Report Navigating the Energy Transition: A Review of State Policies

Introduction

As the nation undergoes a significant transition both in the production and use of energy, states are taking the lead in enacting policies aimed at addressing the challenges and opportunities presented by this transition. These include policies designed to promote specific energy generation technologies, manage an increase in power demand as the transportation and building sectors increasingly electrify, and support communities and workers affected by these changing economic dynamics.

The energy transition involves a gradual but dramatic change in how the nation produces and consumes energy. In general, the components of the transition involve a shift to renewable and clean electricity generation to propel a shift to electrify and decarbonize many sectors of the economy. That transition has implications for every energy sector—from primary energy production to electricity generation, transmission and distribution, to how energy is consumed. Similarly, these changes have implications for industrial, commercial, and residential consumers, along with the energy workforce.

During this period of transition, industry and the public sector are working to ensure that the reliability, resilience and affordability of the energy system is not compromised. The transition also requires new thinking on the part of policymakers and regulators to manage both the opportunities and challenges these changes will have on energy systems.

One of the primary elements of the energy transition involves a shift in the electricity generation mix from generation powered primarily by fossil fuels to a growing share of renewable and other clean energy resources. That shift in generation resources presents opportunities to reduce greenhouse gas (GHG) emissions, improve local air quality, lower energy costs and create new jobs and economic development opportunities. It also creates a host of challenges, including:

• The need for major new investment in generation, transmission, distribution and end-user infrastructure.
• Potential challenges in maintaining affordability for energy consumers.
• Potential threats to the reliability and resilience of the system.
• And negative consequences for some workers and communities tied to fossil fuel resources.

While federal policy is playing a key role in driving the energy transition, states and state legislatures have been taking the lead in directing and managing many aspects of this transition. The scale of the transition also requires engagement and collaboration from every level and branch of government, including executive branch entities and regulatory bodies.

This publication will review how state legislatures are engaging to drive and manage various dimensions of the energy transition. All legislation referenced in this report has been enacted, unless otherwise noted.

Driving the Transition to Renewable and Clean Energy

In recent years, a number of states including Colorado, Oregon, North Carolina, Illinois, Rhode Island, Minnesota and Maryland have enacted broad clean energy or emissions reduction legislation. In 2021, Oregon HB 2021 required a 100% reduction of carbon emissions by 2040, North Carolina HB 951 set a target to reduce emissions 70% by 2030, and Illinois (SB 2408) and Rhode Island (H 5445) each enacted new requirements to reach net-zero emissions by 2050. In 2022, the trend in seeking emissions reductions continued. California enacted AB 1279, setting a new target for the state to reduce statewide GHG emissions by 85% from 1990 levels by 2045. Maryland SB 528 set a target of 2031 to reduce GHG emissions by 60% compared to a 2006 baseline and to reach net-zero emissions by 2045.

In addition to emissions reduction legislation, one commonly used state policy tool playing a key role in driving the energy transition has been the renewable portfolio standard (RPS), which requires utilities under state jurisdiction to procure a certain amount of electricity from qualifying renewable resources by a certain date. However, since 2017, a growing number of states have increased their RPS requirements and expanded the types of resources to include a wider array of carbon-free or low-carbon resources, such as nuclear power or fossil fuel-fired generation with carbon capture and sequestration (CCS) technologies. These policies—all of which maintain a strong RPS—have been classified as clean energy standards (CES).

Thirty states, Washington, D.C., and two territories have active renewable or clean energy requirements, while an additional three states and one territory have set voluntary renewable energy goals. Of those, at least nine states have established CES policies that work in tandem with the state’s RPS requirements. At least 11 states, two territories and the District of Columbia have increased their RPS or CES standards to 100% of retail sales with deadlines ranging from 2030 to 2050, while another three states have increased their standards to 50% or greater.

In 2022, Rhode Island enacted HB 7277A to adopt annual increases in the state’s Renewable Energy Standard and requiring that 100% of Rhode Island’s electricity be offset by renewable production by 2033. In 2023, Minnesota enacted HB 7, which establishes a new CES requirement that utilities in the state must get 100% of their electricity from carbon-free sources by 2040.

