‘We see no path’ to phase out coal, US utility says

Good morning and welcome back to Energy Source, we come to you from New York.

While the US celebrates independence from Britain, our colleagues across the pond are covering the general election, with Labour cruising to a landslide victory. The party has put energy at the heart of its campaign, pledging to cut carbon emissions from electricity generation to net zero by 2030 and set up a state-owned energy company.

In today’s Energy Source, we talk to the CEO of FirstEnergy. The investor-owned U.S. utility sees no way to phase out coal amid growing demand for more 24-hour power, fueled by artificial intelligence data centers and new manufacturing.

Our second piece delves into a new report from the Clean Air Task Force that casts doubt on the ability of green hydrogen to decarbonize the energy sector. Data Drill looks at how the global liquefied natural gas market is set up for a glut.

Thank you for reading,

Amanda

‘We’re Just Being Honest’: FirstEnergy CEO on Delays in Coal Plant Closure

Rapidly growing energy demand driven by artificial intelligence and the deterioration of the U.S. power grid are making it harder to become carbon-free, warns FirstEnergy, one of the largest investor-owned U.S. utilities.

“When we looked at emissions reduction, it was based on running our coal plants less by the end of the decade,” FirstEnergy CEO Brian Tierney told Energy Source. “We don’t see a path to that now.”

The Ohio utility earlier this year withdrew its goal to phase out coal by 2030 and will keep its two West Virginia plants open until 2035 and 2040, citing rising demand for electricity, reduced generating capacity and politics in the state.

“The things that are colliding are the growing demand and desire of people for reliability, what is affordable for most customers and what is sustainable. It’s easier to get two of those three things to coincide. It’s harder to solve for all three at once,” Tierney said.

“That’s why we had to withdraw our interim target. Some people think we were bad people for doing that. I think… we’re just being honest,” he added.

FirstEnergy’s comments come amid a series of delays in closing coal plants as the struggle to meet rising energy demand from AI data centers puts carbon-reduction plans on the back burner. On Monday, Google said its emissions have risen nearly 50 percent over the past five years due to data center expansion, calling into question its 2030 net-zero target.

FirstEnergy serves five states in the Mid-Atlantic and is part of the PJM Interconnection, an energy market that includes Northern Virginia, the world’s largest data center hub. Demand for electricity in the PJM region is among the fastest growing in the country, with the operator this year more than tripling its growth forecast for the next decade.

Natural gas accounted for 43 percent of U.S. electricity generation last year, while wind and solar contributed 14 percent, according to the Energy Information Administration. Coal-fired generation, which accounts for 16 percent of the electricity mix, has declined rapidly over the past decade as plants have closed and gas has become the most competitive option.

The Biden administration has set a goal of creating a carbon-free energy sector by 2035. FirstEnergy’s 2040 retirement date violates new U.S. Environmental Protection Agency rules that require coal plants to close or install expensive carbon capture systems by 2039. The rule has been challenged by several Republican attorneys general, utilities and trade groups who argue that the emissions-capturing technology is premature and will raise prices for consumers.

Report casts doubt on role of clean hydrogen in energy sector

Clean hydrogen has “limited prospects” for its ability to decarbonize the electric grid and could worsen the struggle to meet growing electricity demand, the Clean Air Task Force warns in a new report shared exclusively with Energy Source.

The environmental nonprofit found that while it is technically feasible to burn clean hydrogen in power plants, it is highly inefficient and twice as expensive as other low-carbon alternatives for 24-hour power.

The report’s authors looked at the production costs of blue hydrogen, which is produced using gas and capturing emissions, and green hydrogen, which splits water using electricity. CATF estimates that green hydrogen uses three times more energy than it puts back into the grid, depleting the already limited supply of low-carbon resources that everyday energy users need. Blue hydrogen, on the other hand, has a highly variable emissions profile.

“[Green hydrogen] “in general, it increases overall demand for electricity and cannibalizes clean electricity that could be used for another application,” said Kasparas Spokas, who co-authored the report with Ghassan Wakim. “People should be cautious about this strategy to decarbonize the energy sector.”

The report comes as the hype around clean hydrogen is waning as projects struggle to secure financing amid flagging demand and regulatory uncertainty. BloombergNEF, for example, estimates that just 6 percent of U.S. clean hydrogen projects have secured binding supply agreements.

Data Exercise

The global liquefied natural gas (LNG) market is heading for oversupply, BloombergNEF said in a new outlook published on Tuesday.

The research firm expects global demand for the refrigerated fuel to reach 560 million tonnes by 2030, about 11 percent lower than expected supply, according to BNEF, which warned that project delays and further Russian sanctions could tighten the market.

The outlook comes as a wave of new LNG terminals is expected to come online before the end of the decade, with the U.S. and Qatar leading capacity expansions. On Monday, a district judge in Louisiana appointed by Donald Trump rejected President Joe Biden’s pause on LNG project approvals, leaving the permitting freeze up in the air.

Job relocations

• Iberdrola subsidiary ScottishPower has appointed Charles Langan as financial director and Nicola Connelly as CEO of the SP Energy Networks division.

• Curtis Philippon has been appointed CEO of a Canadian midstream company Gibson Energy. Philippon joins Certarus.

• Pharos energy has named Katherine Roe as CEO and Mohammed Sayed as chief operating officer. Roe comes from Wentworth Sourceswhere she was CEO and previously CFO. Sayed was previously group head of technical and general manager in the Middle East at Pharos Energy.

• Jennifer Knealefinancial director of Targa sourceshas been named president of finance and administration of the Texas-based midstream company. Willem Byers will succeed Kneale as CFO and comes from Manchester Energy.

Powerpoints

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Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Contact us on energie.bron@ft.com and follow us on X on @FTEnergy. Read previous editions of the newsletter here.