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Gov. Tim Walz on Tuesday signed a bill that requires the state’s electrical utilities to transition to 100 percent carbon-free energy sources by 2040.

The move puts the state on a 17-year timeline to transition electrical utilities away from power sources such as coal and natural gas that produce carbon dioxide. In that time, utilities also have to boost the amount of electricity that they generate from renewable sources including solar, wind, hydropower and biomass. 

But the move has brought a threat of a lawsuit from North Dakota, where officials say the Minnesota law goes too far to limit commerce among states.

Minnesota joins 21 other states, along with the District of Columbia and Puerto Rico that have set goals to reach 100 percent carbon-free energy generation by 2050. In 2021, 29 percent of Minnesota’s electricity came from renewable sources, while 26 percent came from coal and 21 percent from natural gas. Another 24 percent came from nuclear power, which does not emit carbon.

“Minnesota is not going to wait any longer, Minnesotans are not going to wait longer,” Walz said at a signing ceremony at the St. Paul Labor Center. “They made it clear with their voices, they made it clear through advocacy, they made it clear with their votes, that they expect movement around climate change to happen, and it is happening today.”

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Bill supporters — including clean energy groups, large electric utilities in the state, and labor unions — said it would help Minnesota address climate change while offering utilities options to phase out carbon-emitting energy sources.

The state’s largest electric utilities, Xcel Energy and Minnesota Power, had already pledged to reach carbon-neutrality by 2050. And while the proposal cuts that timeline by a decade, leaders said they were hopeful they could still reach the target.

“We have a lot to do and very little time to do it. But we're going to get it done,” said Christopher Clark, president of Xcel Energy Minnesota, North Dakota and South Dakota. “We're going to show the nation we can make this we can go to 85 percent carbon free on our system by 2030. We'll get to 100 percent by 2040.”

Other bill supporters echoed that enthusiasm Tuesday. And they said that while Minnesota wasn’t the first state to set a carbon-free energy deadline, it could be the first to hit it.

“We believe that we may not be the first state to pass 100 percent but we believe will be the first state to actually get there reliably and affordably,” Kevin Pranis, marketing manager for the regional chapter of Laborers International Union of North America, said.

Meanwhile, Republican leaders in North Dakota said the plan may violate the Constitution's  interstate commerce clause, and they were weighing a lawsuit.

On Monday members of North Dakota’s Industrial Commission moved $1 million from the state’s coal research fund to be used for a lawsuit, 

Minnesota electric utilities buy oil, natural gas and coal power from producers in North Dakota, and some state officials there say the new restrictions from Minnesota could interfere with those sales.

“We respect state sovereignty, and the ability of states to regulate their own industries, and not their neighbors,” North Dakota Gov. Doug Burgum, a Republican, said.

Burgum and North Dakota officials said Minnesota should pass legislation to clarify that the carbon-free requirement ends at Minnesota’s border. Without that, North Dakota leaders said they would sue.

DFL legislative leaders in St. Paul said they were confident that the law would stand up to legal scrutiny. And they committed to fighting to keep it in place.

“I trust that this bill is solid. I trust that it will stand up because it was written to do exactly that,” Walz said. “And just to be clear, Minnesota is not staking our future on coal and carbon and I can't speak for our neighbors, but I think it would be more productive to join us and move the rest of the country in this direction.” 

The proposal has what its authors call “off-ramps” for utilities that can’t meet the renewable and carbon-free standards. And that means they could seek a different timeline if they’re able to show state regulators that they can’t hit the targets while maintaining affordable and reliable power.

They could also buy renewable energy credits to meet the standard, instead of buying or producing the energy directly. DFL lawmakers that sponsored the measure said that would put electric utility or cooperative leaders in a position to make the best choice.

“While that may be a small question for them to debate, the impact will be the same net carbon neutral by 2040,” Sen. Nick Frentz, DFL-North Mankato, said. “And how they choose to do it, I think those boards are in the best position to decide.”

Republican lawmakers in the state said they worried that even with those credits, the law would be expensive for smaller electric cooperatives.

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Clean energy advocates, large utilities and labor unions said the new target would put the state on track to reduce carbon emissions and address climate change. But North Dakota officials say they may sue over the new law. 

People stand around a man who is signing a document 

Walz signs carbon-free energy bill, prompting threat of lawsuit

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