Implementation And Action Toward Net Zero

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Implementationand action towardnet zeroSeptember 2020

About Southern CompanySouthern Company is a leading energy company serving 9 million customersthrough our subsidiaries. Southern Company provides clean, safe, reliableand affordable energy through electric operating companies in three states,natural gas distribution companies in four states, a competitive generationcompany serving wholesale customers across America, a leading distributedenergy infrastructure company, a fiber optics network and telecommunicationsservices. In this document, the terms we, us, our and the Company all refer toSouthern Company.Our CompaniesElectric UtilitiesOther Companies Alabama Power PowerSecure Georgia Power Southern Nuclear Mississippi Power Southern PowerNatural Gas Utilities (SouthernCompany Gas) Southern Telecom Southern LincOur approachto reducing CO2emissionsWe are lowering carbon emissionsin ways that make technical andeconomic sense for our customerswhile enhancing the disclosureof our actions and the risk andopportunities for our companyduring this important transition.As we described in our April 2018Planning for a low-carbon futurereport, our approach to reducingcarbon emissions is described inthree pillars: Atlanta Gas Light Chattanooga Gas Nicor GasPursue a diverse energy resourceportfolio to include low-carbonand carbon-free resources,negative carbon solutions andenergy efficiency resources Virginia Natural Gas Complementary non-utilitynatural gas businessesSouthern Company brands are knownfor excellent customer service, highreliability and affordable pricesbelow the national average. Formore than a century, we have beenbuilding the future of energy anddeveloping the full portfolio ofenergy resources, including carbonfree nuclear, advanced carboncapture technologies, natural gas,renewables, energy efficiency andstorage technology.Through an industry-leadingcommitment to innovation, SouthernCompany and its subsidiaries developthe customized energy solutions ourcustomers and communities requireto drive growth and prosperity. Ouruncompromising values ensure weput the needs of those we serve atthe center of everything we do andgovern our business to the benefit ofour world.Southern Company is a holding company that conducts its business through itssubsidiaries. Accordingly, unless the context otherwise requires, references in thisdocument to Southern Company’s operations, such as generating activities, GHGemissions and employment practices, refer to those operations conducted throughits subsidiaries.Continue our industry-leadingresearch and development(R&D), focusing on technologiesthat lower greenhouse gas(GHG) emissionsConstructively engage withpolicymakers, regulators,investors, stakeholders,customers and communities tosupport outcomes that lead to anet zero future

A Letter from the CEOI continue to be confident that we are prepared andwell-positioned to meet the needs of our customers,employees, communities and investors well into thefuture and will succeed in our transition to a net zerofuture.Thomas A. FanningChairman, President and Chief Executive OfficerWe are updating our long-termGHG emissions reduction goal tonet zero emissions by 2050We now expect to achieve our50% reduction goal well inadvance of 2030, and possibly asearly as 2025In April 2018, we issued our Planning for a lowcarbon future report. At that time, we were oneof the first U.S. utilities to set bold, industryleading goals to reduce carbon emissions. Inthis addendum to our earlier report, we provideinformation on our progress and plans todecarbonize the Southern Company system,including an update of our long-term goal to netzero emissions by 2050.Southern Company’s 2030 and 2050 GHGEmissions Reduction GoalsIn April 2018, we set a goal for our electric and gasoperations of achieving a 50% reduction in GHGemissions by 2030, as compared to 2007 levels.Driven primarily by low natural gas prices, andthrough our regulators, we have seen a more rapidtransition of our electric generation fleet. As aresult, Southern Company’s carbon emissions havedecreased by 44% through 2019. We now expectto achieve our 50% reduction goal well in advanceof 2030, and possibly as early as 2025.Implementation and Action Toward Net Zero3

