Emera finds carbon capture cash in Florida, where the Governor denies climate change
In May, Florida Governor Ron DeSantis made a political point by scrubbing the words “ climate change” from the state’s laws. In the face of hurricanes, flooding and record-setting heat waves, the Republican told voters his government’s energy priorities centred on affordability and reliability.
Environmentalists freaked out. The governor‘s poll ratings rose. And Halifax-based utility Emera Inc.
looked past what politicians say to what their governments actually do, and allocated 80 per cent of its $20-billion, five-year capital spending budget to improving the electrical grid and moving to low-emission power in the Sunshine State.
For all the anti-woke bluster from Republicans such as Mr. DeSantis, Emera chief executive officer Scott Balfour said clarity on regulation and easier access to capital make the U.S. a more welcoming environment than Canada for companies investing in the energy transition.
Along with peers such as Enbridge Inc. and TC Energy Corp., Emera runs massive electric grids and pipeline networks across North America. Its flagship domestic business is Nova Scotia Power, the province’s 525,000-customer electrical utility. In Florida, Emera owns Peoples Gas, the state’s largest natural gas supplier, and Tampa Electric, which provides the power to 800,000 clients.
The key decision for utility CEOs such as Mr. Balfour is where to invest the billions needed to meet ever-increasing demand for electricity.
Last week, in a presentation to the Canadian Club, Mr. Balfour said that, whereas U.S. federal and state governments offer “carrots” to companies such as Emera, in the form of grants, tax credits and low-cost loans, Canadian politician often wield a “stick,” with taxes and cumbersome regulation.
In Canada, Mr. Balfour said a “pancake stack of polices” around energy from federal and provincial governments “overly complicate decisions on how to allocate capital.”
The success of U.S. carrots was on display when Emera outlined its renewable energy spending plans at an investor event last Thursday, after the Canadian Club speech. The company committed $2-billion to solar power projects at Tampa Electric and $870-million to Florida energy storage facilities, which have massive collections of batteries to ensure the grid has power when the sun stops shining.
Emera is also working on a cutting-edge carbon capture and storage (CCS) facility to lower emissions at its natural gas-fired Polk power station just outside Tampa Bay. The federal Department of Energy pledged up to US$100-million to the project. In addition, the Polk investment is eligible for U.S. tax credits.
Emera is forging ahead on CCS and the move to a lower carbon-emission economy in Florida at a time when similar projects in jurisdictions such as the Alberta oil sands are bogged down in negotiations between industry and government over who pays for what.
Mr. Balfour hasn’t forgotten Emera’s Nova Scotia roots. The utility will spend $2.7-billion over the next five years to make its domestic energy business more reliable, efficient and storm-resistant.
In February, as part of its domestic renewables strategy, Emera partnered with the Canada Infrastructure Bank to launch Atlantic Canada’s largest energy storage facilities. Emera committed $180-million to the project and attracted an $18-million equity investment from the Wskijinu’k Mtmo’taqnuow Agency Ltd., a partnership owned by 13 Mi’kmaq communities.
However, the bulk of Emera’s future growth will come from south of the border. Next year, the utility plans to list its shares on the New York Stock Exchange. In a report, analyst Maurice Choy at RBC Capital Markets said the move will mean “better access to capital from U.S. investors for a company with the majority of its assets in Florida.”
Politicians of Mr. DeSantis’s ilk appeal to their base, and poke the left, by rejecting what the Republican leader called the “politicization of weather.” The right-wing rhetoric hasn’t stopped Florida’s Governor from committing billions of taxpayer dollars to restoring the Everglades and addressing rising sea levels and increasingly severe coastal flooding.
A straightforward approach to regulating and funding energy producers won Florida a $16-billion commitment from Emera, including massive spending on renewable power. It’s an approach to the energy transition that Mr. Balfour projected will translate into 5-per-cent to 7-per-cent annual growth in earnings per share.
Just don’t say Emera’s investment has anything to do with climate change.
https://www.theglobeandmail.com/business/commentary/article-emera-finds-carbon-capture-cash-in-florida-where-the-governor-denies/ |
