On November 28, 2023, Governor Gretchen Whitmer signed a clean energy legislative package, which included a 100 percent clean energy standard by 2040, into law. The companion legislation included a package that will modernize Michigan’s wind and solar siting process, while establishing essential community benefits agreements, and a bill to create a community and worker economic transition office within the state Department of Labor and Economic Opportunity (LEO).
Michiganders are reaping the benefits of a clean energy transition: Since the passage of the Inflation Reduction Act (IRA) in August 2022, more than $20 billion in federal investments has flowed from the federal government into the local economy and nearly 16,000 new jobs have been created that will help reinvest in the state’s talented workforce.
Federal incentives and tax credits to build out new clean technology and supply chains have created the opportunities and tools for Michigan families to find better-paying union jobs and build healthier, better lives—and this is only the tip of the iceberg.
There are more opportunities and money on the table to take advantage of—$7.8 billion more by 2050, to be exact. To fully unleash these benefits, Michigan first needs to pass a package of climate and clean energy policies this fall. If it can successfully do so, the state would more than double the amount of investment it could secure from the IRA. These benefits are ongoing, with most of this additional investment within the next ten years.
New independent modeling from 5 Lakes Energy shows that the difference between Michigan taking full advantage of these billions of dollars of federal investments and letting this opportunity slip away comes down to the strength of Michigan’s state-level climate and clean energy policies. The policies 5 Lakes Energy analyzed closely resemble the legislative package currently being considered in the legislature. This package is also one that Governor Whitmer has identified as a top priority for the legislature when it reconvenes in the fall and goes hand-in-hand with the goals she articulated in her MI Healthy Climate Plan.
This package includes a bill that would establish a 100 percent carbon-free electricity standard by 2035, an increased energy waste reduction target, and allow the Michigan Public Service Commission (MPSC) the ability to regulate utilities to ensure energy affordability, reliability, and climate resilience.
Securing this currently pending climate and energy legislation—in tandem with investments in the IRA and the Infrastructure Investment and Jobs Act (IIJA)—will also mean more affordable energy bills and public health benefits and allow Michigan to achieve carbon neutrality by 2050.
Michigan leadership has already taken the first step by prioritizing these critical clean energy investments. Now there’s a narrow window of less than a year to seize the full benefits of federal investments, health benefits, and energy savings.
The new 5 Lakes Energy modeling analyzes scenarios that would achieve Michigan’s 52 percent carbon pollution reductions by 2030 goal and carbon neutrality by 2050 goal, also referred to as the “Michigan Clean Energy Framework.” This framework resembles state legislation recently introduced and currently being considered by state lawmakers and hinges upon the following policies:
1. Clean energy: Passing House Bill 4759 and Senate Bill 271 would transition Michigan’s electricity generation energy mix to 60 percent renewable energy by 2030 and 100 percent by 2035.
2. Energy waste reduction: Passing House Bill 4761 and Senate Bill 273 would increase Michigan’s energy waste reduction targets to 2 percent electric efficiency and 1.5 percent gas efficiency annually.
3. Transportation electrification: Michigan needs to increase vehicle electrification across the state in line with federal clean car rules. Increased electric vehicle (EV) use is also supported by state and federal incentives like electric vehicle tax credits, charging infrastructure funding, and EV manufacturing tax credits.
4. Building electrification: Passing Senate Bill 274 would steadily increase building electrification by facilitating the full electrification of new sales of appliances, heating and cooling systems, and other building systems by 2040.
5. Industrial decarbonization: By using IRA tax credits and by passing Governor Whitmer’s proposed Onshoring Clean Energy Supply Chain Tax Credit, Michigan can give companies the tools they need to decarbonize major industries across the state.
Passing the climate packages in the Michigan Senate and House would dramatically increase the uptake of clean energy incentives in the IRA, and those investments don’t just mean ambiguous benefits in some far-off future. Investing in clean energy is a win-win-win, starting now: a more reliable grid, lower costs for customers, and better public health.
To secure these full benefits, any legislation passed must include a 100 percent clean electricity standard and increased energy waste reduction targets, along with giving MPSC the ability to ensure utilities are delivering clean, reliable, and affordable energy.