A Letter from the CEOAlso in 2018, we set a long-term goal of low- tono-carbon emissions by 2050, which we definedas 80% to 100% reduction in emissions. Since thattime, the discourse around decarbonization effortsin the U.S. and beyond – including with our Boardand stakeholders – has evolved to incorporateconcepts related to negative carbon technologies.As a result of this evolution and our analysis ofopportunities to incorporate net zero conceptsinto our long-term strategy, we are updating ourlong-term GHG emissions reduction goal to netzero emissions by 2050.MAKING PROGRESS TOWARD OUR DECARBONIZATION GOALSOur Goals2050Net ZeroGHG Emissions203050%Notably, we have committed to both our 2030 and2050 GHG reduction goals in the absence of anystate or federal mandates. Rather, we pursue thesegoals because they are good for the customers andcommunities we are privileged to serve.Our approach is driven by thoughtful scenarioplanning, long-term integrated resource plans(IRP) and constructive regulatory decision-making.Our success is enabled by active engagement,thoughtful public policy and industry-leading R&D.Our Path to Net Zero by 2050Working closely with our customers and regulators,we have made significant progress in reducing theemissions profile of our electric generation fleet. For2019, coal decreased to 22% of our annual energymix while renewables grew to 12%. For context, thiscompares to 69% coal and 1% renewables in 2007,our benchmark year.*As we look ahead, Southern Company willcontinue to use a portfolio approach as we seek todecarbonize. We expect our path to net zero to becomprised of several key elements: continued coaltransition, utilization of natural gas to enable thefleet transition, further growth in our portfolio ofzero-carbon resources, negative carbon solutions,enhanced energy efficiency initiatives andcontinued investment in R&D focused on cleanenergy technologies. As an example, across ourstate-regulated utilities and Southern Power, we*4See the annual energy mix chart on page 10.Implementation and Action Toward Net ZeroReduction2019Our Progress44%Reduction201736%Reduction2007currently have more than 9,000 megawatts (MW)and expect to have approximately 14,000 MW ofrenewable resources by 2024.We have already made meaningful shifts todecarbonize our business in a relatively shorttimeframe, and we are mindful of the impactthese changes can have on our customers,communities and employees. Our planning processroutinely considers a host of factors, includingaffordability, reliability, safety, environmentalimpacts and resilience, as well as broader socialand economic community impacts.

A Letter from the CEONow commonly described as a “just transition,” wehave always placed a high priority on protecting theinterests of our employees and the communitieswe are privileged to serve. We will continue to usethis approach as we work to decarbonize in thedecades ahead.Important Role of Natural Gas in Reaching ourDecarbonization GoalsNatural gas has served a critical role in reducingour GHG emissions while providing clean, safe,reliable and affordable energy to our customers.Given its abundance, affordability and relativecarbon footprint, we believe natural gas will play ameaningful role in securing America’s energy future.We also believe that energy policy should considerthe full portfolio of resources in a collective effortto achieve net zero emissions by 2050.As we deploy increasing amounts of intermittent,renewable capacity across our system, naturalgas fueled generation is needed to maintainreliability for our electric customers. The directuse of natural gas is a necessity for many ofour residential customers, particularly in colderclimates. Natural gas also continues to bean important, affordable fuel source for ourcommercial and industrial customers. Unless anduntil technology emerges that can affordablyand efficiently replace it, natural gas remains anappropriate and responsible fuel source, and onethat is critical to the health, safety and comfort ofthe citizens and communities we serve.Because we believe natural gas is an importantpart of our nation’s effective transition to anet zero future, we are committed to playing aleadership role in reducing the environmentalimpact of natural gas usage. We are focused onopportunities to lead the industry in the use ofrenewable natural gas, while minimizing fugitivemethane emissions across the natural gas supplychain and reducing GHG emissions for end usecustomers, including electric generation.R&D and Innovation LeadershipIn 2019, our R&D organization celebrated 50 yearsof delivering innovative solutions and creatingvalue for customers. Southern Company hasled the U.S. utility industry in the development,funding and demonstration of innovative researchnecessary to provide clean, safe, reliable andaffordable energy.Decarbonization continues to be a major focusof our R&D efforts. As just one example, underSouthern Company’s leadership and management,the National Carbon Capture Center remainsfocused on efforts to reduce and capture carbonemissions from electric generation sources. Inlight of the long-term goal of net zero by 2050,Southern Company will continue its leadershipby including negative carbon technologies in ourR&D efforts.Implementation and Action Toward Net Zero5

