Partnering in the Fight Against Climate Change
PG&E believes the link between greenhouse gas emissions and global climate change is clear and convincing and that mandatory emission reductions are necessary. As an emitter of greenhouse gases and a provider of gas and electricity to millions of Californians, we have a responsibility to both manage our carbon footprint and work constructively to advance policies that put the country and the world on a path toward a low-carbon economy.
These efforts will not only help to reduce the potential risks and consequences climate change poses to our company and the broader economy and environment, but will also lead to opportunities to create quality jobs, spur innovation and manufacture new technologies. Businesses and countries around the world are realizing the opportunities these new policies and approaches can create. We believe that with the right policies and incentives, the U.S. can become a world leader in these new technologies, but only if action is taken sooner, rather than later.
Moving forward, PG&E will continue to take meaningful, concrete measures to address greenhouse gas emissions and work collaboratively to develop and implement responsible policies and practices to successfully meet the climate and energy challenge.
Reporting Our Impacts
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 was among the earliest companies to voluntarily quantify and report the greenhouse gas emissions from all of the electricity we deliver to our customers.
From 2002 to 2008, PG&E publicly reported and independently verified our greenhouse gas emissions inventory with the California Climate Action Registry (CCAR).
In 2009, California’s Global Warming Solutions Act (AB 32) greenhouse gas reporting regulations went into effect, requiring regulated entities such as PG&E to prepare and submit an annual greenhouse gas emissions inventory to the California Air Resources Board (ARB). In addition, CCAR transitioned to a nationwide voluntary inventory program called The Climate Registry. Because AB 32’s mandatory reporting requirements do not include some of the emissions reported voluntarily, PG&E chose to voluntarily report to The Climate Registry, and became a founding member of that organization. Reporting to The Climate Registry enables us to be more transparent regarding the greenhouse gas emissions associated with our business.
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 2010, PG&E earned a top ten ranking on both the CDP’s Carbon Disclosure Leadership Index and Carbon Performance Leadership Index for companies in the S&P 500.
As required by AB 32, PG&E’s annual report to the ARB covers the greenhouse gas emissions from our electric generating facilities, imported electricity and major natural gas compressor stations, as well as the SF6 used in electric transmission and distribution equipment. In 2012, we will begin reporting greenhouse gas emissions from the natural gas supplied to end-users and the vented and fugitive emissions from our natural gas system (fugitive emissions are those emissions which could not reasonably pass through a stack, chimney, vent or other functionally-equivalent opening). We are proactively engaging with state and federal government agencies and other stakeholders to more effectively measure these fugitive emissions.
In 2011, we will begin reporting the greenhouse gas emissions from some of our facilities and operations to the U.S. EPA under its new requirements.
In 2009, PG&E’s independently verified CO2 emissions rate associated with the electricity delivered to customers was 575 pounds of CO2 per MWh, about 10 percent lower than the prior year. This reversed an upward trend in our emissions rate dating back to 2007. The improved result was primarily due to an increase in the amount of zero- and low-emitting electricity in our portfolio and the expanded use of cleaner fossil-fueled electricity. PG&E’s emissions rate continues to be lower than the California average and about half the national average.
Click on the links below to review PG&E’s greenhouse gas emissions data.
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 On average, PG&E procures approximately 65 percent of the electricity it delivers to customers from third-party suppliers. 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.
1 Prior to 2009, PG&E did not account for the process greenhouse gas emissions from geothermal generation.
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.
1 Source: U.S. Environmental Protection Agency eGRID2010 Version 1.1, which contains year 2007 information configured to reflect the electric power industry’s current structure as of December 31, 2010.
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. The third-party protocols’ methodologies for estimating these emissions have evolved, becoming more accurate over time.
PG&E’s CO2 Emissions from Owned Power Generation1
| 2008 | 2009 | 2010 | |
|---|---|---|---|
| Total CO2 Emissions (metric tons) | 366,553 | 1,401,487 | 1,545,892 |
| Humboldt Bay Power Plant2 | 366,553 | 390,339 | 276,811 |
| Humboldt Bay Generating Station3 | N/A | N/A | 59,111 |
| Gateway Generating Station4 | N/A | 1,011,147 | 1,209,970 |
| Colusa Generating Station5 | N/A | N/A | N/A |
| CO2 Emissions Rates (lbs/MWh) | |||
| Humboldt Bay Power Plant | 1,554 | 1,558 | 1,591 |
| Humboldt Bay Generating Station | N/A | N/A | 1,004 |
| Gateway Generating Station | N/A | 895 | 861 |
| Colusa Generating Station | N/A | N/A | N/A |
| Fossil Plants | 1,554 | 1,016 | 943 |
| All Plants | 32 | 110 | 106 |
Addressing Our Own Carbon Footprint
As a company that has advocated for federal regulation of greenhouse gas emissions since 2000, PG&E understands the imperative of reducing emissions from our sector. While some companies have set voluntary greenhouse gas reduction goals, PG&E, after careful consideration, has refrained from doing so due to impending state mandates.
