Michigan just passed one of the country’s most ambitious clean energy bills

The state’s Democrat-controlled legislature passed bills that aim to accelerate the energy transition — including a mandate for 100% carbon-free power by 2040.
By Jeff St. John

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crowds of people stand near a grand multistory rotunda
Interior of the Michigan State Capitol in Lansing (Bill Pugliano/Getty Images)

Michigan’s Democrat-controlled legislature has passed a package of clean energy bills that includes one of the most aggressive state-level clean energy targets in the nation.

Senate Bill 271, which requires the state’s major utilities to achieve 100 percent carbon-free energy by 2040, as well as bills 273, 502 and 519, were passed on party-line votes in the Michigan House of Representatives and Senate, where Democrats hold narrow majorities. Michigan is now one of several states in which Democrats won governing trifectas” in the 2022 midterm elections and then proceeded to enact significant climate policy.

Michigan state Republicans opposed the bills, saying they would increase energy costs. But Democratic backers argued that they will fight climate change and reduce energy costs for disadvantaged communities and the state as a whole by expanding reliance on low-cost renewable energy and capturing federal incentives from the Inflation Reduction Act.

The bills closely match a plan put forward by Michigan Governor Gretchen Whitmer (D), who is expected to sign them. Whitmer has already issued an executive order calling for the state to achieve economywide carbon-neutrality by 2050.

Senate Bill 271 is the marquee bill in the legislative package. The bill would order the state’s two big investor-owned utilities, Consumers Energy and DTE Energy, to undertake a course to reach 80 percent carbon-free electricity sales by 2035 and 100 percent carbon-free energy by 2040. Like many of the country’s largest utilities, Consumers and DTE have both set their own goals of reaching carbon-neutral generation portfolios by 2040 and 2050, respectively, but they were not under state mandate to reach those targets.

State lawmakers and regulators are key actors in driving change at utilities, with the power to order them to shut down fossil-fuel-fired power plants and procure more clean energy as part of their long-term investment plans. In order for the U.S. to meet its Paris Agreement emissions-reduction goals, states will need to aggressively exercise that power.

Of the 23 states that have 100 percent carbon-free energy laws or executive orders in place, Connecticut, Minnesota, New York and Oregon share Michigan’s new timeline, while Rhode Island has set a 2033 target for 100 percent of the state’s electricity to be offset by renewable generation. California, Hawaii, Illinois, Massachusetts, New Mexico, Virginia and Washington have also set 100 percent carbon-free mandates with later deadlines, as have Washington, D.C. and Puerto Rico.

Michigan’s new clean energy mandate is not focused on renewable energy alone. The bill will require 60 percent of utility electricity sales to come from wind, solar and other renewable energy sources by 2034 — well above the 16 percent of electricity provided by renewables by the state’s utilities as of last year. But it would allow the remaining portion of its 100 percent target to come from nuclear power, as well as fossil gas power plants that can capture at least 90 percent of their carbon emissions.

These provisions angered some environmental groups who warn that carbon capture at power plants remains a costly and unproven solution. Environmental groups were also disappointed that lawmakers backed off from the even more aggressive targets included in the initial clean energy package introduced earlier this year: 60 percent renewable energy by 2030 and 100 percent renewable energy by 2035.

A group of environmental justice organizations laid out these complaints in an October 27 letter to lawmakers, saying the bill will allow utilities to increase their rates to pay for dangerous, costly, and toxic projects like more gas power plants with carbon capture, dirty hydrogen, landfill and factory farm gas, and new nuclear power.”

John Delurey, senior regional director at nonprofit group Vote Solar, echoed these concerns in social media posts. He praised some provisions of Senate Bill 271, such as lifting the state’s cap on rooftop solar as a share of the state’s renewable energy mix and committing the state to building 2,500 megawatts of battery storage capacity by 2030.

But it also lost key policy priorities like community solar and Justice40-aligned commitments thanks to utility influence,” he wrote. In particular, “[t]he new clean’ definition includes incinerators and fossil gas plants. Any gas plant, new or existing, that reduces carbon emissions by 90% by 2040 can pollute in perpetuity.”

Even so, the 2040 carbon-free target set in Senate Bill 271 will lay the groundwork for the state to speed up the pace of carbon reduction over the coming decade, according to data from nonprofit think tank RMI’s Energy Policy Simulator for Michigan. The policy would also improve public health by reducing pollution and boosting jobs and economic activity, based on data from the tool. (Canary Media is an independent affiliate of RMI.)

Advocacy group Evergreen Action and the clean energy industry trade group Michigan Energy Innovation Business Council commissioned a report that found that a clean energy standard and other climate policies could save Michigan households an average of $145 a year in energy costs, lead to the creation of nearly 160,000 jobs in the state and secure nearly $8 billion in federal incentives from the Inflation Reduction Act.

Other clean energy industry groups added their praise for the clean energy standard. Markus Pitchford, central regional director for the Solar Energy Industries Association, said in a statement that it will bring billions of dollars of investments and thousands of new jobs to the state — from project development and installation to manufacturing.”

Beyond the clean energy standard 

Michigan lawmakers also passed bills to increase utility spending on energy efficiency and expand financial support and workforce development in historically marginalized communities that have borne a disproportionate burden from pollution and climate change.

Senate Bill 273 boosts the energy-efficiency improvement requirements of the state’s utilities from 1 percent to 1.5 percent per year. It also orders utilities to offer more efficiency programs in low-income communities and hire diverse workforces for those programs.

Senate Bill 502 orders the Michigan Public Service Commission, the state’s utility regulator, to ensure equitable access to efficiency programs and to order utilities to make plans to improve reliability and affordability — big issues in a state that’s seen large-scale power outages in recent years.

And Senate Bill 519 creates a state community and worker economic transition office to aid workers and communities whose jobs are impacted in the transition from fossil fuel energy to renewable sources.

The Senate also passed House Bill 5120, which would shift some power over clean-energy project siting and permitting from local government entities to the Michigan Public Service Commission. The bill would give the commission permitting authority for all solar projects and battery projects over 50 megawatts and wind projects over 100 megawatts.

It’s a controversial move by Democrats to fast-track clean energy over the objections of anti-renewables advocates who have successfully pressed local officials to institute ordinances barring wind and solar projects — a tactic that’s stymied renewable energy development in Michigan and other Midwestern states over the past few years.

Opponents of the bill have argued that the law will restrict local governments from taking action to protect farmland. Supporters have noted that it brings clean energy under the same permitting authority that the commission now holds over all other energy projects in Michigan, and that clean energy restrictions in 26 localities in the state threaten to stymie climate ambitions. They’ve also highlighted media reports linking local opposition to social media campaigns promoting misinformation alleging clean energy projects cause health and environmental harms.

Courtney Bourgoin, Midwest senior policy and advocacy manager for advocacy group Evergreen Action, said in a statement that House Bill 5120 will position Michigan to remain competitive with its Midwest neighbor states” in developing clean energy. Illinois passed a similar law earlier this year, while Indiana lawmakers have passed laws that offer as-yet-unfunded incentives to counties that site clean energy within their borders but do not restrict their authority to pass ordinances that prevent clean energy projects.

This bill, paired with the high-level mandate to get 100 percent of energy from carbon-free sources by 2040, will give Michigan the regulatory tools it needs to sprint toward clean energy. Now, it just needs to execute.

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.