Xcel extends net-zero goal to include natural gas business

Xcel Energy announced its commitment to achieving net-zero greenhouse gas emissions from its natural gas business by 2050 and a 25% reduction in emissions by 2030.

The pledge builds on Xcel’s 2018 commitment to provide customers with 100% carbon-free electricity by 2050. The announcement makes Xcel one of the first major American utilities to include in its net-zero target emissions from the natural gas it sells to customers.

“We are glad to see Xcel once again showing industry leadership by acknowledging the need to reduce emissions from its natural gas business to net-zero,” Daniel Stewart, climate and energy program manager at As You Sow, said. “It is absolutely critical for all utilities to follow suit and include their customers’ use of natural gas in decarbonization commitments.”

Xcel disclosed a list of actions it will implement to achieve its target, including purchasing natural gas from certified low-emission suppliers, improving its operations to achieve net-zero methane emissions by 2030, and offering low-carbon gas alternatives such as hydrogen and renewable natural gas (RNG).

“Investors do have serious concerns over the role that RNG and hydrogen will play in utilities’ net-zero transition due to limited supplies of RNG and the high cost of green hydrogen,” Stewart said. “Low carbon gas alternatives will have some role to play in the transition to a net-zero economy, but they are likely to have limited utility in buildings. Building electrification solutions, such as the use of heat pumps, are much more robust at reducing climate risk while being more cost-effective and offering additional benefits such as reduced indoor air pollution.”

“Building electrification will be critical in ratcheting down our economy-wide emissions,” Stewart said. “All utilities need to start examining their natural gas businesses in light of these electrification policy trends geared to achieve local and state net-zero goals. Investors need to know that the utilities in which they invest are analysing the opportunities and risks from a rapid shift to building electrification, both for their emissions reduction goals and their bottom line.”