Specifically, starting in January 2012, AB 32 requires the gradual reduction of greenhouse gas emissions in California to the 1990 level of 427 million metric tons of CO2 (or its equivalent) by 2020.
In addition to this state mandate, PG&E’s facilities in the nine-county San Francisco Bay Area became subject to a greenhouse gas emissions fee imposed by the Bay Area Air Quality Management District in 2009. PG&E facilities that are required to submit an air quality permit to operate, such as fossil-fueled power plants and natural gas compressor stations, have a fee of 4.4 cents per metric ton of greenhouse gas emissions added to their permit bill.
We continue to work to minimize our carbon footprint. Ongoing efforts include the following:
- Since 1998, we have reduced our sulfur hexafluoride (SF6) emissions rate by 85 percent and our total SF6 emissions by more than 70 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.
- We continue to reduce the methane emissions from our natural gas pipeline operations, avoiding the release of more than 2,360 metric tons of methane (CH4), or approximately 50,000 metric tons of CO2-equivalent, in 2010. Methane is a greenhouse gas that is at least 21 times more potent on a per ton basis than CO2 in terms of its effect on global warming.
- 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 2010, this amounted to nearly 48,000 metric tons of CO2 reductions.
Advancing Responsible Climate Change Policy Solutions
In 2010, PG&E continued to play a leadership role at the state and federal levels in advocating for government policies to address climate change. We believe that a well-designed, multi-sector market-based program, combined with cost-effective renewable resources and energy efficiency, can put the nation on a path to a low-carbon economy. Such an approach can achieve reductions in a way that is economically sustainable and environmentally effective, while also spurring innovation and job creation.
PG&E’s Climate Change Policy Principles
Market-based strategies provide economic incentives and the flexibility to cut emissions in the most innovative and cost-effective ways. This approach is key to driving development of the next generation of clean, highly energy-efficient technologies and practices. PG&E believes a properly designed cap-and-trade system—coupled with customer energy efficiency, renewables and demand-side management programs—will reduce greenhouse gas emissions, diversify energy supplies and help to minimize costs to customers. We believe that the following principles should guide policy development:
- Mandatory greenhouse gas reductions are necessary.
- Long-term greenhouse gas targets provide a basis for action and investment.
- Standardized emissions reporting is an essential first step and must form the basis of any mandatory program.
- A cap-and-trade program minimizes costs, maximizes innovation and ensures environmental effectiveness.
- Broad-based participation leads to better, more cost-effective results.
- Near-term opportunities for cost-effective, verifiable greenhouse gas reductions, including offsets, should be encouraged and pursued, and early action recognized.
- Consumers will bear the majority of program costs, so consumers should receive a substantial amount of value associated with allowance distribution.
- The value associated with emissions allowances under a cap-and-trade program should be used to support the overall objectives of the climate protection program, including smoothing the transition for consumers and businesses, helping to advance technology and train and transition the nation’s workforce and supporting efforts to adapt to a changing climate.
- Barriers exist to realizing the full potential for energy efficiency, and they must be dismantled.
- Investment in low- and zero-emission electric generation and other technologies is critical and must be prioritized.
A well-designed program includes elements to help mitigate costs for utility customers, including provisions to return allowance value to utilities for the benefit of their customers; the use of high quality offsets that are additional, real, permanent, quantifiable, verifiable and enforceable; a price collar that ensures there is a minimum price signal for carbon to encourage investment in low-carbon technologies while managing the risk of unsustainably high carbon prices; and other flexibility measures. It also sets long-term reduction targets that challenge our sector while recognizing the time it takes to bring new technologies and resources on-line.
At the state level, PG&E was the first investor-owned utility to support California’s enactment of AB 32 in 2006, which set a goal of reducing the state’s greenhouse gas emissions to 1990 levels by 2020. We approach AB 32 implementation guided by three overarching objectives: achieve AB 32’s greenhouse gas reduction goals, manage costs for customers and create a program that can be integrated effectively with emerging regional, national and international programs.
On November 2, 2010, California voters soundly defeated Proposition 23 by a 23 percent margin. This ballot initiative would have suspended AB 32 until California’s unemployment rate dropped to 5.5 percent or below for four consecutive quarters. PG&E opposed this ballot initiative and contributed roughly $500,000 in shareholder funding to the opposition campaign. We continue to work closely with the state legislature, ARB, CPUC, CEC and other concerned stakeholders to ensure the responsible implementation of AB 32.
For example, we actively participated in the development of ARB’s proposed cap-and-trade regulations, which included provisions to establish a cap on greenhouse gas emissions (beginning on January 1, 2013 and ending December 31, 2020), allocate emission allowances (i.e., the right to emit greenhouse gases) among utilities and other industry participants and permit the purchase and sale of emission allowances through an ARB-managed auction, among other provisions. ARB is expected to submit modified regulations, incorporating public comments, to the California Office of Administrative Law for final approval in the fall of 2011.
