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Minnesota is poised for a decade of unprecedented investment and development with the state committed to 100 percent clean energy by 2040 and billions of dollars in federal funding available to build a more environmentally friendly economy.
The Inflation Reduction Act, signed by President Joe Biden in August 2022, contains $369 billion in federal funding for clean energy and other state efforts to lower greenhouse gas emissions. Now, local officials and advocates are fighting to ensure that Minnesota is in the best position to move forward without leaving behind communities of color and low-income residents.
“I think it sets a foundation for more work,” said Whitney Terrill, who does community outreach and advocacy for the nonprofit organization Minnesota Solar Energy Industries Project.
Terrill joined Pete Wyckoff, assistant commissioner of the Minnesota Department of Commerce, and Nina Axelson of the nonprofit, Grid Catalyst, on a recent panel about implementing the federal act. The panel was hosted by the Minnesota Solar Energy Industries Association.
Wyckoff played a role in crafting the Inflation Reduction Act in Washington, D.C., while working for U.S. Senator Tina Smith. His job at the Minnesota commerce department—assistant commissioner for state and federal energy initiatives—was created to ensure that the state maximizes its opportunities under the act.
It takes time for expansive federal legislation to start having a noticeable impact, Wyckoff said. Minnesota is already seeing some projects emerge from the act, such as a new initiative at the Cummins Power Generation plant in Fridley that President Biden visited this month to tout green economic development. Cummins declared that it would manufacture electrolyzer machines, which produce clean power in a carbon-free way.
But the real wave of funding will likely become noticeable in about a year, Wyckoff said, and it’s key that the state is positioned to reap the benefits.
“We need to accelerate along with it,” he said.
That rings true for Minnesotans in the clean energy field. Timothy DenHerder-Thomas, co-founder of the Minnesota solar co-op Cooperative Energy Futures, said that many in the industry are waiting to receive official guidance on all the act’s tax credits from the Internal Revenue Service, which is working to keep up with the new law.
“Everyone is gearing up to go fast, but not really moving forward yet,” DenHerder-Thomas said.
Gearing up is critical to making sure the state is ready to hit the ground running when the federal dollars start to flow, experts say. On April 18, Governor Tim Walz officially passed a $115 million bill aimed at matching federal grants for energy infrastructure to help access those funds.
“We can solve for climate change and create huge economic development opportunities,” Axelson said.
Equity opportunities and challenges
The Inflation Reduction Act contains significant provisions to direct funding toward clean energy projects in environmental justice communities that experience high pollution levels. This would be mostly achieved through grant programs aimed at disadvantaged communities, such as funding to monitor and mitigate pollution around public schools.
Nonprofits and community-based organizations have multiple opportunities to benefit directly from the act, Terrill said, which should help those groups reach people they serve.
The act has tax credits that reward companies working with low-income communities, tribal nations, or in areas transitioning away from fossil fuel production, Wyckoff said. For example, the legislation boosts investment tax credits by 20 percent for solar projects on federally subsidized housing, and by 10 percent for projects in low-income neighborhoods.
But there are limits to the environmental justice benefits, DenHerder-Thomas noted. His company, Cooperative Energy Futures, focuses on community solar projects that help low-income Minnesotans and people of color save money on energy bills while lowering their carbon footprint.
Those bonus tax credits for projects aimed at environmental justice communities are only available through 2024, and would cover up to 1.8 gigawatts of clean energy projects aimed at low-income communities. While 1.8 gigawatts is a substantial amount of energy—it equals 1,800 megawatts, which is enough to power roughly 1 million homes—it’s a small fraction of what will be developed across the United States in the coming years.
“I think the IRA (Inflation Reduction Act) is the most equitable and most progressive investment in energy and climate solutions that I have ever seen and that probably has ever existed, and it’s still pretty inequitable,” DenHerder-Thomas said.
Much of that inequity stems from the fact that many of the act’s benefits are tax credits for homeowners, Terrill said. The act has programs for homeowners who make investments that improve energy efficiency, such as rooftop solar, updated insulation, and new home appliances. But those benefits won’t be as accessible for Minnesotans of color due to the state’s significant racial gap in homeownership, Terrill said, adding that action is needed to make sure the funds are accessed more equally.
Minnesota has the fourth largest homeownership gap between white residents and people of color in the country, according to a 2021 report from the Federal Reserve Bank of Minneapolis. Forty-four percent of people of color own their homes in Minnesota, compared to 77 percent of white households.
“I think we have a lot of issues around what it means for a person to benefit from this outstanding legislation,” Terrill said.
Building a green energy workforce
All those tax credits and block grants will translate to thousands of projects aimed at installing clean energy infrastructure and increasing energy efficiency. Wyckoff said he hears rumblings about a shortage in the workforce to build out what is needed. A big challenge is in both workforce development and inclusion, Terrill said.
Minnesota’s clean energy workforce is growing, according to a report from the nonprofit Clean Energy Economy Minnesota. The solar industry grew 9 percent in 2021, higher than the 5 percent seen in all clean-energy jobs, which includes varied fields from heating and air conditioning to electric car production.
But 84 percent of companies in the sector say they are already struggling to find qualified workers, the report found. That means the state needs to be focused on partnering with labor groups, trades, and community and tribal colleges to train workers.
“We absolutely have to do more to attract and maintain more workers,” said Amelia Cerling Hennes, managing director of Clean Energy Economy Minnesota.
Right now, there are about 58,000 clean energy jobs in Minnesota. But Cerling Hennes said that number could rise to 100,000 jobs by 2030.
The workforce for green-energy jobs continues to be more diverse than the overall workforce in Minnesota, according to the Clean Energy Economy Minnesota report. The clean-energy job workforce is 26.6 percent people of color, while 22.5 percent of the state’s population is people of color, according to the 2020 Census.
The state should continue investing in workforce development that is inclusive to all Minnesotans, Cerling Hennes said. That includes addressing a significant gap in gender disparity, she said. Today, just 28 percent of workers in clean energy jobs are women.