Southern Company is committed to reducing our greenhouse gas (GHG) emissions to provide our customers and communities a clean energy future. Climate change is real, and the Paris Agreement is an opportunity for the U.S. to engage in a coordinated, global strategy to address the threat of climate change. We support this objective by actively advancing a net zero by 2050 goal in direct alignment with the commitments of this landmark accord. We also have an interim target to achieve 50% GHG emissions reduction by 2030 relative to 2007 levels.
Southern Company is proud of our recent progress in reducing GHG emissions. For 2021, our system’s GHG emissions are estimated to be 47% below the 2007 benchmark level, and we expect to sustainably achieve 50% GHG emissions reduction relative to our 2007 benchmark no later than 2025.*
Our net zero goal includes direct GHG emissions across our electric and natural gas businesses. To reach net zero by 2050, Southern Company is focused on transitioning our generating fleet and making the necessary related investments in our transmission and distribution (T&D) grids. We have substantially reduced both total GHG emissions and GHG intensity relative to our 2007 benchmark year, while maintaining outstanding reliability and affordability for our customers.
Southern Company’s decarbonization strategy considers both direct and indirect emissions reductions. Drivers for direct emissions reduction include: reduced reliance on coal-fired generating assets, use of natural gas to enable the low-carbon energy transition, further growth in our portfolio of zero-carbon resources, enhanced energy efficiency initiatives, negative carbon solutions and continued investment in research and development (R&D) of clean energy technologies. While our net zero goal is focused on direct emissions, we are also committed to reducing emissions across our full value chain through engagement, energy efficiency measures and partnerships with customers, suppliers and other organizations. We currently report all material Scope 1 and 2 emissions and have engaged an independent auditor to provide 3rd party verification for the years 2020 and 2021. We also continue to assess and expand Scope 3 reporting, including working with a consultant to better understand our upstream and downstream emissions from natural gas.
* GHG emissions can fluctuate with electricity demand, fuel prices, and other variables outside Southern Company’s control. Electricity demand in 2020 was reduced by COVID-19 impacts and mild weather. In addition, low natural gas prices in 2020 gave the natural gas generating fleet favorable economics relative to most coal units, displacing additional coal generation. 2021 emissions are estimated and will be finalized later in 2022.
For reporting year 2020, we expanded our GHG inventory (the list of emissions sources we report) to include additional categories of emissions in Scopes 1, 2 and 3. Southern Company’s current GHG inventory includes all material Scope 1 and 2 emissions, and we are currently working to better understand our GHG inventory related to upstream and downstream natural gas emissions. As a part of our commitment to accuracy and transparency, third-party verification of Scope 1 and 2 emissions is currently underway.
When Southern Company considers our energy portfolio transition and decarbonization strategy, we must evaluate a wide range of factors. In addition to environmental benefits, we also consider the potential opportunities and challenges for our customers, communities and employees. It is important that we take a holistic approach so all our stakeholders can benefit from this transition. Three tenets shape our holistic approach to GHG reduction: a diversified energy resource portfolio, the critical importance of R&D and constructive stakeholder engagement and scenario planning.
It is critical that the Southern Company system maintains enough power generation capability and natural gas system capacity to serve the energy needs of all customers, particularly during hot days in the summer and cold days in the winter. Energy efficiency and demand response are key aspects of our efforts to provide clean, safe, reliable and affordable energy to our communities. Both our electric and natural gas subsidiaries have longstanding programs providing education, incentives and options encouraging customers to optimize their energy usage.
In addition to these programs, we continue innovating to provide resources and rates that take advantage of the latest technology and cater to expanding customer needs. Southern Company is committed to making energy efficiency and demand response a part of our energy justice efforts to ensure all the communities we serve can reap the benefits of enhanced energy efficiency.
Southern Company subsidiaries’ retail electric energy efficiency programs help save nearly 400 million kilowatt hours (kWh) of electricity each year. These savings are the results of annual investments of more than $20 million to promote energy efficiency. Programs are designed to provide a variety of energy savings and appeal to a wide array of customer situations and use cases. Residential customers can access personalized information and education through check-ups, calculators, assessments and audits. Our operating companies provide energy saving equipment in kits, discounts for efficient products in stores and in online marketplaces, and rebates or credits for installing specific energy efficient technologies. Behavioral programs provide customers with information regarding their usage, peer comparisons and supply energy saving tips. These programs help engage customers, supply data and encourage ongoing energy management.
The Southern Company system has long been an industry leader in demand response. In partnership with thousands of our residential, commercial and industrial customers who take part in our demand response offerings, we have the ability to reduce peak electrical demand by approximately 8%. This has resulted in the company avoiding construction of over 2,500 MWs of generation capacity since 2007.
