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Off the Menu to at the Table – Climate Leadership

September 26, 2019

I had a front row seat last year to Colorado’s election of Governor Jared Polis, who ran on a 100 percent renewables and aggressive climate platform. I was busy collaborating with the oil and gas industry, preparing for what was destined to be a brutal 2019 legislative session. 

While I was participating in the great oil-and-gas-scramble of the fall of 2018, Colorado’s largest utility, Xcel Energy, wasted no time announcing a vision to deliver 100% carbon-free electricity by 2050, the first such announcement in the country. They made the announcement in Colorado, with Governor-Elect Polis, at the beloved Denver Museum of Nature and Science for all eight of the states where they provide electric service.

I sat down with Xcel Energy’s Colorado President Alice Jackson to learn more.

I wasn’t sure if Xcel Energy’s announcement was brilliant or insane. Now I’m sure — and that Xcel Energy’s process for reaching that commitment holds important lessons for the rest of us.

Both of these things are true:

  • Xcel Energy made a bold commitment to become 100 percent carbon-free by 2050, acknowledging in their announcement that the technology does not exist to get thereCrazy?
  • This announcement instantaneously launched Xcel Energy into a recognized global leader on climate and carbon reduction. And incidentally, from my vantage point, made the company a hero to the new Governor. Unequivocally brilliant.

The problem path forward

My admiration for Alice Jackson makes me a bit tongue tied in her presence. She does not strive to be intimidating; in fact, quite the opposite. She moves fluidly between bold, genuine statements about leadership and a deep, empathetic humanity. That’s what makes her so intimidating. And effective. She’s real. 

In 2018, as a new Governor was elected in Colorado, Xcel Energy was feeling a push from its customers: there was increasing public interest in a 100-percent-renewables grid as well as other sustainability priorities. Xcel Energy was already a national leader in this direction; by 2017 they had successfully reduced their emissions from 2005 levels by 38 percent. They had started with promoting energy efficiency, then added renewables onto the grid, and began shutting down their coal-fired power plants. Yet when they surveyed their customers, their most important audience, they weren’t recognized as a business leader in sustainability.

So Xcel Energy started looking at bolder goals. 

Alice likes to talk about things in layers – it’s one of the ways she makes the complexity of the energy system accessible. She describes the various layers that all have to work to eliminate carbon from the system: 1. Keep the lights on; 2. Maintain affordability; 3. Add renewables; 4. Provide baseload (24/7 type resources) and backup sources of power.

They crafted their first goal: reduce carbon emissions 80% from 2005 levels by 2030. As Alice describes in our conversation, “We could have stopped there. We would have gotten lots of positive PR and our communities would have been happy.”

But instead they decided to go farther. Alice continues, “We needed to send signals to our partners. We aren’t a R&D [research and development] organization. We are not a laboratory or a startup incubator. We need universities, entrepreneurs and inventors to work on the missing pieces of the puzzle required for a carbon-free system.”

Alice returns to the layers: “The pieces were all coming together. We had demonstrated we could keep the lights on with more renewables on our system. The prices for renewables were dropping. Our customers and communities wanted to see less carbon on the system. These three things came together, and we were comfortable with all the factors.”

What’s missing for a zero-carbon electric system is a need for dispatchable carbon-free sources. This is where that signal to the market and to their partners came in. So Xcel Energy went one step further than 2030 emissions reductions, and made a commitment to a carbon-free electricity system by 2050.

Xcel didn’t just make the announcement for Colorado. Xcel Energy is headquartered in Minneapolis, and they made the commitment for all eight of their operating states. Not all of these states are pushing for more renewables or a carbon free energy system, yet Xcel committed to their goals in all eight states. And now not only do their customers know it, Xcel has gotten significant attention for the pledge.

I asked Alice about how she and her colleagues at Xcel were managing both internal and external pushback, particularly operating in states with important politically conservation coalitions and/or coal resources that will inevitably be closed.

Alice’s response was typically thoughtful: “You’re not going to win over everyone. Period. It’s a poignant discussion for me because there are some pretty basic challenges. This energy transition is going to be a challenge for some.”

I tensed, because I’ve participated in Colorado conversations about coal communities and gas communities hit hard by commodity prices and political realities. Alice continues, with both resolve and empathy: “We are in a pretty dramatic transition. We have to look at the human impact of our decisions and be cognizant of addressing those impacts.”

And then Alice surprised me by talking about the extraordinary steps Xcel Energy is making in their Colorado coal communities: putting in solar farms where coal plants are closing; striving to reduce work force over time through retirements, relocation, and natural attrition; investing in local training and economic development programs.

Alice is unequivocal that her CEO, Ben Fowke, has committed that “if an employee wants to stay with Xcel Energy, we will find them a role.” When a 660 MW coal plant was considered for closure in Pueblo, Xcel worked with the city and county on their plan and ultimately gained their support in creating a comprehensive transition. Alice is proud of their work: “We haven’t laid off a single employee. Pueblo supported the plan because we went to them and we were proactive.”

In Pueblo, steel company Evraz is a major employer, important business in the community, and massive consumer of electricity. Xcel contracted with Evraz to build a 240 MW solar plant behind their mill. This move will both keep the mill in town, and create some price stability for their energy bill. 

It matters because

Utilities’ customers are both extremely dependent on energy and very sensitive to affordability. And yet, customers and stakeholders are driving pressure on utilities is to address climate and decarbonization. They are the front lines. Expect this pressure to move up the value chain to your production and transportation. 

The critical mistakes companies are making: 

Reacting to developments— often fighting them — in a one-off fashion. The alternative model here is to think strategically, with a big picture, long-term frame for addressing the social risks you face. Indeed, there are many layers requiring consideration — and companies need to.

Seize the day. Successful companies will:

  • Bake a layer cake. I like Alice’s layering approach, because it serves two purposes.  First, it provides a mental model with which to break down the competing needs of stakeholders to understand what’s important. Second, it allows a company to think about a visionary, comprehensive path forward, in layered pieces.
  • Have internal conversations about risk. It’s important to assess the amount of time your company has to articulate a climate and decarbonization strategy. You may have several years – or a lot less. The growing external drivers that will require your company to address social risk are irrefutable. Assess how leisurely you can be in your response.
  • Talk to peers. I will continue to encourage “fast following” as a strategy. Talk to your colleagues at other companies to assess how they are making progress.
  • Reach out to Adamantine. We are here to help your company get ahead of these risks.

Many thanks to Alice Jackson and Xcel Energy for the opportunity to write about their leadership work. 

Is there someone you admire providing industry leadership on decarbonization? Send me an email and tell me about it.

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