State lawmakers have reached an agreement on what backers say is a historic environment, energy and climate budget bill that will make transformative investments to help Minnesota combat climate change and move more aggressively toward a carbon-free economy.
The $2 billion package tackles big conservation issues like so-called “forever chemicals,” or PFAS, and chronic wasting disease, while also addressing long-standing environmental justice concerns.
And it invests hundreds of millions of dollars in dozens of initiatives to cut greenhouse gas emissions, from funding for solar panels on schools to electric vehicle rebates.
“This is the most significant environment and climate bill in Minnesota history, both in terms of its investments and its reforms. There are things in here that we have worked on for years,” said Rick Hansen, DFL-South St. Paul, who helped negotiate the deal.
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The Minnesota House and Senate agreed to a compromise bill late Tuesday night. It was sent back to conference committee Wednesday for violating a legislative rule but is expected to pass the DFL-controlled legislature and be signed by Gov. Tim Walz.
Climate and energy
Clean energy advocates say even before lawmakers reached a deal on the environmental bill, 2023 was already on pace to be a landmark year for addressing climate change in Minnesota.
"It's the most transformational year we've had in my career. And that's a long career in climate and energy policy,” said Ellen Anderson, former state legislator and author of the state’s first renewable energy standard. She now directs the climate program at the Minnesota Center for Environmental Advocacy.
“It's a game-changing year that we're having at the state capitol in terms of our approach to climate and energy and what we're doing to move our state forward dramatically," said Anderson.
Earlier in the session Gov. Walz signed legislation requiring the state's utilities to generate 100 percent of their electricity from carbon-free sources by the year 2040. It also requires utilities to increase the amount of power they generate from renewable sources — wind and solar — to 55 percent by 2035.
In March, Walz signed a second bill to create a state competitiveness fund. That set aside $115 million the state can use to help win federal clean energy funding from the federal infrastructure law and the Inflation Reduction Act, that often require state matches. There’s another $75 million for the fund included in the jobs bill working its way through the legislature.
“It's a really important tool and framework for enhancing the state — and communities and entities within the state — that have projects that could access federal funding and just need a little boost to make sure that they're fully competitive,” said Justin Fay with the group Fresh Energy.
The environment bill, Fay said, lays the groundwork for broad-based decarbonization of Minnesota’s economy by investing in a host of initiatives, rebates and incentives, including:
more than $30 million to place solar panels on schools and other public buildings
$16 million for electric vehicle rebates, and $13 million for electric school buses
$13 million for grants and rebates to install electric heat pumps in homes
$6.5 million to install electric panels to allow homeowners to add electric stoves and other appliances
The bill also includes $20 million (with an additional $25 million in the jobs bill at the legislature) to fund the Minnesota Climate Innovation Finance Authority, often referred to as a “green bank.”
The new institution would give loans to individuals or groups who might otherwise have trouble getting financing from traditional lenders to help them develop clean energy projects. The bill also creates a “green alley” program to seed and support clean energy companies.
“That’s all about investing in nurturing and creating an ecosystem in Minnesota that supports clean energy and provides new financing mechanisms for clean tech,” said Amelia Cerling Hennes with Clean Energy Economy MN.
While the clean energy and climate provisions have garnered strong support from Democrats, environmental and labor groups, Republicans and some businesses groups have raised concerns about cost and reliability of electricity.
“We’re really concerned the impact of this bill will move us in the wrong direction on affordability and reliability,” said Brian Cook of the Minnesota Chamber of Commerce. “The cost of some of the policies in the budget bill, such as the build out of electric vehicle infrastructure, is going to be paid for by utility customers through their utility bills.”
Aside from energy and climate provisions, the bill includes several policy reforms that legislators and advocates say could serve as models for other states.
For example, the bill includes the toughest regulations on PFAS, or “forever chemicals,” in the country. It includes a ban on the nonessential use of the chemicals in products like carpeting, cookware and cosmetics, and also requires that manufacturers disclose if the products they sell in Minnesota contain PFAS.
“Other states are already looking at what we're doing in Minnesota so that they can copycat our legislation into their own lawmaking,” said Andrea Lovoll, legislative director for the Minnesota Center for Environmental Advocacy.
The bill also seeks to advance environmental justice through what’s known as “cumulative impacts” legislation.
It requires the Minnesota Pollution Control Agency to consider past pollution when weighing whether to issue new or renewed air permits for facilities in or near environmental justice areas. The legislation defines those areas based on factors like income, race, and English language proficiency. It also allows tribal nations the option to allow the provisions to apply to their lands.
Minnesota joins New York and New Jersey as the only states with such legislation.
“Finally, applicants for air permits — whether they are for major sources of pollution or existing ones wanting to expand — will be held to account for their pollution impact on the health of our community. This has been a long time coming,” said Roxxanne O’Brien, with Community Members for Environmental Justice.
The proposal was scaled back significantly from what was initially proposed in the legislature. It now only affects the seven-county metro, regional centers and tribal areas. It also will require the MPCA to first undertake a rulemaking process.
Still, it generated stiff pushback from labor and business groups, who argued it will make it more expensive and time-consuming and add uncertainty to acquiring needed permits.
“We've seen when you put us up against surrounding states that to get an air permit specifically in Minnesota, it takes more time, it cost too much. And there's uncertainty at the end whether you're going to get the permit,” said Tony Kwilas, director of environmental policy at the Minnesota Chamber of Commerce. “And unfortunately, I think the proposal right now is going to add to all three of those.”
The bill also tackles chronic wasting disease — an affliction that’s been gaining ground in Minnesota, is always fatal to deer, and threatens the state’s deer hunting tradition and economic impact.
The bill bans new captive deer farms, and would gradually phase them out by only allowing them to be transferred once, to a family member. It also requires fencing to prevent contact with wild deer, and transfers authority over deer farms to the Minnesota Department of Natural Resources from the state animal control board.
“We feel that captive cervid farms pose an unnecessary risk to our wild deer herd. And so, this legislation that has passed is very encouraging for us,” said Jared Mazurek, Executive Director of the Minnesota Deer Hunters Association. “We are 100 percent supportive of every measure that was taken.”
Investing in natural resources
The bill also makes a host of other investments in natural resources around the state, from planting trees and restoring wetlands to building new boat ramps and fish hatcheries.
“We came in with the Governor's budget proposing really transformational investments in our natural resources and the outdoors,” said Minnesota DNR Commissioner Sarah Strommen. “And we came out with those transformational investments intact.”
Assistant commissioner Bob Meier called it “the biggest budget the department has ever seen.”
It includes $60 million to build new fish hatcheries, raises fees on boat licenses for the first time in 17 years to build new boat ramps, and invests in new camping facilities and other infrastructure.
“It's just really exciting for once not to have to be looking for duct tape and nails, but actually trying to replace things that need to be replaced,” said Meier.
The bill also includes tens of millions of dollars to plant trees, collect seedlings, protect grasslands, restore peatlands, and take other action to sequester carbon dioxide in Minnesota’s natural systems.
“The loss of biodiversity and climate change are our biggest environmental challenges. Ramping up funding in natural climate solutions including tree-planting and protecting natural areas will help address both crises,” said Ann Mulholland, director of The Nature Conservancy in Minnesota. “These are historic investments in conservation.”