Duke Energy (DUK) and Wells Fargo (WFC) lead on environmental impact over the past two weeks on our ESG Safeguard platform. With sizable operations in North Carolina, both firms have partnered to expand their solar energy footprint in the state, and in Wells Fargo’s case, are on the heels of their recent commitment to go net zero on emissions by 2050.
Our ESG Safeguard Platform highlighted Duke Energy and Wells Fargo among the top leaders in environmental impact over the past two weeks. We focus specifically on these two firms due to their sizable operations in North Carolina and a recent partnership on solar installations in the state.
Wells Fargo late last week secured power purchase rights to a 60 MW solar development through the Duke Energy’s Green Source Advantage program. The Advantage program is a massive subscription based energy development program approved in 2019 that will bring 600 MW of renewable energy to North Carolina. Of the 600 MW available 100 MW will be reserved for military installations and 250 MW are reserved for the University of North Carolina. The remaining energy developments are available for large nonresidential energy users like Wells Fargo who has 36,000 employees in North Carolina alone. The Blackburn solar installation in Catawba county will be developed and operated by NextEra Energy.
Wells Fargo pledged in March to become a net zero emissions company by 2050 and just a month later they are taking an admirable step to meet this challenge. The Blackburn solar farm will be operational as early as 2022 and will provide 50% of Wells Fargo’s energy needs in North Carolina. As part of the solar development, NextEra is also seeking to contribute to land conservation efforts in Catawba County.
Wells Fargo has helped finance more than a modest portion of the renewable energy in the United States, passing the milestone of $10b in financing for renewable energy projects in February.
It’s no surprise seeing Banks in the spotlight recently. ESG focus has seen increasing attention in bank earnings calls over the years as noted by a recent Wells Fargo equity research note. We’ve examined the good works banks are doing on the social front in our recent content highlighting investments that go towards fighting systemic inequality, and the debacles that banks have had with risk management, but Wells Fargo is showing us that there is still much to do in terms of financing a low carbon economy.
Duke Energy has been busy this month, as the Wells Fargo collaboration is not the only large scale project they have been involved in. At the beginning of this month Duke announced the sites of two new solar installations in Florida. The solar plants will be located in Hardee County and Citrus County to provide nearly 150 MW of energy. Duke says these installations will produce enough clean energy to power 43,000 homes at peak production.
Moreover, Duke proposed a new installation for solar energy in Indiana. Announced late last week along with the collaboration with Wells Fargo, the “Hoosier Jack” solar farm proposal would be a 175 MW installation when completed, and provide energy for 35,000 homes. The solar farm would be built on a reclaimed coal mining site with construction set to begin in 2023, and producing clean energy by 2024 when it goes online.
One of the recent criticisms of banks has been the slow pace of divestment from fossil fuels. However, the lack of a carbon tax, that has been talked about for years now leads to uncertainty that makes it hard for quick divestment. Many within the financial space including JP Morgan Chase CEO Jamie Dimon have advocated for a carbon tax. It is not just an academic notion at this point and British Columbia in Canada has had a provincewide carbon tax in place since 2008. A clear carbon tax would likely have credit risk implications for fossil fuel producers, and may make the decision to divest from fossil fuels a bit clearer for banks.
However, until that day comes other incentives remain for the development of renewable energy, like tax credits. With or without a carbon tax the world is moving towards a low carbon economy, but a carbon tax may hasten that transition and provide clearer financial reasons to steer clear of fossil fuels.
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This communication does not represent investment advice. Transcript text provided by FACTSET and S&P Global Market Intelligence.
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