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Executive Summary
PSEG envisions climate change as a business and a social challenge … and also an extraordinary opportunity for new investment and growth. We believe that energy companies can be instrumental in helping society address climate change in comprehensive, practical ways – with the goal of assuring that the benefits of a green economy are accessible to all. There is no easy solution to climate change, but real results can be achieved when action is taken on a broad array of fronts, by all sectors of society.
Reflecting our strong history of environmental leadership, PSEG has pursued a low-carbon business strategy for over 15 years. PSEG participates in both the Department of Energy’s Global Climate Challenge and the Environmental Protection Agency’s Climate Leaders programs and has established a record for meeting or exceeding voluntary carbon reduction targets.
PSEG is now establishing a new carbon reduction target that is aggressive but achievable: Reduce our 2005 carbon footprint 25% by 2025. While this target is technically achievable, it will require supportive public policies to be economically feasible.
To achieve this goal, we will continue to implement and expand our three-pronged strategy for addressing climate change that is focused first on energy efficiency, second on renewables, and third on clean central station generation, including nuclear. Through this strategy, we are investing heavily to grow a green energy economy, protect our environment, and enhance the country’s energy security.
PSEG’s commitment is demonstrated by real actions:
- We are investing over $200 million to deliver energy efficiency benefits to our customers and develop the green workforce of the future;
- We are investing over $600 million to develop solar energy, reduce carbon, create jobs, and enhance New Jersey’s energy security;
- We are working to develop a 350 MW wind farm off the coast of southern New Jersey, which would generate green jobs and clean electricity;
- We have invested over $400 million to achieve dramatic improvements in the performance of our nuclear facilities and deliver clean power to the marketplace; and
- We have committed $100 million to develop an early site permit application to build a new nuclear unit at our facility in Salem, NJ to further reduce carbon emissions.
With each investment, we are putting people to work, growing the green economy, reducing carbon emissions, and helping to secure our nation’s energy future.
While voluntary actions by companies and individuals are necessary, strong climate policies at the national level – aligned with international commitments – are essential to successfully address the climate challenge. This includes establishing a price on carbon that will afford businesses the certainty they need to invest in a new green energy economy.
Our nation and the world have a unique and historic opportunity to address the climate challenge. The U.S. Congress must demonstrate responsible leadership by passing climate legislation now.
A Commitment to the Future
PSEG has pursued a low-carbon business strategy for over 15 years and has supported aggressive public policies to reduce GHG emissions, while continuing to pursue investments to reduce our own emissions.
PSEG recently completed a comprehensive assessment of our carbon footprint and identified opportunities to further reduce carbon emissions over the next 15 years. Our assessment revealed that with the right public policies and regulatory approvals, PSEG can reduce our carbon footprint 25% below 2005 levels by 2025, an aggressive but achievable target.
Achieving this goal would require new and expanded initiatives in the following areas:
- Energy Efficiency
a. PSEG Operational Eco-Efficiency
b. Customer Energy Efficiency
- Renewable energy investment
- New and expanded clean central station generation
Operational Eco-Efficiency
PSEG’s fleet of electric generation units is among the nation’s most carbon-efficient. PSEG will reduce power plant emissions through continued investments in heat rate improvements, selected replacements of aging peaking fleet units with state-of-the-art technology, and efficient operation and dispatch. Conservatively, these initiatives will support reductions of more than 575,000 metric tons of carbon emissions per year from PSEG power plants.
PSEG will further reduce its carbon emissions from its operations by over 600,000 metric tons per year through the following initiatives:
- Green Circuits
- Super Efficient Overhead Conductor Installations
- Poletop Transformer Replacements
- Large Transformer Replacements
- Fugitive Methane Reduction
- Gas Main and Service Replacements
- Fugitive SF6 Reduction
- Leak Detection and Repair
- Breaker Replacements
- Small Source Efficiency
- Fuel Conservation
- Replacements of heaters and boilers
- Vehicle Fleet Fuel Efficiency
- Hybrids
- Electric Drives
- Biodiesel
- Vehicle Miles Traveled (VMT) and trip reduction
- Facility Energy Efficiency
- Energy Conservation
- Operational Controls
- Building retrofits
Customer Energy Efficiency
The New Jersey Energy Master Plan (EMP) establishes the goal of reducing projected energy consumption 20% by 2020. This equates to a statewide annual reduction of 20,000 GWh of electricity use and 110 trillion BTUs of heating fuel consumption.
