Minnesota Legislature Considers ‘Clean Energy First’ Policy

New proposed policy will make it harder for companies to add new fossil fuel energy sources.

The centerpiece of DFL lawmakers’ plans to fight the climate crisis is a mandate that would make the energy grid carbon-free by 2050. But at the Minnesota Capitol, another climate measure, this one known as “Clean Energy First,” has drawn just as much attention _ and may have better odds of becoming law.

The policy, which has been championed by clean energy advocacy groups, would make it tougher for power companies to add new fossil fuel energy sources. And unlike the 2050 plan proposed by Gov. Tim Walz, the basic premise of Clean Energy First has the support of Democrats and a sizable chunk of Republicans.

Sen. David Senjem, a Rochester Republican who sponsored a Senate version of Clean Energy First, said his bill would help make Minnesota a “national leader” in driving clean energy production and innovation. “We know it’s the future,” Senjem said of clean power. “We know it’s literally the cheapest option and we know politically and attitudinally, people prefer clean energy over dirty energy.“

Here’s a look at how Clean Energy First would work, and why the climate change proposal has gained some steam in St. Paul: There were multiple versions of Clean Energy First at the Legislature during the 2019 session. But the crux of each proposal is aimed at changing how regulators on the Public Utilities Commission (PUC) can make decisions.

Every few years, utility companies like Xcel Energy submit plans to the PUC detailing the long-term makeup of their power sources. To approve them, state law says the commission must consider whether new energy projects proposed by utilities are in the public interest and whether they would help meet the state’s goals for reducing greenhouse gases.

Clean Energy First would beef up that preference for green technology. Senjem’s bill says the PUC would only be able to approve new fossil-fuel power if the utility is “unable affordably and reliably” to meet its power needs with new clean energy. It would also update definitions of clean energy to include energy storage systems and power-efficiency technology. Moreover, it lets utilities meet energy needs with a combination of different kinds of carbon-saving means.

Steve Kelley, commissioner of the Minnesota Department of Commerce, said Clean Energy First policy would also “deemphasize” the idea that natural gas plants are the only way to replace coal plants and keep a reliable energy grid.

“There are still conversations about where do gas plants fit into the reliability and affordability picture, especially as the prices of renewables appear to continue to decline and we’re developing new opportunities in storage and demand management,” Kelley said. “So I think (Clean Energy First) helps us put the emphasis on those new tools.“

The proposals come at a pivotal moment for state energy policy. Many lawmakers are hoping to aggressively cut carbon emissions as the climate crisis escalates around the world. And in the next 20 years, 70% of the state’s electric generation will be eligible for replacement, says the Commerce Department.

Xcel has already pledged to be carbon-free by 2050 through an expansion of wind and solar power, an extension of its nuclear power and use of natural gas. They also plan to end use of coal by 2030. But there are other power companies still more reliant on fossil fuels.

Clean Energy First has won the backing of a swath of renewable-energy advocates in St. Paul and has been a top priority for many of them. First developed by the Center for Energy and the Environment along with a few other nonprofits, the policy is often billed as a flexible regulation that will guide the creation of clean energy without imposing stiff mandates.

Conservation Minnesota, a Minneapolis nonprofit with a mission to build bipartisan consensus on environmental legislation, says on its website that Clean Energy First is “not a one size fits all policy” and it “allows each utility to affordably maximize its use of clean energy while meeting the unique reliability needs of its customer base.“

The idea has also drawn the support of the Minnesota and North Dakota chapter of the Laborers’ International Union of North America, in part because the bills have provisions aimed at getting clean energy developers to hire local workers.

At a March hearing on Senjem’s bill, Joyce Peppin, general counsel for the Minnesota Rural Electric Association, which represents the state’s electric cooperative, said the organization had some reservations about Clean Energy First. But Peppin said it’s “a better approach than arbitrarily setting dates by which utilities must add specific amounts of renewable generation to their portfolios, regardless of need or their impact on grid stability.“

Senjem said Clean Energy First would ensure that research and investment in green technology would progress faster in Minnesota than it otherwise would. His bill, which was cosponsored by a handful of Republicans, was approved by the Senate’s Energy and Utilities Finance and Policy Committee.

A similar measure was approved by the DFL-led House, although it was tied into the carbon-free 2050 plan and had stricter barriers to building fossil fuel projects, including a requirement that power companies establish “clear and convincing evidence” that renewable energy and clean energy technology can’t be done affordably or reliably to pursue fossil fuels.

Some large business and industry groups have balked at Clean Energy First, as well as some lawmakers. The Iron Mining Association, for example, says it’s dealt with rate hikes in the last decade and worries the cost of building new infrastructure and a faster transition to renewables could spike costs higher. In a global industry, rising prices could make Minnesota’s iron ore uncompetitive, said Kelsey Johnson, president of the association.

Lauryn Schothorst, who leads energy policy for the Minnesota Chamber of Commerce, told the Senate in March that her organization opposed Senjem’s bill and worried it could drive up power rates for business and other customers. The scope of the legislation and its effect on utilities, she said, “is actually enormous.“

Chamber members “support strategies that consider all of the energy resources available as long as those strategies result in cost-effective power, competitive rates, ensure system reliability and do not shift costs to others,” Schothorst said.

The Chamber’s board has representatives from a vast swath of powerful companies such as the Minnesota Vikings, UnitedHealthcare, U.S. Bank, Medtronic, Target, Delta Airlines, the Mayo Clinic, Cargill and 3M.

Andrew Moratzka, an attorney who represents large industrial companies like iron mines, paper mills and refineries, said at the March hearing that Senjem’s measure “is not a ‘light touch’ statute or bill” and noted it allows power companies to pass on costs for new provisions, such as hiring local workers, to customers.

Sen. David Osmek, a Mound Republican who chairs the Senate’s energy committee, said he doubts if Clean Energy First is necessary. Power companies are already working to rid fossil fuels from their systems, he said.

Osmek said he’s worried Clean Energy First “puts the thumb on the scale for renewables to the point where you’re going to create reliability issues on the grid.” He also said it does not allow natural gas to serve as a bridge from coal to renewable energy — a contentious topic in energy debates across the country –or address Minnesota’s moratorium on new nuclear power. Osmek has supported lifting that restriction.

Still, Osmek said he’s “not necessarily opposed” to some form of legislation and has worked in the interim to find a bill that can all can agree to. The measure passed by the DFL House had several differences from Senjem’s bill, including whether carbon-capture technology should be considered as a clean energy technology that can be used as an alternative to traditional fossil fuels. Those differences between the House and Senate would need to be ironed out for a bill to pass the Legislature.

Kelley, the Commerce Department commissioner, said he still views Clean Energy First as one piece of Walz’s larger climate change agenda. But he said “it’s an important part,” since it drives the development of new power sources in Minnesota.

“It’s very important because there’s a lot of money that is affected by this,” Kelley said. “And the potential effect on greenhouse gas emissions is also significant.”

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