Minnesota Joins 20 Other States in Pursuit of 100 Percent Clean Energy | Article

On February 7, the governor of Minnesota signed into law a new piece of legislation requiring the state’s electrical utilities to transition to 100 percent carbon-free electricity by 2040. The law is pivotal to advancing the state’s efforts to reduce greenhouse gas emissions, address the climate crisis, and generate local employment opportunities in the clean energy sector. Minnesota is now the 21st state pursuing a 100 percent clean energy goal, contributing to the nationwide effort to transform the way we power our lives.

Courtesy: Dennis Schroeder / National Renewable Energy Laboratory

Understanding Minnesota’s Clean Energy Law

Minnesota’s climate legislation establishes both a carbon-free energy standard and a renewable energy standard. The carbon-free standard requires electrical utilities to achieve 80 percent carbon-free energy by 2030, 90 percent by 2035, and 100 percent by 2040. Carbon-free energy sources are defined as energy sources that do not release carbon dioxide, such as solar, hydropower, wind, and nuclear. Utilities can meet this standard by transitioning their energy generation to carbon-free sources or offsetting the pollution they emit through the purchase of renewable energy credits.

The renewable energy standard requires that 55 percent of the energy sold to Minnesota customers by electrical utilities come from renewable energy sources by 2035. Eligible renewable energy sources include wind, solar, hydropower, hydrogen, and biomass. Minnesota was aiming to achieve 25 percent renewable energy by 2025 following a law passed in 2007, but the state ended up achieving this goal eight years early in 2017.

In addition to creating energy standards, the law contains measures that simplify the process for siting and building out clean energy projects. For example, some large-scale wind projects will no longer be required to get approval from the Minnesota Public Utilities Commission (PUC). Measures have also been implemented to streamline the siting and routing process for systems that generate solar energy. Fast-tracking the process of approving and developing clean energy projects from now until 2040 will expedite Minnesota's clean energy transition. The law also clarifies under what circumstances the PUC can allow the delay or modification of new solar, renewable, and carbon-free standards.

Currently, four percent of Minnesota's GDP goes to purchasing energy from other states every year. When passing this law, House Majority Leader Jamie Long said that Minnesota should instead invest this $13 billion within the state’s carbon-free energy industry to create local jobs. The law aims to create high-quality jobs by requiring utilities constructing large electric power-generating plants or large-scale wind projects to pay workers no less than the prevailing wage rate.

Environmental justice groups were able to successfully advocate for a provision in the law that prevents energy created through waste incineration plants located in Hennepin County to count as renewable energy. This targets facilities such as the Hennepin Energy Recovery Center, which has been threatening the health of low-income communities of color in North Minneapolis and exacerbating the health disparities present in Minnesota due to air pollution.

“By committing to 100 percent carbon-free electricity by 2040, Minnesota has taken a meaningful step toward increased economic prosperity for communities, reduced energy costs for our residents, and significantly lowered emissions to address the climate crisis,” Tonya Allen, president of the McKnight Foundation, said. “We are pleased to see the inclusion of a number of measures—from hiring practices to energy affordability—that seek to move the state toward the new clean energy requirements in an equitable manner.”

How Electric Utilities and Neighboring States Are Affected by This Legislation

Large electric utilities in Minnesota, including Minnesota Power and Xcel Energy, have been supportive of the bill and had already established goals of being carbon-free by 2050. While the new legislation accelerates this process, it also includes measures that allow utilities to delay or receive exemptions from meeting standards. For example, the bill includes “off-ramps” that allow utilities to delay meeting standards if transitioning to clean energy would significantly increase electricity rates or create reliability issues for customers. Utilities will also be able to offset energy generated by natural gas plants by purchasing renewable energy credits (burning natural gas emits greenhouse gases).

Even with these delays and exemptions, smaller rural electric cooperatives and municipal power agencies worry that it will be difficult and costly to make the transition to carbon-free energy. When the bill was being discussed in January, cooperatives lobbied for measures that would omit certain power plants from the standards, including fossil fuel plants outside of Minnesota and gas “peaking” plants that operate when electricity is in high demand. To ease the transition of these smaller utilities, the bill was amended to reduce the 2030 target for co-ops and municipal power agencies to 60 percent carbon-free energy, compared to 80 percent for investor-owned utilities. However, all utilities will need to reach 100 percent carbon-free electricity by 2040.

The law also incentivizes beneficial electrification by requiring the PUC to factor in emission savings obtained through electrification measures that directly decrease natural gas use. This means that utilities that help their customers replace their use of fossil fuels with electricity (for example, by switching from gas stoves to electric ones) may count the resulting emission reductions toward meeting their energy standard goals.

