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US utility Dominion Energy plans to tackle end-use GHG releases from gas, power business lines

11 February 2022 Amena Saiyid

US utility Dominion Energy is forging ahead with plans to limit GHGs from the electricity it purchases from others to run its power stations and natural gas distribution systems, but also to curb releases from customers who purchase its gas.

It also is taking steps to divest itself from the gas transmission and storage business in an attempt to lower its carbon footprint.

The Virginia-based utility said its expanded plans, announced 11 February, are part of an overarching commitment to reach net-zero levels for its gas business by 2040 and for its power generation by 2050.

One of the largest US utilities, with a market capitalization of $64.05 billion, Dominion supplies gas and generates and distributes power to 7.5 million customers in 13 states.

The utility said it is aiming to not only reduce Scope 1 emissions that it releases from its own power generation activities, it now plans to target Scope 2 emissions, or the emissions released from power the company purchases for its own consumption. It also plans to reduce Scope 3 emissions generated by upstream suppliers of fuel and downstream consumers of the wholesale electricity purchased for its customers, and the gas its supplies through utility units to residential and commercial customers in Utah, Ohio, South Carolina, and North Carolina.

In addition, Dominion is investing in renewable natural gas (RNG) and hydrogen technologies. In 2021, a company pilot project in Utah analyzed and confirmed that 5% of hydrogen could be blended into the gas distribution network without impairing either the distribution network or appliance performance. It also is capturing methane from a dairy farm and swine to convert it to RNG for use in homes and businesses.

Helping reach net-zero goals

The company said these plans will help it reach its interim GHG reduction goals by 2030: a 55% cut in carbon emissions compared with 2005 levels from its power generation business, and a 65% cut in methane releases below 2010 levels from its gas business.

Dominion's announcement follows a similar commitment by a fellow US utility that supplies electricity to nearly 8 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky and distributes gas to at least 1.6 million customers in the Carolinas, Tennessee, Ohio and Kentucky.

North Carolina-based Duke Energy, which boasts a market capitalization of $76.74 billion, announced an expanded clean energy action plan on 9 February that now includes goals to reduce Scope 2 and 3 emissions from its power generation and gas distribution businesses.

Duke said it is adding a new net zero by 2050 goal that includes upstream methane and carbon emissions related to purchased gas and downstream carbon emissions from customers' consumption.

Commenting on the announcements, Patrick Luckow, IHS Markit associate director for global power and renewables, observed that both Duke and Dominion have gas and power customers. "However, the notable thing to me is they are expanding targets to include CO2 emissions at the customer end," Luckow told Net-Zero Business Daily.

According to IHS Markit research analyst Suramya Sharma, who tracks corporate net-zero announcements, Duke and Dominion are not the first US power utilities to announce Scope 3 emissions targets.

She said Sempra subsidiaries San Diego Gas & Electric and Southern California Gas, as well as NRG Energy, and Consumers Energy already have announced Scope 3 targets. But these are utilities that mostly supply power from gas-fired units to their customers.

Lowering emissions through divestment

However, Dominion is not just stopping at curbing GHGs, it is looking to divest much of its gas business to reach its net-zero goal by 2040. On 11 February, the company announced an agreement to sell a West Virginia gas utility—Hope Gas —to an Ullico infrastructure fund for $690 million, an approach to divestment that IHS Markit Associate Director Christopher Elsner said is becoming increasingly common among energy companies looking to reduce their footprint.

At the end of 2021, for instance, Dominion closed on the $1.975 billion sale of Questar Pipelines to Southwest Gas Holdings in a transaction that includes the assumption of $430 million of existing debt. Questar Pipelines consists of federally regulated transportation and underground storage assets in Utah, Wyoming, and Colorado.

In July 2020, Dominion sold the majority of its gas transmission and storage assets to an affiliate of Berkshire Hathaway Energy in a $9.7 billion transaction including assumption of $5.7 billion in debt related to those assets. This transaction involved the sale of more than 7,700 miles of gas storage and transmission pipelines and about 900 billion cubic feet of gas storage that the company operated.

Remarking on the divestment of its gas storage and transmission assets, Dominion's late CEO Thomas Farrell said: "We offer an industry-leading clean-energy profile which includes a comprehensive net-zero target by 2050 for both carbon and methane emissions as well as one of the nation's largest zero-carbon electric generation and storage investment programs."

Reliant on natural gas

According to its 2020 Integrated Resource Plan, Dominion got most of its power from gas, followed by nuclear and coal in 2019. Renewables occupied a very small part of the mix, most notably from solar, but the utility has since been seeking approval to boost its renewables share, particularly from offshore wind.

Already Dominion has a 12-MW pilot project operating in federal waters off the Virginia coast, and now the utility is seeking approval to develop the 2.6-GW Coastal Virginia Offshore Wind project, which upon completion in late 2026 may be North America's largest offshore project to date.

Although Dominion CEO Robert Blue wasn't among the CEOs that met with President Joe Biden on 9 February to discuss approaches for a clean energy future, the utility maintains it is "well-positioned" to decarbonize its operations.

"These commitments are a natural next step, building upon our industry-leading programs to drive down carbon and methane emissions within our own operations," Blue said in a statement announcing the utility's expanded GHG targets.

Reporting on its corporate and sustainability actions taken in 2020, Dominion said it achieved a 43% or about 24.5 million metric tons (mt) reduction in carbon emissions from the company's electricity business between 2005 and 2019 and a 32% or 31.380 billion mt cut in methane emissions from its gas distribution business between 2010 and 2020.

In 2019, Dominion's Scope 1 emissions stood at 34.4 million mt of carbon emissions. This includes 31.7 million mt of carbon dioxide and 50,000 mt of methane. The company reported less than 100,000 mt from third-party purchases of power under Scope 2, and 26.6 million mt in Scope 3.

Duke, meanwhile, has reduced its Scope 1 carbon emissions from electricity generation by 44% from 2005 levels, describing it as "the equivalent of removing 13 million vehicles from the road." The utility also said it is "targeting energy generated from coal to represent less than 5% of total generation by 2030 and to fully exit coal by 2035 as part of the largest planned coal fleet retirement in the industry."

Duke said it is aiming for a 50% reduction in carbon emissions by 2030 and net zero by 2050 from electricity generation and, unlike Dominion, it has set an earlier net-zero goal of 2030 for methane emissions from its gas business.

Posted 11 February 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst

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