Xcel Energy is aiming for "net-zero" carbon emissions from its natural gas system by 2050, an ambitious goal but one with steep challenges.
The company joined just a handful of U.S. gas utilities Monday by announcing plans to extricate carbon in Minnesota and other states — including by replacing some gas with hydrogen, a cleaner alternative.
"It is really an evolution from the company's perspective," said Bob Frenzel, Xcel's CEO. "This is just the next big sector of the economy where we can provide leadership in reducing emissions."
Minneapolis-based Xcel, Minnesota's second-largest gas utility and largest electricity provider, was one of the first U.S. companies to set goals for 100% carbon-free power by 2050. Meeting that electricity goal will be difficult enough for Xcel; the gas-greening project is likely to be even more so.
Fossil-fuel-generated electricity can be more easily — and affordably — replaced by renewable power than natural gas can be for heating. Cleaner substitutes for natural gas are now quite expensive or are criticized for not being environmentally beneficial enough.
"Xcel Energy's announcement that it will set goals to reach net-zero greenhouse gas emissions from its gas business is commendable, but it is just a start," Joe Dammel, gas decarbonization director at St. Paul clean energy advocacy group Fresh Energy, said in a statement.
"In order to meet our climate goals, the gas system must decarbonize by midcentury, which is why it's crucial we focus now on what the future of gas will look like and make the right investments."
Net-zero generally refers to the notion that increases in carbon emission from an industrial process are balanced by an equivalent amount of carbon reductions.
"We are going to limit the amount of greenhouse gas emissions (from gas) as much as possible," Frenzel said. He added, "We are not going to do anything that jeopardizes the reliability of the system or affordability of the product."
Xcel's net-zero gas plan starts with measures that can be taken soon, notably by ramping up efforts to detect and stop leaks on its distribution system; and through purchasing gas only from suppliers with "certified low emissions."
In recent years, several efforts have cropped up to certify natural gas suppliers using such environmental metrics as methane emissions. "There are more sustainable and less sustainable producers of natural gas," Frenzel said.
On the demand side, Xcel's net-zero plan includes gas conservation measures, including offering incentives for electric appliances and water heaters, as well as electric heat pumps to supplement or replace gas heating.
Xcel also plans to launch pilot programs to test both "green" hydrogen and renewable natural gas (RNG) in its gas delivery system. The company, though it has released no details, plans five to eight hydrogen projects.
"We are in an exploratory phase at a number of our existing sites to utilize hydrogen," Frenzel said.
Green hydrogen refers to hydrogen produced by renewable energy or nuclear power, rather than the conventional method of burning natural gas. The former currently costs two to almost four times the latter.
President Joe Biden's clean-energy package before Congress includes tax credits for hydrogen similar to the credits used for years to stimulate wind power. "We think there will be tailwinds from the federal legislation," Frenzel said.
Hydrogen is a big topic in future clean-energy scenarios; it could be used to replace natural gas for both heating and electricity generation.
Xcel, aided by a $10.5 million federal grant, already has a pilot hydrogen project at Prairie Island. It will produce hydrogen by electrolysis, using steam from its nuclear power production.
In electrolysis, an electric current is used to separate water into its components of hydrogen and oxygen. Hydrogen electrolysis can also be conducted with renewable energy — notably wind in the Upper Midwest.
Still, hydrogen use faces many challenges, including that gas pipelines must be adapted for heavy hydrogen use — a costly endeavor. Currently, Xcel's system can handle a blend of only 5 to 20% hydrogen.
Renewable natural gas has perhaps even more challenges, though both Xcel and CenterPoint Energy — Minnesota's largest gas supplier — are pushing ahead with the concept.
Renewable natural gas is produced by breaking down organic waste through anaerobic digestion. Once cleaned of impurities, it can be injected into existing natural gas pipelines. Manure from dairy farm and livestock operations is a prime source of biogas; so is food waste.
However, renewable natural gas has faced criticism from clean-energy and environmental groups, who say it lacks a solid accounting system to measure carbon intensity — the amount of greenhouse gases emitted from producing, distributing and consuming a fuel.
Some forms of renewable gas aren't carbon-neutral, they say.
Currently, renewable natural gas is considerably more expensive than fossil gas — and the adequacy of its supply, even in the long-term, is questionable.
"It is a piece of the solution, but not an enormous piece of the solution," Frenzel said.