Advancing a cleaner energy future is one of the core commitments of PPL’s sustainability strategy. As the world considers climate change and as PPL looks to the future, we will continue to take steps to minimize our impact on the environment, transform the way we generate electricity and incorporate new, lower-emitting technology.
Our actions on climate change include conducting detailed assessments of our climate-related risks and opportunities and incorporating the outcome of those assessments into our business strategy and business planning. An updated detailed listing of climate-related risks and opportunities, the assessed impacts, and our approach with respect to each is available in our CDP response. PPL’s disclosures, which are informed by the Task Force on Climate-related Financial Disclosures (TCFD), cover governance, strategy, risk management and metrics and targets. Our management approach includes actions to reduce transition risks, including reducing the carbon footprint of our businesses, using innovative approaches to integrate more distributed energy resources in Pennsylvania and the U.K., and investing in lower-emitting generation in Kentucky consistent with Kentucky’s lowest reasonable cost requirements. We are also addressing physical risks through climate adaptation actions such as investing across our transmission and distribution operations to mitigate weather-related impacts on our facilities and to make the grid more reliable and resilient.
PPL’s voluntary corporate goal is to reduce CO2 emissions 80 percent from 2010 levels by 2050 and 70 percent by 2040. The company expects to achieve the reductions through a variety of actions. These include replacing Kentucky coal-fired generation over time with a mix of renewables and natural gas while meeting regulatory requirements to provide least-cost and reliable service to customers. Actions also include taking steps across PPL’s U.S. and U.K. operations to improve energy efficiency, reduce greenhouse gas emissions from substations and reduce vehicle fleet emissions.
The U.K. has enacted binding carbon reduction requirements that are applicable to WPD. Under the U.K. law, WPD must offset emissions associated with WPD’s own energy use through a tax on carbon. Additionally, WPD has adopted a voluntary goal to reduce its business carbon footprint 5 percent from 2012-2013 levels by 2023.
PPL is working to make system enhancements necessary to meet electricity demand over the long term to support electrification efforts, including the adoption of electricity-fueled transportation. We are also reducing our own carbon footprint through electrification of our fleet vehicles.
We are strengthening our commitment to fleet electrification by setting goals on electric vehicle adoption. Collectively, PPL’s operating companies expect to reduce CO2 emissions by more than 6,000 metric tons between 2020-2025 through electrification of fleet vehicles, with an additional reduction of more than 2,500 metric tons expected between 2026-2030.
In 2017, PPL conducted a detailed assessment of how future requirements and technological advances aimed at limiting global warming to 2° Celsius over pre-industrial levels could potentially impact PPL.
In conducting the assessment, PPL considered the recommendations of the Task Force on Climate-Related Financial Disclosures, also known as TCFD. The assessment examined several policy and technology scenarios, including a scenario consistent with limiting global temperatures to an increase of 2° Celsius over pre-industrial levels.
Under each policy scenario considered, including the 2° Celsius scenario, PPL’s analysis indicated carbon dioxide emissions from the company’s Kentucky generation assets would be expected to decline 45-90 percent from 2005 levels by 2050.
Based on this assessment and additional analyses we have conducted as part of our enterprise risk management process, we conclude that the financial risk posed by our carbon-based generation assets is minimal due to Kentucky’s regulatory structure, our extensive experience within that structure, and the relatively small part our carbon-based assets constitute of our overall asset portfolio. By maintaining a thorough understanding of regulatory expectations, we can continue to operate in a manner that is economically justifiable to our Kentucky regulators, to alter our Kentucky operations as may be required, and to recover our costs and a return on our investments.
LG&E and KU submit an Integrated Resource Plan to Kentucky regulators approximately every three years, evaluating the best way to serve customers under a wide range of scenarios (varying customer demand, fuel prices, environmental costs and other factors). The most recent plan was submitted in October 2018. Going forward, PPL will more closely link the timing of its climate assessments to LG&E and KU’s Integrated Resource Plan.