At the federal level, Congress failed to enact comprehensive climate change legislation at the end of the 111th Congress. As a result, the U.S. Environmental Protection Agency (EPA) continued to move forward with its rulemaking process to establish a regulatory regime for greenhouse gas emissions from stationary sources. PG&E is actively participating in this process, including making recommendations to the EPA as a member of EPA’s Clean Air Act Advisory Committee on the energy, economic and environmental impacts of potential control options for greenhouse gases.
As part of our continued commitment, we also joined with several utilities last year in a letter to the editor of the Wall Street Journal reaffirming our support for EPA’s efforts to strengthen air quality regulations. PG&E plans to continue to engage both on its own and through coalitions such as the Clean Energy Group, among others.
Working With Coalitions
Much of our climate change advocacy work is done through coalitions, including the U.S. Climate Action Partnership (USCAP), which consists of major businesses and leading environmental organizations. In 2010, USCAP continued to actively advocate for a national, market-based approach to reduce greenhouse gas emissions with a cap-and-trade program as its cornerstone. While legislation passed the House in June 2009, it stalled in the Senate in 2010. The legislation that passed the House and that was being considered in the Senate embodied many of PG&E’s priorities, including achieving real, verifiable reductions in greenhouse gas emissions and providing significant cost protections for our customers.
PG&E is a founding member of the Clean Energy Group, a coalition of utilities advocating for a national, mandatory, market-based approach to curbing greenhouse gas emissions in the power sector. PG&E is also a member of the multi-sector Coalition for Emission Reduction Policy, whose mission is to educate policy-makers and the general public about the benefits of using carbon offsets from domestic and international greenhouse gas emission reduction projects. In 2010, the group played an active role in developing the offset provisions in the ARB’s cap-and-trade regulations.
Finally, PG&E continued its participation in the Business Council for Sustainable Energy. Through this organization, we work to advance legislation and regulations that support renewable energy development, reduce greenhouse gas emissions, improve energy efficiency and advance new and emerging clean energy technologies.
Understanding the Potential Physical Impacts to Our Business
PG&E commissioned its first technical study on the potential physical impacts of climate change on its operations in 1989. In the last several years, California scientists and policy-makers have increased their focus on the potential impacts of climate change to the physical environment. In fact, since 2006, the CEC has published a biannual summary of the most recent developments in climate change science relevant to California.
These experts have identified three primary climate change-related business risks for our sector: potential increased electricity demand from more extreme and frequent hot weather events; potential impacts to facilities due to sea level rise and increased storm surges; and potential reductions in hydroelectric generation due to reductions in snowpack in parts of the Sierra Nevada Mountains.
Since 2008, PG&E has maintained a cross-functional team to explore and communicate these risks within the company. This team has conducted bi-annual reviews at an increasingly localized level of 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.
Team members communicate the results of these reviews to their respective business units, such as power generation and electric and gas transmission and distribution, so that the business units can re-evaluate the risks and impacts to the company’s facilities that may result from climate change, and develop the necessary adaptation strategies.
PG&E also continues to engage with thought leaders from the business, government, academic and non-profit sectors to more accurately determine the physical impacts of climate change on our business, share best practices and plan for the future. For example, PG&E scientists serve on a California Energy Commission-sponsored Technical Advisory Committee for a forthcoming report entitled “Quantifying Risk to California Energy Infrastructure from Projected Climate Change.”
Planning for Potential Climate Change Impacts
According to climate scientists, sometime in the next several decades, climate change will result in more extreme and frequent hot weather events in California. This impact, in turn, is projected to increase Californians’ demand for electricity. PG&E’s adaptation strategies for this potential climate change impact include expanded customer energy efficiency and demand response programs and improvements to our electric grid.
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, although at this time, we do not anticipate that reductions in Sierra Nevada snowpack will have a significant impact on our hydroelectric generation in the near future.
PG&E is proactively evaluating the potential impacts of climate change on its hydroelectric system, and has developed adaptation strategies to minimize the impacts of severe storms and reductions in Sierra Nevada snowpack. These strategies include maintaining higher winter carryover reservoir storage levels, reducing conveyance flows in canals and flumes in response to an increased portion of precipitation falling as rain and reducing discretionary reservoir water releases during the late spring and summer.
PG&E is also working with both the U.S. Geological Survey (USGS) and the California Department of Water Resources to begin using a USGS watershed model, which is well suited to help manage reservoirs on watersheds experiencing loss of mountain snowpack. Because PG&E anticipates that reductions in snowpack due to climate change are likely to impact our low-elevation hydroelectric facilities first, the USGS model is being tested on the relatively low-elevation North Fork Feather River, Middle Fork Feather River and Yuba River watersheds.
PG&E staff has also been raising local communities’ awareness of the decreasing water flows in these systems so that they can explore local adaptation measures.
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 hydroelectricity with other sources.
Finally, climate scientists also project that climate change will cause an increase in sea levels along California’s coast, which may result in higher flooding potential at PG&E’s coastal facilities. Like a growing number of businesses, communities and governments across California, PG&E is aware of this long-term risk and will address it over time. For example, 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 to begin planning for sea level rise.
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