With a barrage of new reports warning of the devastating impacts of climate change, the recent announcement by Xcel Energy that it would cut its carbon emissions 80 percent by 2030 and provide carbon-free electricity by 2050 was welcomed by environmental groups near and far. Xcel is one of the country’s largest electric utilities and the largest in Minnesota, but addressing Minnesota’s contributions to climate change is not just up to Xcel. Our state government also has a critical role.
State and federal policy set the stage for Xcel’s announcement. Investments by Congress in clean energy research and development helped drive the cost of solar today to one-third of what it was in 2000. In Minnesota, our renewable portfolio standard and solar energy standard enabled critical learning and business conditions for wind and solar to become self-sustaining contributors to job growth across the state. Xcel’s carbon pledge shouldn’t take the pressure off state leaders to continue working toward the cleanest, most equitable, and fastest energy transition possible.
In announcing its carbon goal for the eight states it operates in, Xcel emphasized that it “listen[s] very closely to what our communities and customers are asking for.” That’s fantastic! But Xcel is a for-profit company with fiduciary responsibility to its shareholders to make a profit. The Minnesota Public Utilities Commission (PUC) is responsible for providing independent oversight that appropriately balances private and public interests. That’s where the details really matter.
There are many pathways toward economically sound, rapid carbon reductions. Investments in large-scale renewable energy facilities, like Xcel’s Northstar project in Chisago County and its portfolio of wind projects in southern Minnesota, are likely to be more profitable than fossil fuel alternatives. These projects reduce emissions and also handsomely reward Xcel’s shareholders, who are guaranteed a profit on all new investments that Xcel makes. It also seems likely that Xcel will seek extensions for its two nuclear plants in Monticello and Prairie Island, which have licenses set to expire starting in 2030.
But there are also viable complements and alternatives. While sometimes more expensive up front, smaller-scale solar owned by individuals, communities, and third parties delivers clean power along with a stream of benefits that can be difficult to measure. These projects avoid large land-use disruptions and large transmission lines, and since they are sited closer to the point of energy consumption, they reduce waste in transporting energy from A to B.
The appropriate balance of large-scale and small-scale carbon-free energy is one of many questions that arise in planning for our state’s energy transition. Our public servants should celebrate Xcel’s new pledge, but not lose sight of the public interest.
Finding the best ways to meet Minnesota’s goal to reduce greenhouse gas emissions 80 percent by 2050 still requires creating a fair playing field for all forms of carbon-free energy; appropriately engaging our 170 municipal and cooperative utilities; increasing support for the many Minnesotans who struggle to pay their energy bills; and tackling Minnesota’s rising greenhouse gas emissions in transportation, agriculture, heating, and industry.
Meeting our carbon-reduction goal can go in many different directions, so it’s critical now that the PUC and state government protect the public interest. This may be no easy task. According to the Minnesota Campaign Finance and Public Disclosure Board, Xcel Energy is the state’s sixth largest lobbyist, having spent over $1.7 million per year over the past five years, 70 percent of which was directed toward the PUC.
Lobbying isn’t necessarily bad — decision makers require insight into how the industries they regulate work. But because Minnesota’s PUC has a lower budget and fewer resources than agencies in comparable states, it often defers to Xcel’s analysis or public comments because it lacks the capacity to conduct its own analysis.
The Walz administration will choose its Cabinet and first public utilities commissioner soon. We believe it’s critical that our new leaders make sure that as Xcel decides how to realize its pledge to be carbon free, it does so in a way that reflects what Minnesotans value.
Gabriel Chan is an assistant professor at the University of Minnesota’s Humphrey School of Public Affairs. Lindsey Forsberg and Matthew Grimley are master’s degree candidates in Science, Technology and Environmental Policy at the Humphrey School.