Corporate Responsibility and Sustainability Report 2018

Our Approach

PG&E is committed to the California vision of a sustainable energy future. In the near term, California’s Global Warming Solutions Act, or AB 32, requires California to gradually reduce its greenhouse gas emissions to the 1990 level of 431 million metric tons of carbon dioxide-equivalent (CO₂-e) by 2020. PG&E also remains actively engaged with policymakers and various stakeholders on the implementation of SB 32, which requires that the California Air Resources Board (CARB) ensure a 40 percent reduction in economy-wide greenhouse gases by 2030 compared to 1990 levels.

PG&E supported Assembly Bill (AB) 398, which extends California’s cap-and-trade program for reducing greenhouse gas emissions and provides cost protections for energy consumers. The cap-and-trade program covers emissions from PG&E’s fossil-fuel power plants, natural gas distribution to customers not directly covered by the program, compressor stations and electricity imported into California. We also supported AB 617, which addresses local air quality concerns in affected communities.

In addition, PG&E has been actively working with the California Public Utilities Commission (CPUC) to implement Senate Bill (SB) 350’s Integrated Resource Plan (IRP) requirements to meet the state’s greenhouse gas reduction targets and do so in a way that minimizes impacts on all customers’s energy bills. In September 2018, SB 100 was signed into law and increases and accelerates the Renewables Portfolio Standard (RPS) targets and requires state energy agencies to include a 100 percent clean energy planning goal by 2045 into all relevant planning.

Reporting Our Impacts

We believe it is essential that investors, customers, policymakers and other stakeholders have access to information that allows them to assess and understand the risks and opportunities associated with climate change.

PG&E reports its greenhouse gas emissions to the California Air Resources Board and the U.S. Environmental Protection Agency (EPA) on a mandatory basis. On a voluntary basis, PG&E reports a more comprehensive emissions inventory to The Climate Registry, a nonprofit organization. Each year, PG&E also reports its greenhouse gas emissions and climate change strategies to the CDP (PDF), an international not-for-profit organization that requests information on behalf of institutional investors.

Engaging Our Customers and Communities

PG&E actively works with customers to help them achieve energy savings and greenhouse gas emission reductions through a broad range of programs and incentives for energy efficiency, demand response and solar installation. These efforts include helping local governments develop strategies and implementation plans to save energy and reduce emissions, and connecting them with PG&E programs and other resources to help them meet their energy goals.

Addressing Our Own Carbon Footprint

As part of PG&E’s broader commitment to address climate change, we launched the Million Ton Challenge, a voluntary five-year carbon reduction goal for Pacific Gas and Electric Company’s operations. The goal is to avoid one million tons of cumulative greenhouse gas emissions from our operations from 2018 through 2022, compared to a 2016 baseline.

To meet the goal, PG&E is working to reduce emissions across several business areas:

• Saving energy through energy-efficient and more sustainable facilities,
• Reducing methane emissions from natural gas operations,
• Continuing to deploy a smarter, cleaner fleet of PG&E vehicles, and
• Adopt environmentally responsible products and services, with a focus on electric substation equipment.

Clean Energy Policy

PG&E supports the decarbonization of California’s economy through timely, durable, effective and affordable policy and energy solutions. We remain committed to climate actions to reduce greenhouse gases and address the impacts of global warming—from deploying clean energy technologies to continuing to lead and innovate on energy efficiency.

As required by SB 32, CARB adopted its 2030 Scoping Plan Update, which established the state’s plan for achieving the 2030 GHG target. We remain engaged in state regulatory and legislative climate change activities, including those around implementing California’s cap-and-trade program, to meet the state’s greenhouse gas emissions reduction goals at the lowest possible cost to customers.

We also remain focused on other Scoping Plan measures such as Low Carbon Fuel Standard implementation and the reduction of Short-Lived Climate Pollutants per SB 1383, which includes specific 2030 emission reduction goals for methane, fluorinated gases and anthropogenic black carbon.

Adapting to the Impacts of Climate Change

As California continues to experience the impacts of climate change, PG&E is taking action to build a more climate resilient energy network. PG&E’s infrastructure spans over 70,000 square miles and faces a variety of risks driven by the changing climate, including heat waves, more frequent and extreme storms and wildfires, drought, subsidence, and rising sea levels.

Adapting to these changing risks involves understanding the impacts of climate change on our business and being prepared to withstand and rapidly recover from major disruptions in service caused by climate-driven weather events.

