In sunny Florida, NextEra must step up on climate

In many respects NextEra Energy is a national leader on climate. The company – which is the largest electric utility in the US with generation, transmission and storage assets from coast to coast – owns a market-leading 20 gigawatts of wind and solar power generation and works with a range of stakeholders including state and federal policymakers to support clean energy deployment.

But in the Sunshine State, NextEra’s subsidiary is heavily reliant on fossil fueled power plants and has fought residential solar expansion. The Florida company generated more than 80% of NextEra’s net income in 2020, and the parent company cannot deliver on its climate leadership commitments while FPL continues to lag.

Electricity generation is a major source of climate pollution in the United States, responsible for 25% of greenhouse gas emissions, and utilities nationwide are racing to cut both carbon and costs by switching to renewables. NextEra has the size and scale to lead, and frequently points to its commitment “to being an industry leader in environmental protection and stewardship.”

A new analysis commissioned by EDF shows that inadequate climate targets and limited energy transition planning at FPL are undermining NextEra’s decarbonization goals and exposing investors and Florida ratepayers to undue risk.

As the NextEra annual shareholder meeting approaches on May 19^th, investors should urge the company to step up its climate performance in three ways:

1. Set more ambitious climate targets. In contrast with most large US utilities, neither NextEra nor FPL has adopted an emissions reduction target that reflects the urgency of the climate crisis. Both companies should commit to significantly cut emissions by 2030 and reach zero emissions no later than 2050.  NextEra’s current target — to reduce the intensity of their emissions by 67% by 2025 – falls well short of this. FPL’s goal of reducing its carbon intensity just 45% is weaker still.
2. Accelerate renewables deployment. NextEra is a global leader in deploying renewables, but its Florida subsidiary relies on fossil fuels for 75% of power supplied. FPL’s plans to install 9.5 GW of solar in this decade fall well short of the pace needed to achieve an 80% emissions reduction by 2030 – the level that multiple analyses have found necessary to avoid the worst impacts of climate change.
3. Phase out the most polluting resources. Quickly retiring the dirtiest fossil fuel generation in FPL’s portfolio is crucial to reduce absolute emissions and reduce risks associated with natural gas price volatility as well as regulatory and reputational risks.

As the Intergovernmental Panel on Climate Change wrote in its recent Sixth Assessment Report, “Decarbonizing electricity generation, in tandem with increasing use of electricity, is an essential near-term strategy for limiting warming.” The good news is that the tools are ready, with wind and solar routinely outcompeting fossil fuels on cost.

It’s up to power companies like NextEra to put these to use across their portfolio at the fastest possible pace, or else answer to investors for their failure to do so.