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Xcel Energy on track to cut more than 80% of its carbon emissions by 2050

Xcel Energy is taking steps to cut greenhouse gas emissions that put it on a trajectory to reduce its carbon emissions by more than 80% by 2050, the electric and gas utility said in its 2017 Corporate Responsibility Report.

The utility has already cut 35% of its carbon emissions from 2005 levels and expects to easily reach its nearer-term target of cutting those emissions 60% by 2030. It is also eyeing setting higher targets of 80% by 2030 and more after that.

"We're on a path to provide a more sustainable, prosperous energy future and believe reducing carbon emissions while enhancing affordability is a tremendous benefit for the customers and communities we serve," Xcel Energy Chairman, President and CEO Ben Fowke said in a statement. Xcel Energy has four utilities that serve electric and gas customers in Minnesota, Wisconsin, Michigan, Colorado, Texas, New Mexico and the Dakotas.

Energy companies in recent years have faced increased pressure from investors to disclose how they are assessing and addressing potential environmental, social and governance risks and opportunities. Investors use reports like Xcel Energy's to measure the extent to which the company is maneuvering to remain competitive as cultural expectations for companies evolve and as markets transition to a lower-carbon economy.

Xcel Energy is considering proposing reducing carbon emissions by 80% from 2005 levels in its next resource plan to be filed with Minnesota regulators in 2019, it said. Getting there will require retiring more coal-fired generation. The company already has set a 2026 deadline to shutter 20 units that in 2005 represented 40% of the utility's coal-fired power capacity. Xcel Energy plans to replace that power with a mix of wind and solar and "more carbon-friendly natural gas for backup," the report said.

Much of the new energy will come from wind power as Xcel Energy will more than double its wind generation with 12 new wind farms in seven states. Xcel Energy's Public Service Co. of Colorado expects state regulators to rule in early September on the utility's plan to retire two coal-fired generation units in the state and replace them with renewables and natural gas generation by 2026.

The emissions reduction plans are also contingent on Xcel Energy's ability to run its nuclear power plants through the end of their licensing period in the early 2030s. "Nuclear energy is currently the only 24/7 carbon-free baseload energy source available," the report said.

The utility is moving forward with other environmental conservation measures as well. The report noted that since 2005, the company has cut its coal-ash production by 41% and water consumption by 40%, and it could use even less water by relying more on wind and solar generation, which does not need to use water for cooling like more conventional generation.

Protecting water quality is a priority for the utility "given challenges we face in dry years and concerns over drought," the report said. Where possible, Xcel Energy uses recycled water, which "has the added benefit of increasing the reliability of our water supply portfolio because it is virtually drought-proof."

On governance and social issues, Xcel Energy ties executive compensation to a variety of performance metrics, including achieving the utility's carbon emissions reduction goals, and in 2017, 23% of newly hired employees were ethnically diverse and 10% of new hires were veterans, the report said.

The company surveyed nearly 1,000 customers, government officials, environmental groups and others in 2017 to decide which of two dozen corporate responsibility issues it should make its primary focus going forward.

Energy reliability and emergency preparedness topped the list, followed by energy affordability, air quality, employee and public safety, local economic development and jobs. Corporate ethics, governance and compliance, energy efficiency, climate change and greenhouse gas emissions, and renewable and advanced clean energy technologies rounded out the list.