LG&E and KU plan to burn coal for another four decades
Louisville Gas and Electric and Kentucky Utilities is planning for a net zero carbon future. It’s also planning to burn coal through 2066.
The planet is running out of time to eliminate its reliance on fossil fuels, and the coal that keeps the lights on in Kentucky is one of the state’s biggest contributors to global warming. Earth has already warmed about 1.1 degrees Celsius since humankind started carbon-loading the atmosphere at the start of the industrial revolution.
Warming temperatures in Kentucky will bring more extreme weather events. More floods, more droughts, more heat waves, more urban heat and less predictability for farmers and ranchers.
Kentucky is already experiencing the impacts: from floods in Appalachia to an eastward shift of Tornado Alley that’s increasingly put western Kentucky at risk of tornado outbreaks like those that tore through Mayfield and Dawson Springs last month.
Letting the globe warm further is loading the dice for crises like food scarcity, political instability and climate refugees.
The goal of the Paris Agreement, which the U.S. rejoined under the Biden administration, is to limit global warming to 1.5 degrees Celsius. To do that, U.N. Secretary-General António Guterres has said “accelerating the global phaseout of coal is the single most important step.”
Kentucky’s industrial emissions contributed more than 66 million metric tons of carbon into the atmosphere in 2020, the latest numbers available according to the Environmental Protection Agency’s Greenhouse Gas Reporting Program.
Nearly 75% of those emissions came from power plants. More than 40% of the state’s total emissions came from just one company: Louisville Gas & Electric and Kentucky Utilities. Mostly from burning coal.
Utilities like LG&E and KU are the cornerstone to the entire global economy meeting the Paris Agreement goals because every other business is relying on zero carbon electricity to reduce their own carbon footprint, said Patrick Callery, a corporate sustainability researcher and associate professor at Carleton University in Ottawa.
“They are arguably the real key to making these goals happen,” Callery said.
LG&E and KU has taken steps toward reducing its carbon emissions. The company built a 10-megawatt solar array at the former E.W. Brown coal plant in 2016, it’s partnering with a merchant power company to build a 125-megawatt facility for specific large customers and it has a solar share program for residential customers.
LG&E’s engaging in research and development on battery storage and carbon capture technologies, and it’s retiring older coal-fired power plants with plans to replace them with more environmentally friendly alternatives.
Despite these advances, LG&E still plans to continue to burn coal and natural gas for decades to come.
“As the coal fleet naturally ages out, and this is true for the nation as a whole, they will be replaced with lower-emitting resources,” said LG&E Vice President of Energy Supply and Analysis David Sinclair, who declined to acknowledge the existence of manmade climate change in an interview with WFPL News.
The question is whether utilities like LG&E and KU retire their coal fleets in time for the planet to avoid the worst impacts of climate change.
Plans to reach net-zero emissions
Louisville Gas and Electric and Kentucky Utilities is the state’s largest utility, serving more than 1.3 million customers across the commonwealth. It’s owned by an even larger utility called PPL Electric Utilities Corporation out of Pennsylvania.
Late last year, PPL updated its climate action plan to align with the Paris Agreement and limit warming to 1.5 degrees Celsius as well as get to net zero emissions by 2050. The execution of those goals largely rests on LG&E KU because it’s the only PPL utility that’s still burning fossil fuels for power generation.
Along the way, PPL says it wants to reduce emissions 70% from 2010 levels by 2035 and 80% by 2040. Experts say detailed plans and specific targets are critical to holding companies accountable for meeting their commitments.
Among the commitments to decarbonize, the company plans to advance clean power generation, invest in research and development and “economically retire coal-fired generation,” according to the report.
That last bit — “economically” — is the key word because it demonstrates how climate scientists and corporations are thinking on different timelines.
Climate scientists are concerned with the amount of carbon we have left to burn without increasing global temperatures more than 1.5 degrees Celsius. Researchers working on the latest Global Carbon Budget found that if we keep burning fossil fuels at the current rate, the planet has only 11 years until we pass that threshold.
Corporations are designed to prioritize a return on investments, generate wealth for shareholders and retire coal-fired power plants when it makes the most financial sense, not necessarily when it makes sense to avoid the worst impacts of climate change.
When to retire
Kentucky led the United States in coal retirements in 2020, but that had less to do with environmental concerns than it did economics. Many of the country’s coal plants are aging out.
The average operating age of a coal-fired generating unit in the U.S. is 45 years old. Most are designed to last 50 years, according to the U.S. Energy Information Administration.
Lower carbon-emitting resources like solar and natural gas are increasingly pricing out these older, more inefficient coal-fired generating units.
LG&E, for example, retired the Cane Run coal-fired power plant back in 2015 and replaced it with a natural gas combined cycle generating plant because it was cheaper, more efficient and produces less, though still significant, carbon emissions.
These kinds of retirements helped LG&E and KU reduce carbon emissions by about 24% from 2010 levels in 2020, according to figures LG&E provided to WFPL.
The company plans to retire another nearly 2,000 megawatts of coal power by 2036, but it still plans to continue burning coal and natural gas in Kentucky for another three decades, slowly retiring the remaining 11 coal-fired generating units until it finally closes the last one in 2066.
