Biden-Harris climate law set off a green bonanza in Walz’s Minnesota

Democrats are racing to persuade voters that their landmark climate law has sparked a clean energy boom — and Tim Walz’s Minnesota could be a showcase.

As governor, Vice President Kamala Harris’ running mate pushed for Minnesota to tap into the massive funding that the Biden administration has made available for eliminating greenhouse gas pollution.

Now, as he prepares to address the Democratic National Convention on Wednesday evening, Walz has a chance to serve as a compelling advocate for the nationwide effort to use President Joe Biden’s Inflation Reduction Act to foster clean energy and create hundreds of thousands of jobs . That’s a message the administration has struggled to deliver, with polls showing many Americans are unaware of the law and doubtful of its impact.

To help Minnesota reap the IRA’s benefits, Walz signed a law requiring utilities to provide 100 percent clean electricity in the state by 2040, loaded up state agencies with policy experts to win the federal cash, updated the state’s permitting rules to speed the buildout of green projects and pressed companies to hire local labor.

That effort enabled the state to lure hundreds of millions of federal dollars for clean energy projects, such as a massive solar farm and a green hydrogen production plant . It also helped Minnesota counter some structural hurdles — its population is significantly smaller than Midwest neighbors such as Michigan and Ohio, and it doesn’t boast the kind of low-tax, light-regulation policies that Sun Belt states use to lure business investment.

"Aggressive states have a lot of the advantages and it's going to create a virtuous cycle with more money coming in to support more aggressive policy,” said Jamal Raad, co-founder and former executive director of Evergreen Action, a national climate advocacy group.

Walz’s supporters say his record shows that fighting climate change and economic development go hand in hand.

“Gov. Walz and his team were very aggressive in trying to pull together a strategy to bring as much IRA dollars as we can,” said state House Majority Leader Jamie Long, a Democratic environmental attorney and climate advocate.

With its passage two years ago, the IRA supercharged efforts to accelerate clean energy in the state, he said, building on a yearslong drop in the costs of renewable energy as well as utilities’ commitments to taking on climate change.

"Thanks to the Inflation Reduction Act, hundreds of Minnesotans have new jobs in the clean energy industry and countless more are saving on energy bills," Claire Lancaster, a Walz spokesperson, said by email. The person said the governor worked hand-in-hand with the Biden administration to get the IRA funding deployed for the clean energy transition.

But Minnesota Republican Rep. Pete Stauber said the effort to tap the IRA money has been more of a “political stunt” than effective policy.

"Gov. Walz's misuse of federal funds for his pet projects is a slap in the face to every Minnesotan struggling with rising costs,” Stauber said in a statement, referring to solar panels for big businesses and electric vehicle charging stations. “He's taken dollars meant to combat inflation and instead pushed his green agenda, ignoring the immediate needs of our state, loading on top of trillions of dollars of crippling national debt.”

Karoline Leavitt, the national press secretary for Republican nominee Donald Trump’s campaign, blasted the IRA, saying it “has proven to be a disastrous piece of legislation as it directly contributed to the record-high inflation crisis crushing every American family.”

Soon after Biden signed the IRA into law in August 2022, Walz mobilized Minnesota to win a piece of the pie.

While many of the IRA’s green stimulus measures are in tax credits that companies can tap for clean energy projects, roughly $145 billion under the law goes toward direct federal spending, such as grants or loans, to support initiatives like financing for renewable energy technologies and expanding access to energy efficiency measures in homes.

“It is a race across states,” said Sam Ricketts, co-founder and partner of S2 Strategies, which advises states on implementation of the IRA. “Red, blue and purple states alike want to see dollars come into their states. This is a competition.”

Minnesota has so far directly garnered $410 million in announced federal grants from the IRA, according to POLITICO's analysis of Invest.gov’s tracking of announcements through June 11 — putting it roughly in the middle of the pack nationally and behind various other red and blue states, including high-population giants such as California, New York and Texas and those with larger industrial sectors, such as Michigan. That figure is expected to increase as the Biden administration continues to dole out funding to states.

The state is also poised to receive at least $200 million in additional IRA money to reduce the climate impacts from agriculture backed by the law’s grant programs and is seeking IRA-fueled electrification and appliance rebates . The Energy Department has also announced a conditional $214 million loan guarantee to finance a private plant in Minnesota that will make chemicals from biomass instead of fossil fuels.

By comparison, just one clean energy project in Ohio — a retrofit of a steel plant that once employed Republican vice presidential nominee JD Vance’s grandfather — is set to get as much as $500 million in Energy Department money under the IRA and Biden’s infrastructure law. Both Trump and Vance have called for repealing or scaling back the IRA. When it comes to private sector investments, Minnesota significantly trails states such as Georgia and South Carolina — where fewer labor restrictions and pro-business incentives have wooed dozens of planned manufacturing facilities — according to the green business advocacy group E2’s tracking of manufacturing announcements by companies since the IRA became law.