A Letter from the CEOConstructive Regulation and Public PolicySouthern Company’s success, including effortsto decarbonize our system, are dependent onsupportive and constructive regulation andpublic policy. We have long been a leader in theadvancement of ideas and positions in the privateand public arenas that are beneficial to ourcustomers, communities and employees.The work of planning, transitioning and operatingour system to meet our decarbonization goalswill require continued active and constructiveengagement with government officials, investorsand a wide variety of other public and privatestakeholders. Our success will require the supportof policies that encourage and advance innovationwhile protecting the affordability, reliability andresilience of service to customers.Governance and Risk OversightThe significant progress we have made in reducingemissions and the development of a strategy forthe future have occurred under the guidance andoversight of a competent and engaged Boardof Directors and a committed managementteam. Together we are keenly focused on theplanning and execution required to meet our GHGreduction goals.The Company’s independent Directors providesubstantive oversight to our managementteam on strategy and risk issues across the6Implementation and Action Toward Net Zero.environmental, social and governance spectrum,including carbon reduction efforts. Eachcommittee of the Board has responsibility forkey elements of risk oversight including futurecapital investments, stranded and physicalasset risk, climate issues, human capital impacts,cybersecurity and policy advocacy.Importantly, these matters are discussed regularlyby our full Board of Directors and at ManagementCouncil meetings. In addition, our independentDirectors are actively engaged in direct dialoguewith key investors and other stakeholders ona variety of topics, including carbon strategy,policy engagement, human capital andexecutive compensation.ConclusionWhile environmental, social and governance(ESG) issues have received increasing attentionby investors over the past few years, at SouthernCompany these issues have always received theheightened attention they deserve. For us, focuson ESG issues and their alignment with long-termstrategy and value creation is about far more thandecarbonization. It goes to putting customersat the center of everything we do, building asustainable workforce and making sure that thecommunities we serve are better off becausewe’re there. This approach is embedded in ourvalues and our DNA, and we know that it is theright way to drive long-term performance.

A Letter from the CEOI continue to be confident that we are preparedand well-positioned to meet the needs of ourcustomers, employees, communities and investorswell into the future and will succeed in thetransition to a net zero future. As always, weare committed to providing clean, safe, reliableand affordable energy to the customers we areprivileged to serve.We appreciate your continued interest in SouthernCompany, welcome your feedback, and lookforward to continuing our engagement with allof you.Thomas A. FanningChairman, President and Chief Executive OfficerSeptember 2020A Path to Net ZeroWe believe a suite of complementary policies will be required to reach net zero by mid-century. These policies should bebuilt around a foundational mission to support the acceleration of energy research, development, demonstration anddeployment to enable solutions at equal or lower cost of service to energy customers compared to current conditions. Thisfigure depicts a collection of established and emerging solutions that could be useful in decarbonizing our operations.2007201920302050Coal44%44%While coal has been key to supplying affordableenergy to our customers, we are embracing anorderly transition of our coal fleet.CO2 EmissionsCoalFoundationalNuclearHydroNatural GasNuclear, hydro and natural gas arefoundational baseload and flexiblecomponents of an orderly transition.50%ExpandingSolarWindEnergyGridStorage ModernizationWe are expanding our deployment ofrenewables and energy storage, modernizingthe electricity grid and enhancing energyefficiency programs.EnergyEfficiencyEmergingRenewableNatural GasCarbon Capture,Use and StorageEmerging technologies, such as carboncapture, use and storage (CCUS), renewablenatural gas, next generation nuclear andhydrogen, will be key to achieving ouremission reduction goals.HydrogenNextGas orGenerationNuclear AlternativeNetZeroForestry andBiomassDirectSoils Management with CCUS Air CaptureNegative Carbon ConceptsNegative carbon concepts, such as naturalsolutions, biomass energy with CCUSand direct air capture, must emerge andbecome cost-effective to achieve net zerocarbon emissions.Implementation and Action Toward Net Zero7

