States have long led U.S. clean energy policy by setting renewable energy targets and requiring carbon emission cuts from their broader economies. The Biden administration has shifted the federal government’s policy toward similar goals, but Congress has not passed a hard decarbonization mandate and doesn’t seem likely to do so anytime soon, so it’s still up to state lawmakers to keep climate policy momentum going.
A half-dozen states did just that in 2021. Significant laws were passed in Colorado, Illinois, Massachusetts, Oregon and Washington, all states with Democratic-controlled legislatures — and, in an outlier to the political trend lines, in North Carolina, where the legislature is controlled by Republicans.
Washington state already had a strong legislative framework for cutting carbon emissions from electricity generation, buildings and transportation. In 2021 it put a capstone on that framework in the form of the Climate Commitment Act, which adds a carbon “cap-and-invest” system, a form of cap-and-trade that will measure and tax emissions and use the proceeds to fund new investments in climate mitigation and adaptation. The aim is to reduce economywide greenhouse gas emissions by 95 percent by 2050.
Unlike the cap-and-trade program in California, the only other state to create one so far, Washington’s is written to remain in place until its goals are reached, insulating it from the threat of being weakened or done away with in future legislative sessions. It was also designed to avoid some of the problems that have bedeviled California’s cap-and-trade system, such as oversupply of emissions allowances, reliance on hard-to-police emission offset credits, and insufficient oversight of facilities that use offsets to delay emission reductions to the detriment of local communities. And the program’s inclusion of natural gas utilities, emissions-heavy industries, and transport (road, rail, water and air) makes it one of the most comprehensive carbon-reduction systems in the country.
The new law also includes environmental-justice provisions that set air-quality standards and steer investment toward communities overburdened by environmental harms.
For years, Democrats in Illinois tried to pass a law committing the state to zero carbon emissions by 2050. They weren’t able to get it done in 2019 nor in 2020, when Covid-19 disruptions and splits between different clean energy, labor union and utility factions prevented a compromise from being reached.
But in 2021, they finally closed the deal — although not without significant delays and setbacks. A major dispute arose over whether or not to offer state subsidies to the financially threatened nuclear power plants operated by home-state utility Exelon. In the end, the nuclear subsidies made it into the bill, but a bribery scandal enveloping Exelon subsidiary Commonwealth Edison weakened the company’s power to set terms for the bill.
What almost scuttled the legislation was a dispute over the future of two municipally owned coal plants, including the Prairie State Energy Campus, the largest in the state. Representatives of the surrounding communities and workers at those plants demanded that the facilities be exempted from the bill’s planned 2035 shutdown date set for coal plants. Environmental groups balked but then eventually relented in the interests of getting the bill passed, keeping the 2035 closure deadline just for privately owned coal plants.
Even so, Illinois’ Climate and Equitable Jobs Act represents a significant win for the clean energy industry groups, labor unions and environmental justice advocates that came together to support its passage. Solar developers won more funding for a state program that had ground to a halt after previous funding had dried up. Consumer advocates won provisions subjecting ComEd to more stringent regulatory review. Labor groups got clean energy project-labor agreements and prevailing-wage provisions, and disadvantaged communities got workforce development, small-business support and economic transition programs.
Oregon also went through a yearslong set of conflicts and compromises to get a clean-electricity bill passed in 2021. Previous proposals for an economywide carbon cap-and-trade mandate were strongly opposed by Republican lawmakers, who in 2019 and 2020 actually fled the state to prevent a vote. But the cap-and-trade proposal was also unpopular among business and labor groups and rural communities afraid of its potential impact on the economy and jobs.
Climate-bill backers regrouped and engaged in a monthslong statewide “listening tour” to build a broader coalition behind a different type of climate legislation, which they were able to get passed this year. While the new law doesn’t take on emissions throughout the economy, it does set the country’s most aggressive timeline for decarbonizing electricity, with the state’s two investor-owned utilities pledging to supply only carbon-free power by 2040.
