Warren Buffett on Abel details Berkshire Hathaway Energy’s actions on climate change

GREG ABEL: Sure, Warren. Thank you.

And, really, as Warren touched on, BHE and BNSF have our — have the significant carbon footprints when you think of Berkshire.

And Warren, you touched on the disclosure that we’ve provided in the past going all the way back to 2007. I did pull those two investor presentations, one from 2007, and then our most recent one in 2021.

So, if we could pull up BHE-1 as a slide, I think it would just highlight, going all the way back to 2007, we’ve been doing investor presentations for what we call our fixed-income investors, and we’ve done that through — every year through 2021.

We’ve provided very similar disclosures to our board on an annual basis and had discussions around Berkshire Hathaway Energy’s plans to decarbonize.

Now, it’s interesting. If you go back to the 2007 fixed-income conference — and we are having a conference at that point in time — we have third-party debt, capital debt, that our utilities raise. It’s a traditional capital structure used across our regulated entities to manage our total cost to the customer.

So, we have investors. We present to them, as we’re highlighting, on an annual basis. And if you go back to that 2007 investor conference, it’s interesting. In that presentation, we’re highlighting climate change, that it’s a fundamental risk. And we discussed what good policy would be.

We discussed innovation. We discussed market transformation and the importance of — and the importance of setting targets, at that point in time. And we had recommendations for our industry.

And then, since then, each year, we’ve presented, really, a plan and a strategy around how each of our businesses in BHE, but each of our regulated entities, how they’re going to transform.

And the whole transformation has been around decarbonization, managing that risk on behalf of our stakeholders in our many states, our customers that we serve, and ultimately managing that risk for Berkshire Hathaway’s shareholders.
If you go back to 2015, when the U.S. was discussing — excuse me — joining the Paris Agreement, very specific targets were set. Prior to those targets being set, Berkshire Hathaway Energy and 12 other companies, including the Apples of the world, Google, Walmart, committed to Paris, and that targets needed to be set. Berkshire Hathaway Energy was one of those companies in 2015.

WARREN BUFFETT: Yeah, how many other utilities were there?

GREG ABEL: Right. Warren, there were no other energy companies that made any type of commitment at that point in time. I’m happy to report we made a variety of pledges.

Well, one of them was, at that point, we’d invested $15 billion in renewables, and that we would commit 30 billion in total. Well, we far exceeded that total now.

So, there’s been a clear commitment to reduce — decarbonizing our businesses. We have focused on very identifiable, quantifiable outcomes. And I think that’s very important.

If you look at the standards that were set with the — that were the original U.S. government’s commitments associated with the Paris Agreement, the target was 26% to 28% reductions in carbon footprints going back to 2005. So, that’s the reduction period through 2025. And they wanted the 26% to 28% reduction level.

We committed to that at BHE. And I’m happy to report, Warren — and we’ve briefed our board — we achieved that in 2020. So, we met our pledge. And we met the commitment under the Paris Agreement.

And then, if you fast forward to the discussions that are occurring right now, or have occurred, around rejoining the Paris Agreement, the current administration has proposed that, again, using 2005 as a starting point, that the emission goals for reduction should be 50% to 52% by 2030.

Again, the reason we can do it is we’ve built the foundation through transmission, the substantial investment that Warren’s highlighted, and then followed that up with very specific investments on the renewable side.

I’ve one incremental slide that, I hope, sort of pulls it all together, and that’s BHE-2.

Because, as people discuss carbon, they often go to coal units, how many you own, how many have you closed. And there’s no important — there’s no question that can be an important metric. But it is a transition. And we have very much focused across the three utilities we own and the ones we’ve highlighted on the slide, is to transition from our existing fleet to renewables, using transmission.

We have not become overly dependent on transitioning to gas. That’s been a clear strategy. So, over a period of time, our coal units will retire.

I’m happy to report — or pleased to report — to our shareholders that through 2020, we’ve closed 16 units to date.

If you look at — from 2021 through 2030, there will be an incremental 16 units closed. And then if you go through to the end of 2049, our remaining 14 units will be closed. And at that point in time, all our coal units are closed.