PG&E’s multipronged approach includes:

• Integrating climate science into key company functions and creating tools to support planning and decision-making that takes into account the future climate. For example:
  • We are leveraging data from the Cal-Adapt tool as we strive to ensure that investments in our system will be adequate in light of more extreme weather expected in the future.
  • We are integrating climate data into PG&E’s strategic risk planning process. Pacific Gas and Electric Company will file its second Risk Assessment Mitigation Phase report with the CPUC in 2020. We filed our first assessment (PDF) in 2017.
  • We have begun to assess the maturity of key capabilities among the lines of business that are critical to effectively plan for climate change. PG&E set its first internal baseline in 2018.
  • We are also conducting research into specific climate impacts and how they relate to PG&E’s infrastructure. This research is designed to empower decision-makers with robust analysis around climate threats to our system.
  • We coordinate internally to bridge the gap between near-term emergency preparedness efforts and longer-term climatic trends that may contribute to extreme weather events.
• Engaging with utility peers and policymakers to advance energy sector climate resilience, stay up-to-date on the most recent developments in the field, and help state and federal officials in their efforts to prepare for climate change. Pacific Gas and Electric Company participates in the Governor’s Office of Planning and Research’s Integrated Climate Adaptation and Resilience Program, the U.S. Department of Energy’s Partnership for Energy Sector Climate Resilience, and the Corporate Climate Resilience Council. We are an active participant in CPUC efforts to establish guidance for the utilities regarding adapting to climate change.
• Partner directly with customers and communities to enhance climate resilience in California. PG&E offers grants to help communities through our Better Together Resilient Communities program.

PG&E’s climate adaptation efforts are overseen by our Climate Resilience Officer Committee, which includes leaders from key departments across the business. This group of senior leaders is also responsible for their respective line-of-business Climate Action Plans.

With regard to increased electricity demand from more extreme, persistent and frequent hot weather, 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 and storage—will help address the state’s evolving energy demands.

Air Quality and Environmental Justice

In July 2017, California took an important step to address air pollution in the most heavily burdened communities through the passage of AB 617, which directs CARB to develop a community air monitoring and community emissions reduction program and to deploy them in the highest priority communities.

PG&E strongly supports a comprehensive, statewide air protection program and was actively engaged in the development and passage of AB 617. PG&E is working with CARB and other stakeholders through the AB 617 implementation process to ensure that the community air protection programs are successful and effective at reducing emissions in disadvantaged communities.

2018 Milestones

In 2018, we continued to minimize our carbon footprint and prepare for the consequences of a changing climate:

• Delivered clean energy to customers. With 38.9 percent of the electricity delivered to customers in 2018 coming from renewable sources of energy, we reached California’s 2020 renewable energy goal ahead of schedule.
• Reduced emissions from our operations. In the first year of the Million Ton Challenge, Pacific Gas and Electric Company avoided more than 380,000 tons of CO₂—putting us well on our way toward our five-year goal. This included avoiding emissions through energy-efficient and more sustainable facilities, continuing to deploy clean fleet vehicles, and reducing methane emissions from natural gas operations.

Measuring Progress

Mandatory Emissions Reporting

Under AB 32’s annual reporting requirements, PG&E reports greenhouse gas emissions to CARB. These reports include emissions from our electric generation facilities, natural gas compressor stations, natural gas supplied to customers and the fugitive emissions from our natural gas distribution system and compressor stations.

The following table shows the greenhouse gas emissions data PG&E reported to CARB under AB 32.

• 1. PG&E’s owned generation was 32,749 GWh in 2018.¹
• 2. Includes all PG&E-owned generation sources, including nuclear, hydroelectric and renewable energy.²
• 3. Includes, but is not limited to, compressor stations and storage facilities emitting more than 25,000 metric tons of CO₂-e annually.³
• 4. 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 is equivalent to the above-reported value less the emissions from fuel that is delivered to covered entities, as calculated by CARB.⁴

PG&E also reports the greenhouse gas emissions from our facilities and operations to EPA under EPA’s mandatory reporting requirements.

Voluntary Emissions Reporting

PG&E’s voluntary greenhouse gas emissions reporting showed that PG&E’s CO₂ emissions rate was our lowest level on record in 2018, the most recent year for which verified data are available. PG&E’s emissions rate of 206 pounds of CO₂ per megawatt-hour of delivered electricity represented a slight reduction from the prior year’s figure of 210. The emissions rate takes into account both PG&E-owned power generation and power purchased from third parties.

• 1. U.S. Environmental Protection Agency eGRID 2018.¹
• 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.²

From year to year, several factors affect PG&E’s power mix and emissions, including the availability of clean hydro power and renewable energy in our energy mix, customer electricity demand, the share of customers in our service area receiving procurement service from PG&E, as well as the availability and flexibility of the power plants in our portfolio.

• 1. The protocols for measuring greenhouse gas emissions differ between mandatory and voluntary reporting regimes, resulting in some differences in the table above compared to PG&E’s emissions reported to the California Air Resources Board.¹
• 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.²

• 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
• 2. The emissions associated with purchased 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 1.0.²
• 3. This figure includes 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 and gas delivered to PG&E facilities such as power plants, compressor stations and offices, the emissions of which are reported separately.³

• 1. This figure includes 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.¹
• 2. Other Scope 3 emissions include the greenhouse gas emissions from business air travel, waste management and employee commuting.²