Emissions reduction targets and RPS policies have driven broad changes in electricity generation. State legislatures have also been adopting policies focused specifically on supporting, promoting, or regulating specific generation technologies including wind, solar, geothermal and other renewable and clean electricity generation technologies.

As renewable energy deployment expands, siting of those facilities has become an important topic for state legislatures. In recent years, Montana SB 63 authorized the state land board to lease state lands for wind and solar development. Multiple states also passed legislation concerning the siting of renewable energy facilities on farmland. New Jersey enacted AB 5434, encouraging the dual use of farmland and solar installations by establishing a pilot program and allowing certain dual-use property to be assessed solely as farmland under certain conditions. By contrast, Maine enacted SB 206, which convenes a working group to discourage the use of high-value agricultural land for siting solar arrays and instead looks to marginal-value land for those facilities.

State legislatures are also considering the need to ensure proper decommissioning and recycling of renewable energy facilities and infrastructure to avoid negative environmental impacts of growing development. Hawaii HB 1333 commissioned a study to determine best practices for the recycling and disposal of solar panels. Washington enacted HB 1393, which postponed the state’s original solar panel recycling and decommissioning requirements as the state looks to establish a more comprehensive program. Conversely, Maine enacted SB 113, establishing decommissioning requirements for solar facilities, including the submittal of a decommissioning plan for all new solar developments. Similarly, Texas SB 760 set parameters for the removal and decommissioning of solar power facilities. As renewable production continues to expand, appropriately managing that development, including end-of-life considerations, will continue to spur legislative action.

In 2022 offshore wind took on new focus following an announcement from the federal departments of Energy, Interior, and Commerce of a national goal to deploy 30 gigawatts (GW) of offshore wind by 2030. State legislatures have been exploring opportunities to take advantage of this initiative and ensure that offshore wind development serves state priorities. For example, in 2022 Louisiana enacted HB 165 which would allow offshore wind development in Louisiana state waters for the first time. This action in Louisiana illustrates both the challenges and opportunities of the transition. The state has long benefited from fossil fuel production through state revenues, workforce and economic development benefits. HB 165 includes a requirement that state offshore wind regulations include lease and royalty terms. This highlights the need to replace state revenue and economic activity associated with fossil fuel production. The expansion of renewable energy production offers, at least in part, an opportunity to provide new state revenue and economic development opportunities.

Also related to offshore wind, recent legislation in New Hampshire highlights a role for states in managing the potentially negative impacts of new renewable generation projects on existing industries. New Hampshire SB 268 requires the state’s PUC to meet certain requirements in the approval of power purchase agreements for offshore wind development, including mitigating the impacts on commercial and recreational fishing, an existing economic sector that may be threatened by new energy infrastructure.

One of the opportunities presented by the energy transition involves new investment in communities that may not have experienced the benefits associated with previous generations of investment in energy infrastructure. A number of states have identified community solar as an opportunity to drive the economic benefits of the transition to previously underserved communities.

Massachusetts’ community solar program incentivizes community solar access for low-income customers by providing “adders” to the base rates that utilities pay for electricity. Under the Solar Massachusetts Renewable Target (SMART) program, utilities in the state must purchase a certain amount of their electricity from solar facilities developed under this program, including community solar facilities. To incentivize building community solar facilities in low-income areas, the state has established “adders” on top of the base SMART rate that provide developers with additional financial compensation on top of the base SMART rate for solar facilities with certain characteristics. For instance, a community solar facility in a low-income area can sell its electricity at a rate 6 cents higher than the base SMART rate. Similarly Virginia’s HB 573 established a low-income community solar pilot program that requires each electric utility participating in the state’s community solar program to locate at least one generation facility in a low-income community.

The combination of new state emissions reduction targets, policies to support renewable generation and increases in the stringency of state RPS requirements constitute a major driver in the transition from fossil fuel-based to renewable and clean electricity. The examples above also illustrate how state legislatures have been exploring policies to both realize the benefits and manage the potential negative impacts of this transition.