That plant is the Trimble County Generating Station. LG&E completed it in 2011. Sinclair, vice president of energy supply and analysis for LG&E KU, said it could be one of the last remaining coal plants in the country at that time.
That means LG&E could keep emitting carbon into the atmosphere for 16 years after it’s supposedly carbon neutral. That’s where the “net” in “net zero” comes in.
“Net zero is not the same as absolute zero. Carbon emissions are no different than any other commodity so to speak, you want to reduce them in the most economic way,” Sinclair said.
Net zero means the utility would offset any remaining carbon emissions it produces. PPL and LG&E are leaning on unproven technologies, hoping they can offset their remaining emissions after 2050 with some combination of carbon capture or carbon trading.
“Whatever the economic world looks like in 2050, the idea again is that you do it in the least-cost way,” Sinclair said.
But the plan to reduce emissions laid out by PPL looks different from the one that LG&E has shared with the Kentucky utility regulators as part of its long term planning.
LG&E’s forecasts building more natural gas power plants
Though PPL has told shareholders it’ll reduce emissions 70% from 2010 levels by 2035, LG&E forecast an emissions reduction of somewhere between 22 and 47% from 2010 levels by 2035 — far short of PPL’s goal.
Over the next 15 years, LG&E told Kentucky utility regulators, it plans to replace coal-fired generating units with some combination of solar, wind, battery technologies and natural gas, according to LG&E’s latest Integrated Resource Plan.
The forecast depends on how many additional customers LG&E is expecting, as well as fuel prices. In a scenario where gas prices are cheap, LG&E and KU would add between five and 17 simple cycle combustion natural gas turbines and between 0 and 1,100 megawatts of solar, according to the plan.
If gas prices are high, they still plan to add between two and five single cycle combustion natural gas plants, and would replace the rest with solar, wind and batteries.
Natural gas is generally seen as a more environmentally friendly alternative to coal, but it’s still a fossil fuel and some researchers say it might be as bad or nearly as bad for the atmosphere because of all the methane that leaks out in the process of converting the gas into energy.
However, given current technologies, it is still more reliable than wind or solar.
Under all of the scenarios outlined for utility regulators, LG&E will continue to burn carbon for power for the foreseeable future.
It’s unclear how PPL plans to make up the difference when LG&E is PPL’s only utility burning fossil fuels for power generation.
“As highlighted in the report, the amount and timing of future emission reductions will depend on factors including future load, technology costs and development, fuel prices and policies,” said LG&E Spokeswoman Liz Pratt in a statement.
Sinclair, with LG&E, said the forecast they offered to utility regulators was a simple analysis that is not reflective of how the company plans to implement renewable resources. He said that’s because it would be too complicated to forecast the reliability of renewable energy.
“It takes us months and months and months to prepare an integrated resource plan,” Sinclair said. “You start introducing renewables, the reliability analysis gets more challenging.”
If the U.S. is serious about retiring coal-fired power plants on a timeline that avoids the worst impacts of climate change, it’s likely the government will need to intervene, either by helping ease the financial burden of retiring coal plants early, or making it too expensive to continue operating them.
“Early retirement of productive assets is economically harmful for a company so that becomes the domain or the responsibility of the government,” said Callery with Carleton University, “to figure out policies that can hasten the transition.”
The Biden administration’s Build Back Better bill included a $150 billion clean electricity program that would have incentivized utilities to stop burning fossil fuels and replace their generating units with wind, solar and nuclear energy, West Virginia Sen. Joe Manchin, a Democrat who has financial ties to the coal industry, insisted the Biden administration strip it out of the bill. The fate of the Build Back Better bill itself remains uncertain.
Tax credits and incentives are the carrot, but there’s also the stick: putting a price on the carbon that companies put into the atmosphere. Callery said the impact of carbon pollution should be borne by the companies. Right now, he said, they’re burning fossil fuels without paying for the indirect costs of warming the climate.
“We call it a market failure, and market failures should be corrected, and, to date, they’re not because they’re not politically palatable enough in most jurisdictions,” Callery said.
It’s not just LG&E. This energy transition needs to happen on a global scale.
A look at the 50 leading power companies across the planet — not including PPL — found 98% will exceed their carbon budget by 2035 based on an International Energy Agency scenario for reaching net zero by 2050, according to a November report from the World Benchmarking Alliance.
Most of those companies are actually expected to increase their carbon emissions in the near-term.
The November report from the World Benchmarking Alliance found 47 of the 50 utilities haven’t yet aligned their carbon reduction plans with Paris Agreement goals. In that respect, PPL and LG&E are taking the necessary steps ahead of their peers in the power industry.
Callery said the best way for companies like PPL to maintain their momentum is to hold themselves accountable on an interim basis, releasing environmental targets for the next 12 to 24 months, then updating shareholders on whether they achieved those targets.
PPL’s climate assessment says it will annually report progress toward emissions reductions goals. But in a small section toward the bottom of the report, it reads: “The goals and projects described in this report are aspirational; as such, no guarantees or promises are made that these goals and projects will be met or successfully executed.”