WASHINGTON — Minnesota, a leader in renewable energy resources could make a significant impact on climate change-fighting provisions contained within the Inflation Reduction Act.
President Joe Biden signed the bill into law on Tuesday. It offers nearly $370 billion worth of incentives to consumers, utilities, and corporations for reducing planet-warming emissions.
Democrats and other supporters of the bill, including Minnesota’s rural electricity cooperatives, believe the bill adds to the state’s efforts to encourage renewable energy. The climate provisions in this bill are just the beginning, according to environmentalists and their advocates in Congress.
“It’s an important piece of legislation, and it’s just one of many things we can do,” stated Sen. Tina Smith (D-Minn).
The U.S. Energy Information Administration states that renewable resources such as wind, solar and hydropower generate the majority of Minnesota’s electricity. Renewables made up 29% of the total state electricity net generation in 2021. Coal fueled 26%, while nuclear power provided 24% and natural gas 21%.
Minnesota has exceeded the mandatory renewable energy portfolio standard (RPS) by generating or procuring at least 25% from renewable sources. This is in addition to the state’s largest utility.
The new law extends tax credits for wind, solar and biomass for a period of ten years. The credits were renewed by Congress on a year to year basis. This creates uncertainty for investors in these areas and increases credits for other renewable fuel sources.
Carol Andress, associate vice-president of climate and legislative affairs at Environmental Defense Fund (EDF), stated that “we just put (the tax credit) on steroids.”
Andress stated that environmental groups such as the EDF felt “pretty crummy and hopeless” in the weeks leading up to the announcement by Chuck Schumer, Senate Majority Leader, last month, about a breakthrough in negotiations for the Inflation Reduction Act. This legislation targets climate change, but expands on health care benefits.
The Inflation Reduction Act was a triumph of persistence and compromise. The Inflation Reduction Act, unlike other congressional efforts to curb climate changes, mainly uses incentives rather than punishments. This has won its support from key industry associations.
Andress stated, “It’s largely carrots.”
Inflation Reduction Act offers tax credits to consumers who use renewable fuels in their homes and offer rebates for those who buy electric cars. A $7,500 tax credit could be available to buyers of a new EV. Those who buy a used EV may receive $4,000 off their federal taxes.
However, for Minnesota’s electric cooperatives the incentives to use renewable fuels might not be the greatest benefit.
This law addresses an issue that has been preventing non-profits such as electric co-ops from taking full advantage federal tax credits. These co-ops needed to form complex partnerships with for-profit organizations in order to receive the full benefits. The act’s “direct payment” provision allows nonprofits to claim all of the credit.
Darrick Moe, CEO of the Minnesota Rural Electric Association said that this will allow them to continue to deploy renewables in a level playing field.
Moe stated that Minnesota’s 50 rural electric co-ops serve approximately one-third the state’s ratepayers. Great River Energy is the largest.
David Ranallo (communication director for the company), stated that “we absolutely supported this bill.” “This bill is completely in line with our vision.”
Ranallo stated that the Inflation Reduction Act will “lubricate the skids” for innovative innovations. However, Great River Energy customers won’t see lower electricity bills.
According to Great River Energy, the company stated that “over the long-term,” they expect the Inflation Reduction Act provisions to lower costs for members of cooperatives. This includes financial incentives for energy innovation and lowering overall energy costs. It also said that the Inflation Reduction Act will make it easier for members to use electricity in new and more efficient ways such as heat pumps and electric vehicles.
Inflation Reduction Act provides $500 million to support new infrastructure for bio-fuels, which will allow for the creation of more ethanol pumps.
Ashwin Raman, spokesperson for the Minnesota Biofuels Association, stated that “it means we will have stations offering higher blends ethanol.” “More infrastructure will always be good.”
Minnesota has 19 ethanol plants and is the fifth largest ethanol producer in America.
The Nature Conservancy forecasts that the Inflation Reduction Act would drive investment of more than $6.6Billion in Minnesota, and create 10,000 jobs every year over the next ten years.
No bridge over partisan divide
Smith stated that she “pushed hard for clean energy tax credits…that will accelerate the clean-energy transition.”
Other Minnesota legislators supported provisions within the broad-ranging law. For example, Rep. Angie Craig (D-2 nd) has sponsored legislation to cap insulin costs at $35 per month for all insured patients. After Republicans successfully raised objections, the provision was removed from the act to only cover Medicare patients.
Inflation act passed through the Senate and House as a budget reconciliation package. This requires 50 votes to pass the Senate, so it bypasses the filibuster. However, all of the reconciliation package provisions must have an effect on the federal budget.
The bill was supported by all Democrats in both the House and Senate.
Smith stated, “I have no doubt that I will look back at my service as a senator and see the Inflation Reduction Act to be one of the most important things that I had the opportunity to work on.”
Although the most progressive Democrats in Congress voted in favor of the bill, they opposed the inclusion of provisions that gained the support of key Senate Democrats, namely Senators. Joe Manchin from West Virginia and Kyrsten Silena of Arizona objected to the inclusion of provisions that won the support of key Senate Democrats – namely Sens.
“I am still concerned about certain provisions in this bill, including the expansion fossil fuel leasing, removal of a tax for wealthy private equity speculators, and a cap insulin prices to private insurers,” stated Rep. Ilhanomar, D-5 .
However, Republicans were angered by the use of reconciliation to approve a bill that promoted key elements on Biden’s agenda. Not a single Republican voted for it.
Republicans opposed the corporate tax increases in the bill. They claimed that the increase of the Internal Revenue Service would lead to honest middle-income Americans being unfairly audited, possibly for political reasons.
Rep. Brad Finstad (R-1 , st) stated that the bill is flawed on multiple fronts. “Instead spending billions on hiring an army IRS agents and wasting billions on programs that won’t improve the economy,” said Rep. Brad Finstad, R-1sup>st.