A major opponent to the law is Minnesota’s neighbor, North Dakota, which is threatening to sue as it claims that the new legislation violates the Constitution’s interstate commerce clause. North Dakota officials argue that carbon-free energy requirements interfere with the sale of oil, natural gas, and coal power from fossil fuel plants in their state. North Dakota is one of the nation’s top energy producers and exports around 50 percent of the electricity it produces. In 2022, the state exported over 20,000 gigawatt hours to other states. As Minnesota is North Dakota’s main customer for its electricity, which is generated primarily from coal and natural gas, North Dakota officials are calling on Minnesota to pass legislation to specify that the carbon-free energy requirement only applies to Minnesota electric utilities and stops at the border.

A similar situation developed in 2007, when North Dakota sued Minnesota for passing legislation that banned the development of new coal power plants and the importation of new coal-based electricity in the state. In this case, federal courts sided with North Dakota, ruling that the law illegally regulated out-of-state utilities. Now, North Dakota leaders are prepared to sue Minnesota again and have already made $1 million available for the lawsuit through the state’s coal research fund.

Nationwide Efforts to Advance Clean Energy Goals

Twenty-one states plus Washington, D.C., and Puerto Rico have set goals through legislation or executive orders to achieve 100 percent clean energy within the next 30 years. This has led to more than half of Americans now living in a state with a 100 percent clean energy plan. While some states, such as Minnesota, are specifically targeting the power sector, others, like Louisiana and Michigan, have legislation that is economy-wide. States also have different timelines for pursuing the 100 percent clean energy goal. Rhode Island has the shortest timeline, with a target year of 2033. Nine other states, including Wisconsin and North Carolina, have a target year of 2050 to reach their goals. Among the states that have not yet passed 100 percent clean energy goals, New Jersey, Michigan, and Maryland are already looking to pass major energy legislation this year.

The Biden-Harris Administration’s nationwide goal is to achieve 80 percent renewable energy generation by 2030 and 100 percent carbon-free electricity by 2035. Recent legislation and initiatives at the federal level, such as the Inflation Reduction Act (P.L.117-169) and Infrastructure Investment and Jobs Act (P.L.117-58), aim to put the United States on a trajectory to reach these clean energy goals.

The Inflation Reduction Act (IRA) invests $370 billion in energy security and climate change programs over the next 10 years. The IRA incentivizes the deployment of new clean energy generation and prioritizes investments into disadvantaged communities, which will decarbonize the economy, lower energy costs, boost clean energy development in rural areas, and strengthen American energy security. To increase investments in clean energy in rural areas and disadvantaged communities, the law allocates $9.7 billion in loans and grants to rural electric cooperatives through September 2031 to improve the long-term resiliency, reliability, and affordability of rural electric systems. The Infrastructure Investment and Jobs Act (IIJA) authorizes $1.2 trillion for infrastructure across a variety of sectors, including more than $65 billion in clean energy transmission and electric grid investments. These investments will strengthen grid resilience and build out new transmission lines to facilitate the expansion of renewable energy.

In addition to major climate legislation, federal agencies are also supporting the nationwide transition to clean energy through their programs. One of these is from the U.S. Department of Energy, which launched a $50 million program in January to help communities across the country meet their clean energy goals. The Clean Energy to Communities program (C2C) connects electrical utilities, local governments, community-based groups, and others with technical assistance provided by national laboratories. “With C2C, we’re helping all kinds of communities—from small rural communities to sprawling urban areas—access the tools and scientific and technological expertise they need to bring their energy systems into the 21st century,” U.S. Secretary of Energy Jennifer M. Granholm said. C2C is funded by DOE's Office of Energy Efficiency and Renewable Energy (EERE), which is the largest investor in clean energy technology development in the U.S. government. Federal programs such as those implemented by EERE help states develop and deploy technologies and solutions to achieve their clean energy goals.

Minnesota’s new clean energy legislation is pivotal to its efforts to reduce greenhouse gas emissions and address the climate crisis. State-level efforts by Minnesota and other states to pursue 100 percent clean energy are crucial to achieving nationwide clean energy goals. By continuing to advance carbon-free and renewable energy generation, states have the opportunity to create employment opportunities, lower energy costs, and protect their communities from the threat of climate change. The 21 states aiming to achieve 100 percent clean energy serve as inspiring examples of how we can move toward a cleaner and more equitable future.

Author: Madeline Dawson