PPL’s latest goal: Reduce 80% of its carbon emissions by 2040
PPL Corp. said Thursday it believes it can eliminate up to 80% of its carbon emissions by 2040 but added a technology gap will have to be bridged to reach zero emissions by 2050.
Still, the 2050 goal represents an upgrade from the company’s previous announcements, when PPL had committed to reducing its carbon emissions 80% by then. Carbon dioxide is the greenhouse gas experts say is most responsible for global warming, and contributes to extreme weather events such as hurricanes.
“Our new goal reflects our continuous evaluation of our progress and opportunities through ongoing business and resource-planning efforts,” President and CEO Vincent Sorgi said during a call with financial analysts.
PPL, which announced its reduction plan in November 2017, said that its new net-zero emissions goal reflects updated forecasts, as well as the company’s efforts to invest in clean-energy technologies.
In line with its new goal, PPL said last week it would invest up to $50 million to foster innova
tion and accelerate the shift to a low-carbon future. In addition, PPL has hired a global consulting firm to enhance its clean-energy strategy and develop additional programs to reach net-zero emissions.
PPL no longer generates electricity in Pennsylvania, having divested from that business years ago. Its electric production is in Kentucky, where it owns other utilities. PPL continues to generate electricity using coal-fired power and natural gas plants in Kentucky, but the company plans to retire nearly all those plants and replace them with a mix of resources.
Sorgi acknowledged the industry must pursue further technologies to achieve loweror no-emission goals, while balancing the need to provide affordable energy for customers. President Joe Biden has asked the utility industry to reach carbon-free generation by 2035.
“Our internal view of what it will take to achieve 100% carbon-free generation by 2035, using current technologies, would create significant affordability issues for our customers,” Sorgi said.
PPL’s failing to commit to 100% reduction in the past drew criticism from environmental and other groups, including the nonprofit Majority Action, which advises institutional investors to seek ways to mitigate “systemic risks” such as climate change.
Eli Kasargod-Stab, the group’s executive director, called PPL’s news “too little, too late” and charged PPL is playing catchup with other leading energy companies. Majority Action filed a document in April with the U.S. Securities and Exchange Commission urging shareholders to vote against PPL board Chairperson Craig A. Rogerson during its May meeting.
While stockholders elected Rogerson and eight other directors to its board for one year, nearly 22% of stockowners voted against the board leadership, Kasargod-Stab said.
“Shareholders ... are increasingly discontented by underwhelming corporate climate action,” he said.
As for earnings, PPL Corp. reported second-quarter and half-year losses as the company began noting its quarterly financial periods without its United Kingdom operations. The company reported $19 million, or 3 cents per share, down from $344 million and 45 cents per share for the same period last year.
The company posted revenue of $1.29 billion during the quarter, nearly the same as the 2020 quarter.
PPL posted a net loss of $1.8 billion, or $2.37 per share for the first six months of the year compared with earnings of $898 million, or $1.17 per share, during the same period last year.
The Allentown energy holding company completed the sale of its Western Power subsidiary in the U.K. on June 14 for $10.4 billion, and is working toward its $3.8 billion acquisition of Rhode Island’s Narragansett Electric, saying the deal is expected to close by March. Both transactions are with energy giant National Grid, and the moves are repositioning PPL as purely a domestic energy company.
Sorgi said selling the U.K. utilities enabled PPL to retire $3.5 billion in corporate debt, and it potentially plans to use remaining sale proceeds to invest in Pennsylvania and Kentucky operations, or in renewable energy, and repurchasing company shares.
The company also expects to repurchase approximately $500 million in shares by year’s end, with its board of directors recently authorizing the purchase of up to $3 billion of outstanding shares. Companies often buy back shares when management considers them undervalued. Sorgi said the company arrived at the $500 million figure because it represented a “nice balance” while providing value to create value for shareowners.
He said the company should have $2 billion-$2.5 billion in cash by the end of the shares buyback and closing the Narragansett deal.
PPL shares closed at $28.87, up 44 cents, on the New York Stock Exchange. Its shares have increased about 1% since Jan. 1, while the S&P’s 500 index has risen 17%
One of two Lehigh Valley Fortune 500 companies, PPL owns PPL Electric Utilities, which delivers energy to 1.4 million customers in Lehigh, Northampton and 27 other Pennsylvania counties. It also sells electricity and natural gas to approximately 1 million customers in Kentucky.
PPL officials have said the sale of its U.K. assets would not affect jobs at its downtown Allentown headquarters. It employs about 1,300 people in the Lehigh Valley, with more than 50% of them at its PPL Tower at Ninth and Hamilton streets.