The law also embeds a host of labor and environmental justice protections, including agreements to use union labor and provide prevailing wages and benefits for workers on large-scale clean energy projects. It also funds clean energy projects outside the state’s biggest city of Portland and requires utilities to seek and consider input from lower-income customers, Native American tribes and communities bearing the burden of pollution from power plants.
In 2019 Colorado passed a Climate Action Plan law setting a goal to cut its economywide carbon emissions in half by 2030 and by 90 percent by 2050. But how precisely to accomplish that was left to future legislation, sparking a fight this year between Democratic lawmakers and Democratic Governor Jared Polis.
In simple terms, lawmakers demanded more legally binding carbon-reduction mandates over multiple sectors of the economy. But Polis, whose office developed a policy roadmap to incentivize carbon-cutting investments, threatened to veto any plans that gave state agencies power to set and enforce strict carbon targets.
The compromise reached in June yielded a host of bills that set enforceable emission-reduction requirements for the state’s electricity, industrial and oil and gas sectors, but not for transportation and buildings. Xcel Energy, the state’s dominant investor-owned utility, had already set its own decarbonization targets largely in line with the targets in the bill, but the state’s oil and gas industry will face new targets for cutting emissions of both carbon dioxide and methane. The bill also creates a new environmental justice framework aimed at helping communities hardest hit by pollution.
While lawmakers didn’t impose carbon-reduction mandates for vehicles and buildings, another bill passed in the session will offer incentives for EV purchases and fund EV charging stations and public transit, and four others will address building energy efficiency and set new standards that could encourage switching from natural gas to electric heating.
North Carolina’s 2021 carbon-reduction law doesn’t move as aggressively as the others we’ve been talking about. Its goals to cut electricity-sector carbon emissions by 70 percent by 2030 and reach net-zero emissions by 2050 would only apply to its dominant utility Duke Energy, which has already set its own companywide targets. But the law is still notable for being the only significant one of its kind passed by a Republican-controlled legislature.
To be clear, the impetus for the bill stemmed from a set of climate and energy policies set out in an executive order from Democratic Governor Roy Cooper. And it’s important to note that Cooper, Democratic lawmakers and clean energy and environmental groups didn’t get much of what they’d hoped for from the compromise bill that eventually passed in October.
What they got, however, was much more than they would have from the first version of the bill introduced in June, which was widely criticized as a giveaway to Duke Energy. Among the most contentious provisions were ones that could have allowed Duke to replace coal-fired power plants with natural gas without review from state regulators. Clean energy and environmental groups successfully pushed to remove those from the final bill.
Cooper and clean-energy groups did support the compromise bill that eventually passed, but not without misgivings. Industrial trade groups and consumer advocates alike fear that utility rates could rise dramatically because of a provision that will allow Duke to use a multiyear process to set future rate increases. And clean-energy groups supported the bill’s expansion of the state’s large-scale solar procurement program but were disappointed at the lack of policies to create more opportunities for third-party power projects to compete against Duke.
While North Carolina’s climate bill was hammered out by a Republican legislature and a Democratic governor, Massachusetts had the opposite dynamic. Republican Governor Charlie Baker opposed the Democratic-controlled legislature’s plan to update the state’s 2008 clean energy legislation. He vetoed the first version of the bill in January. Legislators then drafted a new version that incorporated some of Baker’s proposed amendments, which he signed in March.
The new law sets legally binding emission-reduction targets for electricity, transportation, commercial and industrial buildings, residential buildings, industrial processes and natural-gas distribution. The targets are 50 percent reductions by 2030, 75 percent by 2040 and net-zero carbon emissions by 2050. The law also sets new renewable energy targets for the state’s investor-owned utilities, expands access to solar power for lower-income households and includes programs to increase EV adoption and build EV charging infrastructure.
The law also establishes new legal definitions of environmental justice communities and strengthens public participation and environmental impact review for energy and infrastructure projects that could add to the communities’ environmental burdens. In addition, it beefs up the state’s clean-energy jobs training programs.