St. Paul, MN – The Minnesota Public Utilities Commission (PUC) approved a Fuel Life-Cycle Analysis (LCA) framework to guide utility compliance with the state’s Carbon-Free Standard (CFS). The decision establishes the CFS is an integral part of Minnesota’s economy-wide greenhouse gas reduction goals, ensuring that utility compliance results in meaningful and sustained emissions reductions.
The Commission’s decision largely adopts the joint recommendations and technical guidance provided by the Minnesota Department of Commerce (DOC) and the Minnesota Pollution Control Agency (MPCA).
The Carbon-Free Standard, enacted in 2023, requires utilities to supply 100% carbon-free electricity by 2040. The new framework provides a rigorous, science-based pathway for evaluating complex fuels – such as biomass, municipal solid waste (MSW), and renewable natural gas (RNG) – while providing automatic eligibility for established carbon-free resources.
Key elements of the Commission’s decision
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Automatic eligibility: Solar, wind, hydropower, nuclear, and geothermal resources - as well as hydrogen produced with any of these resources - qualify as carbon-free without requiring further analysis.
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The LCA requirement: For complex, waste-derived fuels – including MSW, RNG, and secondary biomass – utilities must conduct a Life-Cycle Analysis. To qualify for CFS compliance, the greenhouse gas emissions of the proposed generation resource must be less than the emissions of the alternative disposal method. Utilities will be required to submit a facility-specific LCA for any new or existing facilities that use a waste-derived fuel and would be subject to fuel mix reporting and re-evaluation requirements.
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Oversight: To ensure oversight and accountability, the MPCA and DOC will review all LCA studies and provide formal recommendations to the Commission. This framework subjects all LCA filings and proposed partial credit methodologies to a transparent public notice and comment process, allowing for stakeholder input before any final determination.
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Partial Compliance standards: Facilities using carbon capture may receive partial credit based on the percentage of total direct CO2 emissions reduced by the capture technology. Facilities blending carbon-free fuels (like "green" hydrogen) with fossil fuels may qualify for partial credit for the carbon-free portion.
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Exclusions: Primary biomass – crops grown intentionally for energy production – would be ineligible for CFS compliance. Utilities proposing to use carbon capture for CFS compliance would also have to provide information demonstrating how the carbon associated with CFS credits will not also be used for enhanced oil recovery.
Additionally, the Commission may establish operational limits on the use of emitting fuels to ensure utilities do not expand the use of these fuels significantly beyond current levels.
“Minnesota’s Carbon-Free Standard is part of a broader strategy to cut greenhouse gas emissions,” said Commissioner Audrey Partridge. “By requiring a rigorous life-cycle analysis, we can ensure that decisions for our electric system aren’t inadvertently increasing emissions in other areas of the economy. This framework will result in real climate benefits while maintaining the reliability and cost protections our ratepayers expect.”
The adopted framework seeks to ensure that electricity generation does not simply shift or increase greenhouse gas emissions to other sectors of the economy. By using a life-cycle approach, the Commission ensures that fuels like waste-to-energy only count toward the standard if they are better for the climate than alternative disposal methods, such as landfilling.
The Minnesota Public Utilities Commission regulates three cornerstone service industries in Minnesota's economy: electricity, natural gas and telephone. The Commission’s mission is to create and maintain a regulatory environment that ensures safe, adequate, and efficient utility services at fair, reasonable rates consistent with State telecommunications and energy policies. It does so by providing independent, consistent, professional, and comprehensive oversight and regulation of utility service providers. Learn more at mn.gov/puc.