Our electric operating companies are not the only subsidiaries focused on energy efficiency. Southern Company Gas has some industry-leading energy efficiency programs that help our customers use gas more efficiently.
For example, since 2011, Nicor Gas, a subsidiary of Southern Company Gas, has had one of the gas industry’s largest energy efficiency programs. Since 2011, this program has resulted in annual savings goals averaging 16 million therms per year, resulting in a corresponding reduction of more than 840,000 metric tons of customers’ CO2 emissions, roughly equal to the energy use of 100,000 homes for a year. Nicor Gas’ goal and resulting carbon reduction are the result of more than $40 million per year of investment.
From 2022 through 2025, Nicor Gas’ Energy Efficiency Plan will invest approximately $183 million to help customers install more than 750,000 energy efficiency measures and over 80,000 energy efficiency retrofit and technical assistance projects in homes and businesses throughout northern Illinois. The plan will help customers save 660 million net therms over the lifetimes of the installed measures and projects. These savings are expected to reduce GHG emissions by over 3.2 million metric tons and water use by over 900 million gallons over the life of installed measures.
We value the relationships we have built with our customers. We strive to help our customers achieve their sustainability goals, which in turn, helps us achieve ours. While Southern Company’s customer support offerings were historically geared toward process optimization and energy efficiency, we are transitioning toward services that more specifically target customers’ comprehensive sustainability goals, including air and water.
A specific example of customer sustainability partnerships is an initiative called Southern 360, a new way to work with our family of businesses. Southern 360 packages our energy expertise into solutions that make energy simple. Our goal is to provide energy solutions for a climate-ready future by assisting customer organizations in their achievement of sustainability, resiliency and net zero goals. Through Southern 360, we provide benchmarking, energy consumption data and analysis, prioritization, implementation, and custom advisory services. We are looking to roll this out more broadly in the first half of 2022.
As part of this customer solution offering, Southern Company has worked closely with the Hartsfield-Jackson Atlanta International airport to leverage their energy use performance data to revolutionize their sustainability program. The project helps the airport use real-time energy data to identify opportunities that improve energy performance, expanding its sustainability program and achieving top-tier success in sustainability. The program’s outputs have helped contribute to the airport’s 2035 Sustainability Master Plan, including plans to re-certify LEED status, obtain airport carbon accreditation, enhance ESG reporting and obtain ISO 50001 certification – all of which will help Hartsfield-Jackson advance its sustainability goals.
Alabama Power has partnered with customers to construct 250 megawatts (MWs) of solar generating capacity across the state. Solar facilities at the Anniston Army Depot, Fort Rucker and in LaFayette all went into commercial operation in 2017, and in 2021 Alabama Power announced new solar facilities to serve Wells Fargo and Mercedes Benz. The Mercedes Benz project, an 80 MW facility called the Letohatchee Solar Project in Lowndes County, located south of Montgomery, builds on a long-standing partnership between Alabama Power and Mercedes Benz and aligns with the shared vision of enhancing the use of renewable energy. The Letohatchee Solar Project is expected to create about 300 construction jobs while generating more than $9 million in tax revenues for Lowndes County over the life of the project. Commercial operation is expected to begin in 2024.
In 2021, Nicor Gas received approval to launch the TotalGreen pilot program. TotalGreen is a new gas service that will enable Nicor Gas sales customers to participate in a program that bundles their natural gas purchase with environmental attributes from renewable natural gas (RNG) and carbon offsets to effectively offset the total net carbon emissions of their natural gas usage. This program demonstrates Nicor Gas’ commitment to helping customers meet their environmental goals.
As we transition to a clean energy future, we understand there will be potential opportunities and challenges for our workforce, communities and customers. Southern Company is committed to a Just Transition for our stakeholders.
We have outlined a set of Just Transition Principles that foster:
In recent years, we have seen in other regions and countries the unintended consequences and disruption caused by rapid or unstructured infrastructure transitions. Southern Company believes that our electric utilities’ vertically integrated, state-regulated model with integrated system planning is optimal for advancing decarbonization of our operations while maintaining system integrity and affordability for customers. This structure, coupled with our longstanding commitment to be a “Citizen Wherever We Serve,” provides a strong foundation for Southern Company and our operating companies to help facilitate a Just Transition.
In our 2022 Just Transition report, we outline our Just Transition Principles and provide examples, based on prior coal-fired generating asset retirements, of our work with employees, labor partners, communities and local governments to effect a smooth transition. We believe that our principles and historical examples align with the spirit and intentions outlined in the ILO’s Just Transition guidelines and the Just Transition Declaration put in place at COP26.