Minnesota’s Climate Ambitions Face Federal Setbacks
Minnesotans who are passionate about climate action are feeling the impact of a significant shift in federal policy. The recent passage of a budget bill by Republicans in Congress has ended key federal tax incentives aimed at supporting clean energy and climate initiatives. This move is expected to cost the state hundreds of billions of dollars in potential benefits that were previously available through the 2022 Inflation Reduction Act.
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Despite this setback, Minnesotans remain committed to their climate goals. The legislation not only cuts tax credits for renewable energy projects but also accelerates the phase-out of incentives that were set to last for a decade. For developers of solar, wind, and other renewable energy sources, the deadline to begin construction on projects to qualify for these credits is just one year.
Representative Jamie Long, a Democrat from Minnesota, expressed deep concern over the loss of these incentives. He highlighted the importance of President Biden’s efforts on climate change, calling it one of his most significant legacies. However, Republican lawmakers have criticized these efforts, arguing that focusing on fossil fuels will save Americans money and improve grid reliability.
A report by Rhodium, a nonpartisan research firm, suggests that the new legislation could lead to increased energy costs for American households by as much as 7% by 2035. Despite this, Minnesota’s commitment to renewable energy remains strong. According to Pete Wyckoff, deputy commissioner of energy resources for the Minnesota Department of Commerce, solar and wind farms are still the most cost-effective way to expand energy production.
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The state is currently benefiting from the IRA credits, saving approximately $650 million in energy costs this year. However, with the phase-out now mandated by Congress, Minnesotans have until the end of September to claim credits for electric vehicles and until the end of December for rooftop solar or energy efficiency upgrades.
Minnesota has passed a law requiring its utilities to generate 100% of electricity from carbon-free sources by 2040, making it one of the most ambitious climate policies in the nation. In 2024, over half of the state’s electricity was generated by renewable sources and nuclear power, surpassing the national average of 42%. A recent report by Clean Energy Economy Minnesota showed that renewable energy accounted for 99% of power plants built in the state over the past five years.
The state is currently seeking public input for Gov. Tim Walz’s Climate Action Framework, which outlines how Minnesota plans to meet its clean energy mandate and reduce other carbon emissions. The framework includes expanding public transit, building out electric vehicle charging infrastructure, planting more trees, and managing manure and fertilizer to reduce agricultural emissions.
Margaret Levin, executive director of the Sierra Club’s Minnesota chapter, criticized the federal budget bill as a “handout to billionaire polluters” that will harm working families, public health, and the planet. She emphasized the importance of local organizing in the coming years, stating that change often happens at the community level.
Climate activists are focusing on several priorities this year, including limiting the definition of “carbon-free” energy under Minnesota’s climate law and streamlining the permitting process for residential rooftop solar installations. State regulators are debating whether to classify the burning of wood and trash as carbon-free energy, a move that environmental groups oppose.
Local organizers are also working to persuade cities to allow online permitting for rooftop solar, aiming to unify the process and speed up adoption. While some climate advocates remain hopeful, clean energy developers, many of whom are small businesses, are worried about the future of their industry.
Kim Benjamin, owner of MNSolar, expressed uncertainty about the future of her business, questioning whether she might have to lay off employees. Early analyses suggest that Minnesota could lose between 4,600 and 14,400 clean energy jobs over the next five years. The solar industry alone, which employs about 5,000 people, could lose half of those jobs, according to Gregg Mast, executive director of Clean Energy Economy Minnesota.
