State of the States: Why 2023 Is Looking Like a Tipping Point For Clean Energy In States

2023 may be the tipping point in how states shift to a clean energy economy . The Inflation Reduction Act, Infrastructure Investment and Jobs Act, and the CHIPs and Science Act have collectively created a generation-defining opportunity in the United States. But how united are the states in making full use of that opportunity?

Right now, it looks like the starting gun has fired and states across the country are in a race to the top to lay claim to the clean energy future. As President Biden highlighted in his State of the Union address, we’re already seeing significant progress on job creation and investments due to these historic pieces of legislation. There is also increasing recognition that states have incredible potential to go even further with their own policies to cut emissions and accelerate the use of clean energy technology, but they must address key barriers to get there.

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The Good News

With so much happening, you may have missed all the good news about a massive wave of clean energy manufacturing projects like renewable energy, battery facilities, electric vehicles, and more. Climate Power’s analysis shows that since its passage just six months ago, the Inflation Reduction Act has led to 100,000 new jobs.

And state governments have increased revenue and are well positioned to continue maximizing the potential of federal climate and clean energy funding.

Many of these efforts are already taking off in conservative states and districts . Ohio and Indiana are new leaders in solar farms. Georgia, Idaho and many others are announcing numerous cleantech projects with billions of investment dollars coming to them. The evidence is clear: clean energy jobs and investment are nonpartisan.

In large part, this clean energy and technology industrial boom is happening because states recognize the economic and technology shifts that are here now and are embracing policies that will ensure their individual economies do not get left behind.

For instance, many states are passing legislation that will help them leap forward and not be held back by sunk costs associated with continued use of fossil fuels. They are recognizing that these technologies are not only better for our climate and health, but are now often much cheaper.

For example, Minnesota just passed a clean energy standard for 2040—the first Midwest state to do so—which makes sense given that new renewables are better economically than polluting fossil fuel generation. Washington recently became the first state to require clean, efficient heat pumps in new buildings. Numerous other examples abound. These are not just investments in reducing pollution, but also investments in technologies that make economic sense today and whose costs will only improve over time.

This week, states gathered for the National Governors Association and separately for the National Association of State Energy Offices . Both gatherings had prominent content on how to build on the clean energy opportunity in 2023.

And the potential is even greater when we look at what would happen if states actually cut their emissions in half by the end of the decade. RMI analysis shows that, by taking advantage of federal funding and implementing their own state-level climate policies, states could see hundreds of thousands of new jobs, improved health, and many billions of dollars in economic development for states if they accelerate clean energy.

The Challenges Ahead

Workforce

Meeting the full potential of the clean energy economy is not a given for states, however. They face real barriers and must take action to bring these benefits home. One of the biggest issues facing the deployment of all this opportunity is a workforce shortage. The unemployment rate in the US is the lowest it’s been since 1969 , which is great for employees but also presents a challenge for new projects and slows down deployment. Simply put: we need more workers to install new renewable energy projects, hook up heat pumps, and work on the EV manufacturing lines.

The construction industry has struggled to attract workers for over a decade and is today facing a 650,000 worker shortage .

Fortunately, this reality is being recognized and has bipartisan momentum to take steps to alleviate the shortage: the issue is one of the main plenary sessions at the National Governors Association this week. And some places, like Detroit’s IBEW Local 58 have trained workers ready to go and are just waiting for the projects.

With the right policy support—already set in motion by the Inflation Reduction Act’s strong worker wage provisions and training opportunities—clean energy jobs will become more competitive, something that’s necessary for a just transition and our ability to deploy the clean energy we need to tackle climate change.

Clean Energy Transmission

Transmission is another hurdle . With all the new clean energy we aim to build, we need to be able to move the electricity it generates within and across state borders to lower electricity costs and truly transform our power system to prioritize cleaner, cheaper energy.

?Yet, as it stands, the United States lacks a plan to do this, and many are looking to the Federal Energy Regulatory Commission to make it easier to build electricity transmission. States can look to the U.S. Department of Energy’s Grid Deployment Office , which has new resources to help. State action and collaboration will be critical to get this right.

Preventive Forces at Work

And what’s the good and the bad without a bit of the ugly? The past year has unfortunately seen more of a decades-old problem: fossil fuel interests keep pushing state policy to hinder clean energy , even employing fake people and hired actors to do so. This is in clear opposition to public opinion which overwhelmingly supports renewable energy and carbon neutrality. (To be clear, RMI works with anyone in the energy industry legitimately working to find clean energy solutions and business models. We focus on solutions, but such bad faith actions cause harm to all of us, including the good people in these firms trying to do the right thing).

The Clean

While polluting industries still have a stronghold in many states, the economic tides have turned both locally and globally . It’s clear that any state investing in its future will focus on the clean energy economy, and RMI and Energy Innovation’s Energy Policy Simulator can help them see the jobs and health impacts of different energy policies . Clean energy is the sector where investment is booming.

While inflation is harming sectors across the economy and fossil fuel costs remain volatile, clean energy is one sector where the economics are improving instead of failing, and it’s eliminating pollution to create healthier communities.

Six weeks into 2023, it’s clear that states are going to have an outsized role in determining if and how we advance our clean energy future and make it accessible for everyone.

If states can get past these hurdles and take full advantage of historic federal legislation, the 46 weeks ahead will see a big shift in terms of our ability to truly reach our climate goals. ?

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