Commodities 2021: States racing to set goals toward net-zero emission, 100% renewable electricity

Four more governors announced plans to put their states on a path toward 100% renewables or carbon-free emissions, bringing the total up to 12 states that are leading the US energy transition, while the recent stimulus package could be a major driver for renewable energy penetration.

Louisiana, Michigan, Connecticut and New Jersey became the latest states to join the race to clean energy, while a bill was introduced in Delaware to extend its Renewable Portfolio Standard and Arizona approved new clean energy rules for utilities to provide 100% carbon-free energy.

"The COVID-19 stimulus package recently passed by Congress included a number of extensions to the federal tax credits that have historically been the major driver of US renewable energy penetration," said Matthew Williams, S&P Global emissions and clean energy analyst. "This includes the Production Tax Credit supporting new wind plants and the Investment Tax Credit for new solar plants. Historically, both have had fixed expiration dates, which introduce considerable uncertainty for the economics of new renewable energy projects every time expiration draws near."

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Louisiana plan

In August, Louisiana Governor John Edwards signed an executive order to reduce greenhouse emissions by forming the first-ever Climate Initiatives Task Force to study and make recommendations to reduce GHG emissions, according to an August news release from the governor's office.

"Louisiana does not have a [Renewable Portfolio Standard], though it's likely such a program could be included in the recommendations," Williams said. "Whether the legislature wants to implement one is a completely different story."

Edwards's emissions reduction goals include cutting net greenhouse gas emissions by 26-28% by 2025, 40-50% by 2030 and 100% by 2050.

"The plan is ambitious but achievable," Eric Smith, Tulane Energy Institute associate director, wrote in an email to S&P Global Platts, adding that the planning process affects virtually every subsector of the state's population and is being supported by every sector of the energy community. "The goal is to develop a plan for gradual de-carbonization that does not destroy the state's existing employment profile or its basic economy."

While Louisiana will draw on lessons learned from other states and nations engaged in reducing emissions, the state faces unique challenges and opportunities, according to an August news release from the governor's office.

"Louisiana's biggest source of manmade emissions is our refining and petrochemical industry," Smith said. "This is atypical for the US where normal state profiles are dominated by transportation and power generation emissions. While these are also important sources in Louisiana, they are each smaller than our industrial emissions."

The Climate Initiatives Task Force will produce an update to Louisiana's GHG emissions inventory by the end of 2020, an interim report by February 2021 and a final Climate Strategy document by February 2022.

Michigan order

In September, Michigan Governor Gretchen Whitmer signed an executive order to create the "MI Healthy Climate Plan" to put the state on a path toward being fully carbon neutral by 2050.

"Through comprehensive and aggressive steps, we will combat the climate crisis by formally setting and relentlessly pursuing a goal of statewide decarbonization by 2050," Whitmer said in a September news release. "These bold actions will provide critical protections for our environment, economy and public health, now and for years to come. It will also position Michigan to attract a new generation of clean energy and energy efficiency jobs."

Connecticut executive order

In September, Connecticut Governor Ned Lamont signed an executive order directing state regulators to lay out a plan to reach 100% carbon-free electricity by 2050, according to the Connecticut government website.

"Climate change is an urgent, existential threat that must be tackled immediately, and under the leadership of this administration I am going to see to it that Connecticut remains a national leader on climate action," Lamont said in a September news release. "While the highest levels of our federal government are refusing to accept scientific facts, we need state governments to unite and address one of the most pressing international problem of our times. The effects of climate change are impacting our air, water, health, natural resources, economic and the quality of life of every current and future citizen of Connecticut. We have an obligation to act now."

New Jersey plan

In May, New Jersey Governor Phil Murphy directed the New Jersey Board of Public Utilities, in partnership with other state agencies, to develop a statewide clean energy plan and shift away from energy production that contributes to climate change, according to the New Jersey government website. The Energy Master Plan fulfills Murphy's commitment to achieve 100% clean energy by 2050.

In addition, the Global Warming Response Act addresses Murphy's mandate of reducing state greenhouse gas emissions by 80 percent below 2006 levels, according to the New Jersey government website. New Jersey rejoined the Regional Greenhouse Gas Initiative Jan. 1, 2020, after an eight-year hiatus.

Additional advancements

A bill that would have extended Delaware's RPS from its current peak of 26% in 2026 to 40% by 2035 was introduced in June, right before the legislature was set to adjourn, Williams said. The lawmaker who introduced the bill, Senator Harris McDowell (D), is retiring and it is uncertain at this time if any of his colleagues will re-introduce the bill.

Arizona approved new clean energy rules in October that will require utilities to provide 100% carbon-free energy by 2050, Williams said. Other requirements include energy efficiency standards and battery storage policies for utilities. However, a renewable energy standard is absent.