Minn. bill aims to capture federal energy grants

It would create a $100 million fund to help governments and other eligible entities in the state put up matching funds for federal dollars.
The Minnesota State Capitol in St. Paul. (AP Photo/Steve Karnowski, File)

Minnesota Democrats are positioning the state to be among the first to qualify for clean energy-related federal funds appropriated over the past couple of years through major congressional spending packages.

Legislative and executive branch leaders in the state unveiled legislation this week that would provide $115 million in grants and assistance for state, local and tribal governments, as well as electric utility co-ops, nonprofits, and other eligible entities, to help with matching funds for federal grants for energy projects. Most federal grants require matching funds, which can also help Minnesota compete for them against other states.

Under the legislation, $100 million in grants would be administered through a State Competitiveness Fund run by the state Department of Commerce. The projects it helps launch could unlock millions more for the state in federal funding.

Rep. Patty Acomb (D), chair of the Climate and Energy Finance and Policy Committee, said at a news conference announcing the bill that the “investment we can leverage is close to $750 million to come back in needed investments in Minnesota.”

The matching funds can be used for more than 20 energy and climate federal programs included in the 2021 Infrastructure Investment and Jobs Act and 2022 Inflation Reduction Act.

“This will be a transformational amount of money to provide competitive matching grants for the IIJA and IRA legislation that came out of Washington, D.C.,” Sen. Nick Frentz (D), chair of the Senate Energy, Utilities, Environment, and Climate Committee, said. 

Colorado approved $80 million for IIJA funding in 2022. Arkansas created an electric vehicle infrastructure fund as a matching fund source. Michigan has also appropriated funds, Minnesota Commerce Commissioner Grace Arnold said at the news conference.

“Unfortunately, right now we’re behind,” Arnold said.

The IIJA provides a total of $1.2 trillion over five years, including $7.4 billion for Minnesota. Of that amount, about $6.1 billion must be matched by nonfederal sources. The IRA is a far-reaching climate change law that provides $370 billion to lower energy costs and reduce greenhouse gas emissions driving climate change. 

Democrats and Republicans negotiated a federal matching funds measure last year, when the GOP controlled the Senate, but failed to reach an agreement. Since winning a state government trifecta in the midterm elections last year, Democrats have made enacting matching funds legislation a priority

Frentz said he expects both chambers to approve twin measures creating the fund this month. Both are currently advancing through committees before reaching the floors for votes.

Acomb said one of the questions she has heard is why lawmakers are launching the fund now. She cited climate change and the state’s recently enacted 100% clean energy law, and said federal funding would help meet the goals in it.

“We have this historic opportunity by partnering with the federal government, and we want MInnesota to be as competitive as possible with other states around the country in securing those funds,” Acomb said.