1. Cut energy costs for families by an average of $145 per year. Savings could increase to as much as $1,196 for homes that are energy efficient and fully electrify their appliances, heating and cooling, and transportation.
Transforming Michigan’s economy to run on reliable, clean energy means a safer climate future and energy savings for families. The clean energy and electrification policies currently pending in Michigan’s legislature would help cut spending on transportation fuels and fossil gas, along with keeping electricity rates stable through increased use of lower-cost renewable sources. The data shows that hitting ambitious carbon pollution reduction targets and keeping energy affordable for the average household go hand-in-hand.
2. Gain billions of dollars in federal investments
By 2050, state policies through the Michigan Clean Energy Framework, in tandem with the IRA, can bring in an additional $7.8 billion in tax credits, grants, and rebates, as Michigan builds out its clean energy economy. And if Michigan stays the course, it pays off—literally—in the long term.
By 2050, Michigan will more than double the funding it brings in from the IRA if it implements these state-level policies in tandem. State policies increase the benefits of federal funding because:
This would mean massive growth opportunities for Michiganders and local businesses—on top of cleaner and more efficient homes, buildings, and cars.
3. Save hundreds of lives and billions in public healthcare costs
The 5 Lakes analysis shows that implementing these policies means Michigan can avoid nearly 1,000 premature deaths and realize an estimated $8.3 billion in public health savings. When people live in safer homes, drive less-polluting cars, and breathe cleaner air, they live longer and healthier lives. Polluting power plants and industrial processes are the main contributors to Detroit’s air pollution, which is rated as one of the worst in the U.S. for year-round particle pollution. State and federal policies that speed up the transition to clean sources of energy mean healthier and longer lives for Michiganders.
4. Create thousands of jobs
Michigan is known for its proud manufacturing history and strong union labor workforce. Now, policies like the IRA’s climate investments are spurring good, family-sustaining jobs, allowing workers in the Midwest and beyond to create sustainable careers in clean energy.
The bills currently in the legislature would contribute to an economic boom in Michigan projected to result in historic federal and private sector investment and nearly 160,000 additional jobs. And because of recent actions by Governor Whitmer to support a unionized workforce and strengthen workers’ rights, we must ensure these jobs are good-paying and family-supporting.
This includes jobs created due to the demand to build and clean energy technology, jobs to produce the goods needed by those workers, and jobs resulting from increased economic activity, like childcare for workers or employment at local restaurants where workers may stop for lunch. The IRA’s significant investments offer states a once-in-a-generation level of resources to set and implement the policies needed to reach climate goals.
The more Michigan takes advantage of the IRA’s tax credits and grants, the more the state’s economy will grow. And this isn’t just the numbers speaking—a selection of Michigan clean energy businesses surveyed in 5 Lakes Energy analysis already expect that the combination of federal and state policies will mean more hiring, more jobs, and more growth—all of which will boost the local economy.
This is Michigan’s moment to act. With unprecedented federal funding, a motivated state legislature advancing an ambitious clean energy package, a governor committed to tackling climate change head-on, and billions of dollars on the table, there hasn’t been a better time for Michigan to move forward with its salvo of ambitious state-level climate policy.
Now, timing and urgency are everything. Delaying legislative action comes with a huge price tag: Michigan would lose out on $1 billion in federal investments if it fails to pass these state policies by the end of 2023.
And this doesn’t just hurt the overall dollars going into the economy.
It hurts Michiganders. Without state policy to fix Michigan’s power system, families will continue to face higher energy costs and the grid will lack the upgrades it needs to address reliability issues—a problem that hits close to home after an ice storm wreaked havoc across the state earlier this year.
Democratic leadership in Michigan was voted in to act on climate. Now that they hold the majority, it's their moment to do what their constituents put them in power to do and deliver on policies that are popular and effective.
Michigan wants to build a clean energy future. Governor Whitmer recently said passing climate legislation is her top priority when the legislature reconvenes in September, and this modeling shows why. Now, it’s just a matter of getting it done.