Report out on Southern Company’s portfolio outlookIn our 2018 report, we provided an outlook on each asset category within our portfolio. Below we provide an update onactions taken since April 2018. We have also added negative carbon concepts to the portfolio list. These specific initiativesare in addition to energy efficiency efforts, which span all of our businesses.Facilitates GHGReductionPortfolioDemandOutlookActions Taken Since 2018 Report Continued to look for opportunities to increase efficiency of existingnatural gas fleet resulting in reduced fuel use and GHG emissions.NaturalGas Natural gas suppliers committed to GHG reductions in their ownbusinesses have a competitive edge in our bid selection process. Converted National Carbon Capture Center to focus on CCUS fornatural gas units.CoalNuclear Retired approximately 1,900 MW of coal generation in 2019. Additional retirements continue to be evaluated. Continued progress on construction of Vogtle Units 3 & 4. Unit 3 isexpected to go into service in 2021 and Unit 4 in 2022. R&D efforts focused on advancing 4th generation nuclear technology. Anticipate adding approximately 4,400 MW of additional renewablegeneration sources by 2024.Renewables More than 14,000 MW of renewables expected online by 2024. R&D efforts focused on lowering renewable operating andmaintenance costs.EnergyStorage 440 MW of battery storage projects operating or under developmentacross the U.S., including 80 MW approved in the 2019 GeorgiaPower IRP. R&D continues to pursue cost-effective, long-duration storage options.ElectricTransmission&Distribution Continued investment in grid modernization including smart gridtechnology and cybersecurity protection. Strategic reliability enhancements and ageing infrastructure replacementprograms that improve system availability, reliability and resilience. Virginia Natural Gas (VNG), a Southern Company Gas subsidiary,began purchasing 20% of its customers’ annual natural gas supplyfrom select, low fugitive emissions wells operated by producers in OurNation’s Energy (ONE) Future.LocalNatural GasDistribution Continued investment in methane detection and reduction acrossthe Southern Company Gas footprint, including our leadership role inONE Future. Continued support for customer programs supporting reducedemissions and efficiency, including the introduction of Greener Life carbon offset program in October 2019 by Southern Company Gassubsidiary Georgia Natural Gas.MidstreamNatural tiveCarbonConcepts8 Engaging with pipeline investment partners and industry groups onopportunities to reduce methane emissions in this sector. Working with industry groups to standardize methane intensityreporting methodologies. Continued working with commercial and industrial customers to bringdistributed energy resources (DERs) on-line to enhance reliability. Learning from the Smart Neighborhood projects to understandimplications of community solar. Direct air capture R&D. Enhancing land management practices and stewardship efforts thatlead to natural carbon sequestration.Implementation and Action Toward Net Zero

Contents10Making Progress Toward Our Decarbonization Goals1012Transitioning ElectricityGeneration PortfoliosGreenhouse Gas Emissions Reductions14A Portfolio Approach to the ContinuedDecarbonization of the Southern Company System16212324Important Role of Natural Gas in Reachingour Decarbonization GoalsZero-Carbon ResourcesEnergy EfficiencyGovernance and Oversight of Our DecarbonizationEfforts31Industry-Leading R&D ThatEnables Decarbonization28Our Core Business Model Emphasizes a JustTransition31Negative Carbon Concepts252629Deliver an Affordable, Reliable, Net ZeroEnergy System33Board Oversight of Climate-Related BusinessStrategy, Operations, Risks and OpportunitiesAlignment of Executive Compensation withour GHG Emission Reduction GoalsOptimize Delivery Systems to Support SectorTransformationIn response to growing investorinterest in information on howcompanies are managing climaterelated risks and opportunities in linewith the transition to a lower carboneconomy, both our 2018 report andthis 2020 addendum include disclosureresponsive to recommendations of theTask Force on Climate-related FinancialDisclosures (TCFD).TCFD IndexMetrics and TargetsStrategyRisk ManagementGovernancePages of 2018 ReportPages of 2020 Addendum4, 6 8, 13, 223 4, 8, 10 13, 21 22, 294, 7 12, 18 214 7, 14 304, 5, 13 166, 17, 31 325, 23 256, 31 33A note about renewable generationRenewables continue to be a rapidly growing part of the energy we supply to our customers. We own renewablegeneration facilities and purchase the energy output of renewable generation facilities owned by third parties. When werefer to "renewables" in this document we are referring to wind, solar, hydro, biomass and landfill gas facilities, whetherowned by us or owned by third parties and whether we have rights to the renewable energy credits (RECs) associated withenergy from the facilities. To the extent Southern Company subsidiaries or affiliates retain or receive the RECs associatedwith energy from the facilities, they generally reserve the right to use those RECs to serve customers with renewableenergy or to sell the RECs, either bundled with energy or separately to third parties.Implementation and Action Toward Net Zero9

Making Progress Toward OurDecarbonization GoalsIn 2018, we set an intermediate goal to achieve 50% reduction in GHG emissions by 2030, compared to 2007. Currentprojections now indi

net zero future About Southern Company Southern Comp n s le d n ener comp n serv n 9 m ll on customers throu h our subs d r es Southern Comp n prov des cle n, s fe, rel ble nd fford ble ener throu h electr c oper t n comp n es n three st tes,

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