In 2021, Colorado passed Senate Bill 21-264, legislation requiring Colorado’s gas utilities to reduce their greenhouse gas emissions by 4% by 2025 and 22% by 2030, relative to 2015 levels. These goals cover emissions from customers’ use of gas and leakage from the utility’s distribution system. They are ambitious, and the steady growth in gas sales by Xcel Energy, Colorado’s largest electricity and gas provider, makes them even more so. Since 2015, Xcel’s retail gas sales have grown by 9%, meaning that the utility’s 2030 emissions reduction goal is really a 28% reduction from current levels – which it must achieve in just seven years.
In this report, we recommend measures to drive a steep reduction in emissions from the gas utility and demonstrate how Xcel can meet Colorado’s targets in a way that delivers the most emissions reductions per ratepayer dollar. To achieve its 2030 goal, Xcel must rapidly increase adoption of efficient electric appliances – heat pumps and heat pump water heaters – and weatherize tens of thousands of homes and businesses. While the efforts necessary to meet the clean heat targets are challenging, they are achievable.