Clean energy progress during the 2021 legislative session

Where did we start the 2021 legislative session?

With Minnesota remaining the only divided legislature in the nation, this being a budget year, and still being in the middle of a global pandemic, we headed into the 2021 legislative session with cautious optimism. Given the split, viable policies needed to have bipartisan agreement and be big enough for the legislature to consider with their limited time among a number of other pressing issues.

In 2021, CEEM focused on targeted opportunities to accelerate Minnesota’s economic recovery by removing red tape around community solar development and creating market opportunities for energy efficiency and clean energy development.

CEEM’s priorities for the year

CEEM focused on three main policy areas for the 2021 session:

• Passing the Energy Conservation and Optimization Act (ECO)

• Improving the Community Solar garden program

• Passing enhanced building performance standards

The Energy Conservation and Optimization Act (ECO) updates Minnesota’s successful energy efficiency program — the Conservation Improvement Program or CIP. ECO allows for fuel switching and electrification (like switching from a natural gas heating system to an all-electric source) to co-exist with and complement traditional energy efficiency. This legislation provides new energy efficient options to businesses and residential customers, while also driving local job growth through technological innovation and the development of new utility programs. Energy efficiency projects are designed by local building and energy analysts, use locally sourced products from area distributors and are installed by state licensed contractors.

Minnesota’s nation-leading Community Solar Garden (CSG) Program — which was passed in 2013 needs strengthening and modernization. The CSG program needs updates to recognize the growing pains and market changes from the past eight years. A main area of focus is removing arbitrary red tape slowing the program down, like the contiguous county provision. Removing the contiguous county restriction will open up an industry-estimated 300 megawatts of untapped solar potential – leading to 12,000 new CSG construction jobs over the next 6-24 months.

As more cities and states take steps to lower their energy usage, evidence suggests that policies on building energy usage are helping nudge energy consumption lower. The use of enhanced building performance standards will help reduce energy waste and GHG emissions from Minnesota’s buildings. According to the Minnesota Department of Commerce and Department of Labor and Industry report Improving Energy Efficiency in Commercial and Multifamily Construction, “In 2017, Minnesota’s building sector consumed 40.6% of the total energy consumed in the state, 19.5% of which was from within the commercial buildings sector, including large multifamily buildings.” Policies are needed on codes in order to improve building performance and enable action on climate while unleashing clean energy use.

What progress was made in clean energy this year?

The ECO Act has been passed by both the House and Senate and is on its way to the Governor’s desk for signing. This bill continues Minnesota’s leadership on energy efficiency and economic progress in clean energy. The improvements to CIP include reforms that will increase consumer options in how, when, and what type of energy they use. Minnesota’s energy efficiency industry was significantly impacted by job losses during the pandemic. Policy leadership like passing the ECO Act will help us as our industries and economy emerge and recover. The larger clean energy business community helped this bill pass which is a big victory for jobs, clean energy and efficiency businesses and a step toward lowering our collective carbon emissions.

On Friday, May 7, an administrative law judge ruled that the Minnesota Clean Cars ruling was reasonable and needed. There is still some political wrangling happening around this rulemaking, however, Senate Majority Leader Paul Gazelka has indicated it won’t hold up the passage of any budgets. The Minnesota Clean Cars ruling will bring more EV options to Minnesotan consumers.

What was left on the table?

Solar*Rewards funding is still being negotiated, with the House negotiating with the Senate to increase the current $5 million for 2022 and 2023. We will continue to monitor these discussions and hope for progress to be made in the upcoming special session. For more on why Minnesota solar companies say Solar*Rewards is an invaluable program, read our blog: Solar*Rewards offers path to saving money for Minnesota schools.

An agreement on community solar is still being discussed, but a pathway to getting something done this year is looking less and less likely.

The building codes bill made it a lot further this year than was initially expected. This is great news for next year, when passage could become a reality.

Special session(s) and beyond

Budget targets were agreed upon between the House, Senate and Governor’s office on the official last day of session — Monday, May 17. Budget targets are the financial agreements on how much the state will spend in each of the key funding areas (example: education, environment, energy, etc.). Preliminary budget proposals for energy spending from the House and Senate are very far apart. Key areas include spending on programs out of the renewable development account, money for the Solar*Rewards program, and the establishment of an energy technology market accelerator. Policy areas, including outstanding policy related to community solar, must be agreed upon by both chambers of the legislature and the Walz-Flanagan administration – this makes substantial policy unlikely for the remainder of the 2021 session.

Leaders publicly committed to completing their legislative work by mid-June. Working groups convened with the budget targets in hand. The final budgets will need to be passed in an upcoming June special session along with many controversial policy issues that still need to be negotiated; those include police reform and Clean Cars Minnesota rulemaking. Budgets for state government agencies must be completed by June 30 to avoid a state government shutdown.