Xcel Energy investing in high-quality carbon offsets
Investments to benefit local communities, help company reach net-zero gas vision
Every day, Xcel Energy powers millions of homes and businesses with safe, reliable energy that’s also increasingly clean. In the coming decades, Xcel Energy aims to serve its customers with net-zero energy across all the ways customers use energy, including:
- Delivering 100% carbon-free electricity
- Fueling zero-carbon transportation
- Providing gas service with net-zero emissions.
By 2030, we plan to reduce greenhouse gas emissions 25% from the supply, distribution and customer end-use of natural gas, on our way to providing net-zero gas service by 2050. To achieve these goals, we’re deploying a portfolio of solutions that include tackling methane and cutting carbon emissions from homes and businesses through a variety of voluntary options.
Reducing greenhouse gases from the natural gas business is a complex undertaking. To reach our goals, we’re counting on our ability to lead a major transformation in the coming decades. Not only will we change the way we do business, but we must encourage others to change, too.
Achieving a net-zero future for natural gas will require piloting new options across the board— to build the market for certified low-emissions natural gas, advance electric technologies and clean fuels for wide-scale adoption and persuade hundreds of thousands of customers to install and use those technologies. It’s an ambitious goal, and that’s where carbon offsets come in.
What are carbon offsets and how do they work?
A carbon offset represents one metric ton of carbon dioxide equivalent (CO2e) either prevented from entering or removed from the atmosphere in order to compensate for emissions elsewhere. These offsets can be traded, sold or retired in the form of a carbon credit, where one credit equals one metric ton of CO2e reduced. Organizations or individuals choose to participate in carbon offset projects by purchasing credits equal to a portion, or all, of the greenhouse gas emissions from their operations or activities.
Xcel Energy is starting to invest in offset projects to gain experience, demonstrate offset quality and help build the market for high-caliber projects. At the same time, we understand carbon offsets are not a substitute for reducing emissions from natural gas. We’ll continue to take cost-effective measures to reduce emissions from our system and help customers reduce their emissions. Offsets work in addition to those reductions. And by investing in carbon offsets now, we can cost effectively reduce greenhouse gas emissions today while we wait for new clean energy technologies to mature and become more affordable and mainstream for consumers.
What makes a carbon offset project “high-quality?”
To ensure the projects are high-quality, Xcel Energy has established strict criteria for participation. We are specifically seeking projects that:
- Benefit the states and communities we serve.
- Create economic benefits, such as jobs and sources of local revenue.
- Produce significant environmental or social benefits, beyond producing verified greenhouse gas reductions, such as reducing air and water pollution, waste or water use; preserving wildlife habitat; and restoring or supporting sustainable management of ecosystems.
- Follow a scientifically robust protocol and rules.
- Reflect our company’s commitment to diversity, equity and inclusion.
- Match our corporate values: Committed, Connected, Safe and Trustworthy.
We also plan to only purchase offsets from projects registered on recognized carbon offset registries with rigorous standards and long-term experience.
“Rigorous quality criteria are key to ensuring the projects we support produce real, additional and conservatively quantified GHG reductions,” said Nicholas Martin, Xcel Energy’s Director of Strategic Outreach and Advocacy. “Working with established offset registries like the American Carbon Registry, City Forest Credits, Climate Action Reserve and Verra helps ensure that because it guarantees these projects have followed robust quantification protocols, been third-party verified, and are issued serialized credits so that no one else can claim the credits we retire on our customers’ behalf.”
Working with the carbon offset registries, the American Carbon Registry, City Forest Credits, Climate Action Reserve, and Verra, combined with applying our selection criteria, means our customers and communities can be confident that projects we support meet the highest standards for greenhouse gas reductions while also delivering significant environmental and social benefits.
Who is Xcel Energy partnering with on carbon offsets?
Xcel Energy has invested $300,000 in six locally based projects in Colorado, Minnesota and Wisconsin, which represent approximately 15,000 carbon offsets. They will help our company gain experience and test the use of offsets associated with our net-zero goal for the gas business.
These offsets also provide environmental and community benefits, beyond reducing carbon emissions, such as job creation and wildlife habitat preservation.
“Urban tree canopy is crucial infrastructure to mitigate the impact of climate change on our region—in addition to sequestering carbon, urban trees cool heat islands, capture stormwater, reduce air pollution and create urban wildlife habitat,” said David Wilson, board chair of Green Minneapolis. “Tree loss due to Emerald Ash Borer, drought and other factors is causing the Twin Cities tree canopy to decline rapidly. As cities across the metro area search for ways to increase their tree planting budgets, carbon offset projects like Xcel Energy’s can be an important new funding source.”
The credits from these projects were purchased with shareholder funds, so the cost is not included in customer energy bills. All these projects support our local communities and customers in addition to reducing carbon emissions. The combined project impact will be:
- 186,000 acres of forest responsibly managed
- 45,000 acres of Colorado grassland preserved
- 8,600 trees planted in Minneapolis neighborhoods, helping cool urban heat islands
- 2,500 pounds HFC refrigerant recycled, preventing it from entering the atmosphere
“Xcel Energy’s purchase of voluntary carbon offset credits from the Southern Plains Land Trust helps us to make further strides for prairie wildlife,” said Nicole Rosmarino, co-founder of Southern Plains Land Trust. “Funding land acquisition can be challenging, and carbon dollars make a difference. We appreciate our partnership with Xcel as we work to bring back the American Serengeti across a vast prairie wilderness.”
The six select projects include:
- Green Minneapolis
- National Indian Carbon Coalition
- Bayfield Forestry Project
- Ducks Unlimited May Ranch Preserve
- Southern Plains Land Trust Raven’s Nest and Heartland Ranch Preserves
- Refrigerants HFC Reclaim
Find out how these high-quality carbon offset partnerships are helping organizations and communities. Learn more about Xcel Energy’s net-zero vision for natural gas on xcelenergy.com.