Minnesota's 2040 carbon-free energy bill advances to Gov. Walz for signature

Minnesota will require its electricity to be carbon-free by the year 2040, the state's most ambitious clean energy standard ever, under legislation that state lawmakers sent to Gov. Tim Walz on Thursday.

The state Senate passed the requirement on a 34-33 party-line vote. It will require utilities to meet escalating carbon cuts over the next 17 years. The House passed the bill last week, meaning it now heads to Walz, who has vowed to sign it.

The legislation will be seen as a "turning point in our battle against a relentless and very real climate crisis," said Senate Majority Leader Kari Dziedzic, DFL-Minneapolis.

The new standard will push utilities in Minnesota to ditch coal, natural gas and any other energy sources that release planet-warming gases a decade earlier than the state's two largest retail utilities, Xcel Energy and Minnesota Power, have planned.

But it allows for some flexibility. Electric companies could appeal to the Public Utilities Commission (PUC) if ratepayers find it too expensive to make the shift by 2040 or if carbon-free alternatives such as solar and wind aren't reliable enough to keep the lights on.

After hours of debate, the Senate approved the bill just before midnight, with all DFL senators in favor and all Republicans opposed.

The 2040 standard has been a priority for DFL lawmakers and the Walz administration for years. Lawmakers said it's needed to fight a changing climate and to get the state on track to meet promised cuts to greenhouse gas emissions. Along with the carbon-free requirement, the bill will require power companies to meet a renewable energy standard as well.

Under the legislation, utilities would have to provide power that is:

There are some exceptions.

Electric cooperatives, which largely serve rural customers and have signaled concern about making the switch, will only need to provide 60 percent carbon-free power in 2030. They will still need to be carbon-free by 2040. Cooperatives also have historically been more reliant on coal than Xcel and Minnesota Power, which are both planning to end the use of coal within the next 12 years.

Xcel Energy, which serves 1.3 million customers in Minnesota, was "excited" to see the legislation pass, utility spokesman Kevin Coss said in a statement.

The company is on track to cut emissions in the electricity provided in Minnesota by 85% in 2030, Coss said.

He estimated that new investments in wind energy have already lowered costs in the Upper Midwest by nearly $1 billion between 2017 to 2021.

Utilities that don't think they can hit the targets can ask the PUC for an exception. They could also buy renewable energy credits to offset any polluting power they retain. The credits can be used to meet both the renewable and carbon-free goals.

Achieving carbon-free energy is possible, said Dave Ojala, a spokesman for Minnesota Power, which serves 145,000 customers in northeast Minnesota. Legislators listened to the utility as it laid out the state of technology, the hurdles that will need to be passed, and the investments that will be needed, he said in a statement.

"There is a lot of work ahead...." he said. "We will continue to work with legislators, regulators and customers to ensure we can preserve reliable and safe energy in the most affordable way possible."

Minnesota has been getting rapidly warmer, especially during winter. The state's lakes have lost an average of about two weeks of ice coverage over the past 50 years. Heavy, damaging rains and storms have become more common. Since 2018, much of the state has whipsawed between extreme floods and droughts.

"There is a very real financial cost we are already paying for climate change," state Sen. Nicole Mitchell, DFL-Woodbury, said.

Minnesota's power utilities have been one of the few sectors of the state's economy to make significant cuts to greenhouse gas emissions, hitting past renewable energy goals earlier than expected. A state report that came out this week found that the energy sector slashed carbon emissions by 54 percent between 2005 and 2020.

But Republican senators said they don't believe many of the state's power providers, especially smaller ones, will be able to meet the 2040 standard without cutting off service or significantly raising prices. Getting there relies on the hope of innovations in clean energy technology, said state Sen. Andrew Mathews, R-Princeton.

"Hope is not a plan," he said.

Republican senators offered their own plan, which would allow companies to keep using coal and natural gas, lift a moratorium on construction of nuclear power in Minnesota and count hydroelectric power as renewable energy.

"We can be good stewards, we can be cleaner, but we have to be affordable and reliable," said Sen. Jason Rarick, R-Pine City. "Minnesotans expect the lights to come on when you turn the switch on."

Ensuring reliable energy will be the key challenge to meeting the 2040 requirement.

Right now, fossil-fuel peaker plants keep electricity flowing during high demand periods. Those would still be allowed to get the state through days or weeks of extreme cold or heat, but power companies that use them would need to purchase renewable energy credits to offset the carbon emissions. Improvements in batteries to store power when the wind isn't blowing or the sun isn't shining will be needed.

But 17 years should be enough time for every power company in the state, said Michael Noble, executive director of Fresh Energy, a St. Paul clean energy advocacy group.

"There is plenty of time to deploy, deploy, deploy the known technologies and develop the additional technologies needed," he said.

The exceptions in the bill — even if they ultimately aren't needed — should provide comfort that nobody in Minnesota will have to sacrifice reliability or affordability "one iota," he said.