Minnesota utility’s plan for getting off gas isn’t enough, critics say

This story was first published by Energy News Network.

Climate and clean-energy advocates weighing in on CenterPoint Energy’s ideas to decarbonize its natural-gas business in Minnesota applaud the effort but say it falls short of what’s needed to meet the moment.

The state’s largest gas utility submitted an ​“innovation plan” last summer to the Minnesota Public Utilities Commission, which is taking public comments on the plan through March 15. Over the course of hundreds of pages, the utility proposes 18 pilot projects — from tree-planting and geothermal to carbon capture and hydrogen-blending.

Altogether, the utility is asking to spend more than $105 million on 18 pilot projects that it estimates will reduce the equivalent of around 330,000 metric tons of carbon emissions over the five-year plan. According to calculations by clean energy organizations, this would represent about a 4% reduction.

The plan ​“is going to move us, but it’s not going to move us fast enough,” said Melissa Partin, climate policy analyst with the Minnesota Center for Environmental Advocacy, one of several groups that have submitted comments on the plan.

The docket (M-23/215) stems from the Natural Gas Innovation Act, a 2021 state law that, among other things, authorizes gas utilities to collect money from ratepayers for projects to reduce greenhouse gas emissions. Xcel Energy submitted a similar plan to state regulators late last year for its natural-gas utility.

Gas utilities are expected to make up a growing share of the state’s climate pollution as the state’s electric utilities transition to 100% clean power by 2040. Two out of every three households in Minnesota heat their homes with natural gas, and many industries rely on the fuel to operate medium and heavy machinery—a potentially daunting challenge as the state seeks net-zero climate emissions by 2050.

Not a ​“silver bullet”

The Minnesota Center for Environmental Advocacy and other advocates have asked the Public Utilities Commission to supplement the pilot project spending with emissions-reduction targets for the utilities.

While many of CenterPoint’s ideas look promising, and some could eventually scale up to make a bigger impact, Partin said the Natural Gas Innovation Act will not alone drive the state across the finish line for its climate goals.

Other strategies will be needed, such as updating commercial and residential building codes, improving energy-efficiency standards for appliances and considering a ban on allowing any natural gas in new buildings, which, Partin said, ​“will be difficult in Minnesota’s current political climate.”

Utilities are somewhat hamstrung by the act’s requirement that half the budget for the initial plans must go to alternative fuels, which ​“stacks the deck” in favor of renewable natural gas and hydrogen, Partin said.

CenterPoint is already blending hydrogen into its system from a downtown Minneapolis facility, so proposing additional such projects does not seem to fit the definition of ​“innovation,” Partin said. Meanwhile, a recent study by the Institute for Energy and Environmental Research found little to no climate benefit from blending hydrogen in existing gas-supply lines, in part because hydrogen is less energy-dense and more prone to leaking.

Joe Dammel, managing director of buildings for Fresh Energy, said CenterPoint’s plan ​“is definitely not a silver bullet; it’s not going to get us where we need to get.” (Energy News Network is an independent journalism service of Fresh Energy.)

While praising the utility for its yearlong stakeholder process and for proposing new resources and changes to its business model, Dammel said the plan shows that CenterPoint will not contribute its ​“fair share of the emissions reductions needed.”

CenterPoint’s pilots for weatherization and retrofitting homes look promising, he added, but ideas for purchasing carbon offsets, selling gas-powered heat pumps and injecting hydrogen into the existing gas system have little chance of success.

CenterPoint’s proposal to create green hydrogen, which is produced using renewable energy, and blending it into the gas distribution system is not ​“scalable” and has limitations. Commercial gas heat pumps ​“are not a very viable technology,” Dammel said. Instead, the utility should focus on applying hydrogen technology to decarbonize industrial end users.

Dammel added that to reach the state’s 2050 carbon-neutrality goal, CenterPoint’s first plan would have to increase its emissions reductions from 4% to 27%.

The cost of learning 

Audrey Partridge, policy director for the Center for Energy and Environment, said the pilot programs will lead to better data and a greater understanding of the potential energy sources and their carbon emissions.

“I’ve heard people describe it as throwing spaghetti at the wall,” Partridge said. ​“But we need to come up with all the possible solutions and pursue them on a small scale to see which ones are going to stick. These aren’t necessarily mature ideas, as you would see in other areas of energy. They’re very, very new.”

The pilots that could yield important advances include using heat pumps for large loads and electrification of low- and medium-heat processes in the industrial sector, she said. Residential deep energy retrofits and geothermal technologies will likely reduce natural-gas consumption.

“We do hope that CenterPoint and Xcel get approval to move forward on these plans so that we can start to learn from them,” Partridge said.

The docket could begin a new path for CenterPoint, which only sells gas. Patrick Hanlon, Minneapolis’ deputy commissioner of sustainability, healthy homes and environment, said CenterPoint’s plan allows the utility to provide ​“heat as a service,” a crucial distinction that gives room for innovations the city supports, including ground-source networked geothermal systems, district energy and other approaches.

“Heat as a service allows CenterPoint to move away from natural gas and move toward some alternative, more climate-friendly sources of heat,” Hanlon said. The city also wants to ensure that residents are ​“not burdened” with the cost of the innovative pilots or switching to a different level of service, he said.

The attorney general’s office, which represents ratepayers, suggested that the cost for some pilots outweighed the carbon benefits and recommended that the commission modify or deny sections of the plan.

“Portions of CenterPoint’s plan are not yet ready for prime time: Several of the proposals lack necessary partners, and many lack sufficient detail to establish their prudence,” the office wrote. ​“Other proposed projects are unlikely to achieve the greenhouse gas savings CenterPoint suggests and unlikely to justify the astronomical cost to ratepayers.”

The attorney general and clean energy groups also raised concerns about CenterPoint’s request to exceed pilot budgets by as much as 25% without statutory approval. Clean energy groups also seek modifications to CenterPoint’s plan to recover the cost of projects.

The Public Utilities Commission is expected to hold hearings later this year before deciding on the plans for both utilities.