for the actions that we will need to take to adapt to the likely impacts that climate change will have on our future operations.

With respect to electric operations, climate scientists project that sometime in the next several decades, climate change will lead to increased electricity demand due to more extreme and frequent hot weather events. PG&E believes its strategies to reduce greenhouse gas emissions—such as energy efficiency and demand response programs, infrastructure improvements and the support of renewable energy development—will help to offset the expected increased demand for electricity.

In 2011, Gary Freeman earned our Richard A. Clarke Environmental Leadership Award for his leadership in helping PG&E better understand the potential impacts of climate change on our hydroelectric operations.

Climate scientists also predict that climate change will result in significant reductions in snowpack in parts of the Sierra Nevada Mountains. This impact could, in turn, affect PG&E’s hydroelectric generation. At this time, PG&E does not anticipate that reductions in Sierra Nevada snowpack will have a significant impact on our hydroelectric generation, due in large part to our adaptation strategies. These strategies include maintaining higher winter carryover reservoir storage levels, reducing conveyance flows in canals and flumes during storm events and the winter period in response to an increased portion of precipitation falling as rain, and reducing discretionary reservoir water releases.

PG&E is working with the U.S. Geological Survey (USGS) and the California Department of Water Resources to better understand the potential impacts of mountain snowpack loss on three Northern California low-elevation watersheds. Procedures for tracking and classifying climate change’s potential to impact our lines of our business have been developed for sea level rise, temperature change and the effects of precipitation change.

Additionally, PG&E has developed a snowmelt runoff tracking procedure to identify and track climate change’s potential impacts on small watershed areas, investigated Northern California’s aquifers to better understand how they may respond to climate change's potential impacts and worked with local communities in Northern California to increase awareness of decreasing water flows so that these communities can explore local adaptation measures. PG&E has also presented and published several scientific papers on our research and investigations into how climate change is impacting the Northern Sierra Nevada and Southern Cascade watersheds that supply our hydroelectric system.

If PG&E is not successful in fully adapting to projected reductions in snowpack over the coming decades, it may become necessary to replace some of our hydroelectric generation with electricity from other sources.

Scientists also project that climate change will cause sea levels along California’s coast to rise within this century, which may result in higher flooding potential at PG&E’s coastal facilities. In light of this long-term risk, PG&E is participating in the Adapting to Rising Tides project, in which the San Francisco Bay Conservation and Development Commission is partnering with the National Oceanic and Atmospheric Administration Coastal Services Center to work with Bay Area communities on planning for sea level rise.