PSE&G’s recently approved Carbon Abatement and Energy Efficiency Economic (EEE) Stimulus programs will deliver a portion of these savings. Through 2025, the $46 million Carbon Abatement program will result in approximately 750,000 metric tons of carbon reductions. PSE&G will invest an additional $190 million through the EEE program to bring energy efficiency measures to residential customers, multi-family affordable housing units, municipal buildings, businesses, and facilities such as cash-strapped hospitals. The EEE program is expected to yield more than 2 million metric tons of carbon reductions through 2025.
But greater investment is needed. PSE&G will work with the New Jersey Board of Public Utilities (BPU) to delineate an appropriate role for utilities to help New Jersey achieve its EMP goals for energy efficiency. We will also work with the BPU to develop an appropriate regulatory mechanism – such as a formula rate or decoupling mechanism – to facilitate the level of investment by utilities that will be required to reach this goal.
Assuming PSE&G, our regulated utility, obtains approval to deliver within our service territory 10% or more of the EMP’s energy conservation goal, we will implement energy efficiency programs that achieve annual energy savings exceeding 1,000,000 MWh and 60,000,000 therms of natural gas, yielding an annual carbon reduction of more than 800,000 metric tons.
Renewables
Renewable energy provides zero-carbon electricity and displaces carbon emissions from electricity that would otherwise have been sourced from the grid. PSEG has identified opportunities to install nearly 800 MW of renewables by 2025 and annually displace more than 600,000 metric tons of carbon emissions through the development of new renewable solar and wind energy resources.
The deployment of renewable energy technologies is challenged by high costs and policy uncertainty. Renewable generation requires financial and policy incentives – such as Production Tax Credits (PTCs), Investment Tax Credits (ITCs), and a Renewable Portfolio Standard (RPS) – in order to compete with conventional generation resources.
Provided that public policies yield sufficient incentives, PSEG will continue to pursue a hybrid approach to invest in renewables in both competitive and regulated markets.
Clean Central Station Power: Nuclear Capacity
The efficient operation of clean, central station power plants will be necessary to achieve significant carbon reduction. Nuclear power is a proven, clean energy technology that displaces carbon emissions from electricity that would otherwise have been sourced from the grid.
In August 2009, PSEG submitted applications to the U.S. Nuclear Regulatory Commission (NRC) to extend the operating licenses of its Salem and Hope Creek generating stations by 20 years. If approved, the license extension applications for these units would ensure the continued annual displacement of more than 9,000,000 metric tons of carbon emissions .
PSEG is also working to develop new nuclear capacity. We have invested over $400 million to add 200MW of new capacity at our existing facilities. In addition, the company expects to file an early site permit application with the NRC in the spring of 2010. These investments would enable PSEG to displace more than 4,000,000 metric tons of carbon emissions per year.
Nuclear power relies upon public support to permit and operate. Financial incentives and regulatory predictability – such as a “green bank” under the proposed Clean Energy Deployment Administration, as well as stable regulatory and competitive market frameworks – are needed to realize these carbon displacements. PSEG will consider investments in new and expanded nuclear capacity in close consultation with public policymakers, regulators, and other stakeholders.
Achieving 25% by 2025
PSEG is committing millions of dollars through concrete investments in energy efficiency, renewables and nuclear investments to reach this 2025 carbon reduction goal. The success of this strategy will depend on technological advances, public policies, and our ability to obtain regulatory approvals. PSEG will report annually on our progress toward achieving this goal.
Call to Action
Climate change presents a challenge of unprecedented scale and scope, requiring a corresponding degree of leadership and cooperation. Strong public policies will enable PSEG and others to reduce carbon emissions more than we could otherwise. Most important, is a national price on carbon – through adoption of a national cap and trade system. By putting a price on carbon, Congress will support the carbon reduction goals of PSEG and other energy companies by providing an economic foundation for directing investments towards energy efficiency and clean energy.
Now is the time for all of us – governments, businesses, and individuals – to address the climate challenge. Voluntary efforts are vital and important, but they alone will not produce the level of reductions that are needed to meaningfully address the problem.
The U.S. urgently needs to enact climate legislation. This will enable action on a scale that is needed to effectively combat climate change and provide businesses such as PSEG the policy certainty that is needed to invest in low-carbon technologies. And by proving that our nation is serious about addressing climate change, we can build momentum for an equally important international climate accord.
PSEG urges Congress to seize this historic, perishable opportunity. We owe it to ourselves, and to future generations.
What’s your view? Please let us know at Opinion@PSEG.com.
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