To try to catch up with those competitors, Walz sought to position his state for success by hiring dozens of staff to help the state’s Commerce Department navigate the thicket of financial offerings in the IRA. The law includes at least $527 billion in federal tax incentives meant to spur companies to develop clean energy projects, as well as grants and loans to advance energy efficiency and spur greenhouse gas reductions.
After the IRA became law, Walz aggressively pushed through major policy changes to attract investments to Minnesota, including signing laws that mandate 100 percent clean electricity in the state by 2040, boost electric vehicle adoption and streamline the state’s approval process for building renewable energy and transmission projects.

“Democrats in Minnesota under the governance of Gov. Walz have made all the right moves,” said Harry Godfrey, managing director at Advanced Energy United, a clean energy business association.

The Democratic-led legislature created the state’s first so-called green bank to position Minnesota to receive funding from the IRA’s Greenhouse Gas Reduction Fund, a grant program meant to fund clean energy projects in low-income areas and communities of color that often struggle to attract private sector financing. Earlier this year, EPA announced it would give the state $62 million from that program to support residential solar projects.

“One of the biggest things that's hard for states to get their head around is most of the [IRA] money isn't in grants. It's in tax credits and loans,” said Pete Wyckoff, assistant commissioner of Minnesota’s Department of Commerce. “States should be trying to orient efforts to attract all three. Minnesota is a good example of states that are wrestling with this with the goal of taking full advantage to bring in more federal support for our clean energy transition.”

Hiring Wyckoff to lead Minnesota’s implementation of the IRA was one of Walz’s first moves after the IRA became law. Wyckoff, a former climate adviser to Democratic Minnesota Sen. Tina Smith, had played a leading role in shaping the climate law in Congress.

"Those personnel choices help a lot, being the connective tissue to get the money into the right places and to make the biggest impact," said Matthew Davis, vice president of federal policy of the League of Conservation Voters.

Wyckoff arrived in March 2023, just a few months after Minnesota Democrats won full control of the state government for the first time since 2014. That trifecta enabled Minnesota Democrats to enact the slate of climate policies after years of Republicans’ blocking those measures.

Even power companies skeptical of Walz’s ambitious clean energy targets have expressed happiness with the state’s effort to help local businesses leverage federal funding.

Darrick Moe, CEO of the Minnesota Rural Electric Association, said federal assistance alone won’t solve the momentous challenge of reaching 100 percent clean electricity in the state in the next 16 years. But Walz’s efforts have helped his members apply for money from both the IRA and the 2021 bipartisan infrastructure law, he said.

“The Walz administration has made resources available and has worked hard to leverage federal funding opportunities,” Moe said.

Other utilities and regulators in the state say the IRA’s incentives have made the 100-percent goal much more feasible.

Minnesota’s largest utility, Xcel Energy, is poised to leverage about $315 million in benefits from the IRA to build the Sherco solar farm — 710 megawatts, capable of powering more than 150,000 homes. It will be the largest solar project in the Upper Midwest.

Besides benefiting from federal production tax credits, the solar project will score additional credits because it’s being developed on a former coal plant site and will be built with union labor — something that Minnesota utilities were already making a priority because of guidance from state regulators.

“We were really happy to see that [state labor component] as a portion of the IRA, because it aligned with where we were already headed — both as a company and as a state,” said Ryan Long, president of Xcel Energy’s Minnesota, North Dakota and South Dakota territories.

The state’s independent Public Utilities Commission, made up of Walz-appointed regulators, began calling on project developers as early as 2018 to disclose a project’s local jobs impact — and even declined to approve one project for failing to produce that information.

As a result, the state went from using about 20 percent local labor for new renewable projects, to regularly developing projects using 50 to 70 percent local labor, according to the Laborers' International Union of North America, far exceeding some of its red state neighbors.

“The Governor’s office, Dept of Commerce, Public Utilities Commission and legislative leaders have prioritized strong labor standards and participation in planning, including priority for local workforce which is not always baked into IRA,” said Kevin Pranis, marketing manager at union group LIUNA of Minnesota and North Dakota, in an email.

Utilities and clean energy project developers say Walz’s biggest win is his success at ushering through a law this summer to streamline permitting rules. Democrats in Congress have failed to do this at a national level, even though they see such a change as key to unlocking the IRA’s full potential. The issue has created division among some environmentalists who oppose changes to the regulatory process.

Walz signed the bill in June at a wind farm in Dexter, Minnesota.

Solar manufacturer Heliene, which has been operating in Minnesota for more than seven years, announced plans to expand its solar manufacturing footprint in the state, thanks in part to new tax credits under the IRA.

And the head of the company said the governor has been personally engaged in the project.

Walz is “the type of person that calls you from his cell phone number, and the number is not hidden so you see ‘Tim Walz’ popping in on your phone,” CEO Martin Pochtaruk said. “And he tells you, ‘Text me, … and I will find a moment to talk anytime you need it.’ That’s the type of person he is. He’s personally involved.”

Jessie Blaeser contributed to this report.