Supporters of climate action say work will continue in Minnesota despite federal reversal

Minnesotans who favor climate action are mourning the loss of hundreds of billions of dollars in federal tax incentives meant to aid the fight against global warming.

They’re also set on plowing forward with the state’s climate agenda.

Republicans in Congress passed President Donald Trump’s budget bill by the narrowest of margins Thursday, greenlighting $4.5 trillion in tax cuts and new immigration enforcement while ending federal subsidies for greening the economy.

The legislation quickly phases out the tax credits for climate and clean energy projects under the 2022 Inflation Reduction Act, including some incentives intended to last for 10 years. For solar, wind and other renewable energy developers, they must begin construction on their projects within a year to qualify for the credits.

“It’s just devastating,” said Minnesota Rep. Jamie Long, a Democrat who wrote the state’s law mandating carbon-free power from utilities. “One of the most important legacies of Biden’s presidency was the work that he did on climate.”

Republicans have denounced that legacy and pushed for a renewed focus on producing and burning fossil fuels. The energy components of the legislation, they argue, will ultimately save Americans money and make the electrical grid more reliable. A report by the nonpartisan research firm Rhodium, however, estimated the legislation would raise energy costs for American households by as much as 7% in 2035.

The repeal of the tax credits will slow but not stop Minnesota from building solar and wind farms, because they are still the “cheapest way to expand energy production,” said Pete Wyckoff, deputy commissioner of energy resources for the Minnesota Department of Commerce.

“It will just be the case where ratepayers will pick up the tab, not the federal government,” he said.

This year, Minnesotans are saving about $650 million in energy costs because of the IRA credits, Wyckoff said. With the phase-out now mandated by Congress, Minnesotans have until the end of September to claim credits for electric vehicles and until the end of December to claim credits for rooftop solar or energy efficiency upgrades.

In 2023, Minnesota passed a law requiring its utilities to generate 100% of electricity from carbon-free sources by 2040, among the most ambitious climate policies in the nation.

More than half of the state’s electricity in 2024 was generated by renewable sources, as well as nuclear, outpacing the national average of 42%, according to a recent report from Clean Energy Economy Minnesota, a trade association representing Minnesota clean energy developers. Renewable energy also made up 99% of power plants built in the state over the past five years, the report said.

The state is currently taking public comments for Gov. Tim Walz’s Climate Action Framework, a road map for how the state plans to achieve its clean energy mandate, as well as steps the state plans to take to reduce other carbon emissions and better prepare its infrastructure and communities for climate threats.

Those steps include expanding public transit options, building out the electric vehicle charging infrastructure, planting more trees and managing manure and fertilizer more carefully to reduce emissions from farmland. Unlike the energy mandate, those changes aren’t required by law.

Margaret Levin, executive director of the Sierra Club’s Minnesota chapter, called the federal budget bill “an enormous handout to billionaire polluters that will harm working families, public health and the planet.”

The bill’s passage also is galvanizing Minnesota’s environmental community to focus on what can be achieved at the state and local level, she said.

“We know that our best role in the next couple of years is local organizing,” Levin said. “I think, long term, that’s how change happens.”

Levin said some priorities for climate activists this year include limiting the definition for what the state considers “carbon-free” energy under its climate law, as well as streamlining the permitting process for residential rooftop solar installations.

State regulators are debating whether to accept the burning of wood and trash as carbon-free energy, which several environmental groups oppose. Levin said local organizers are also attempting to persuade cities to allow online permitting of rooftop solar.

Cities and counties tend to have their own specific requirements for rooftop solar permits, she said, so unifying that process on an app could speed up adoption of the technology and encourage people who are undecided.

While some climate advocates remain hopeful, Minnesota’s clean energy developers — many of which are small businesses — are worried.

“I don’t know what’s going to happen with our industry,” said Kim Benjamin, owner of Plymouth-based MNSolar, which installs rooftop solar on homes and small businesses. “Am I going to have to lay people off? It’s a big possibility.”

Early analyses have estimated that during the next five years, Minnesota stands to lose between 4,600 and 14,400 clean energy jobs under the new legislation. Minnesota’s solar industry alone, which employs about 5,000 people, could lose half of those jobs, said Gregg Mast, Clean Energy Economy Minnesota executive director.