Preserving Existing Industries

While many states are aggressively driving the clean energy transition, other states with communities, workers and economies tied primarily to the fossil fuel industry are grappling with the implications of how the movement toward clean energy will affect them.

In recent years, a handful of states enacted policies aimed at preserving coal-fired power plants, along with the associated jobs, tax base and other economic contributions. North Dakota enacted measures providing the coal industry with exemptions to certain taxes (HB 1412), limiting state regulation of coal-fired power plants (SB 2237) and providing for a study on lignite coal industry insurance (SB 2287). North Dakota also encouraged research and development of technologies to reduce carbon emissions from coal-fired plants through a Clean Sustainable Energy Fund (HB 1452). Arkansas enacted HB 1665, which encourages the state PUC to promote the continued use of existing generation through the end of its useful life. Finally, Wyoming HB 166 creates a presumption against the retirement of coal-and natural gas-fired generation, which utilities must rebut to retire such generating units. The new law also eliminates cost-recovery for new electric generation intended to replace retired coal- or gas-fired generation.

One of the concerns associated with the transition away from fossil fuel generation involves the financial consequences for utilities that own assets that may be retired earlier than originally planned. North Carolina’s HB 951 requires the state’s major electric utilities to submit plans to the state public utilities commission (PUC) outlining how they will reduce emissions and directs the PUC to undertake a rulemaking regarding the securitization of costs associated with early retirement of coal-fired electric generating facilities that would allow utilities to securitize up to 50% of the value of those facilities. Securitization has become a commonly discussed tool to insulate utilities and ratepayers from the economic consequences of early retirements of fossil fuel generation assets. Since 2019, at least six states—Colorado, Indiana, Kansas, Montana, New Mexico and North Carolina—have enacted legislation enabling utilities to securitize assets to facilitate the early retirement of coal-fired power plants.

In addition to taking action to preserve the economic benefits of coal generation, some states are responding to measures intended to electrify building energy use that has traditionally been served by natural gas. In 2021, California AB 137 directed the state Energy Commission to develop an initiative to support new, all-electric residential construction. Another bill, California SB 68, required the Energy Commission to disseminate guidance and best practices to overcome barriers to building electrification, including model electrification plans and permit applications to streamline the process. New Mexico’s HB 15 provided additional tax bonuses for fully-electric construction, in addition to those mentioned under energy efficiency.

In addition, a number of localities have pursued bans on the use of natural gas in new buildings. For example, in 2019, Berkeley, Calif., as part of its emissions reduction policies, became the first local government to prohibit the use of natural gas in new buildings. Since then, several local governments across the country have moved to enact similar policies, including New York City banning natural gas hook-ups in new buildings in 2021.These policies most often ban natural gas hookups in new construction for multi-dwelling apartment buildings and commercial buildings, requiring buildings to electrify heating, cooking and other appliances. While the majority of these policies have been enacted by local governments, at least two states have taken similar action in the past couple of years. In 2022, Massachusetts enacted HB 4515, which among other things, allowed up to 10 local governments to prohibit the use of natural gas in new buildings. In 2023, New York enacted the first statewide ban on gas hookups in new construction as part of its budget bill.

In response, some state legislatures moved to preempt this type of action by municipal governments, arguing they unfairly burden low-and-middle-income residents by limiting access to cheaper resources. Four states—Arizona, Louisiana, Oklahoma and Tennessee—enacted laws in 2020 preempting local governments from restricting the use of natural gas and other fuels in new construction. In 2021, another 17 states passed this type of legislation, often referred to as “fuel choice” laws.

A recent federal court decision only complicated the issue. In April 2023, the 9th U.S. Circuit Court of Appeals ruled that Berkeley’s gas ban was preempted by the federal Energy Policy and Conservation Act, which prohibits state and local restrictions on gas appliances. The three-judge panel ruled that prohibiting gas piping ultimately established a restriction on gas appliances. While the ruling stands, the city of Berkeley may challenge the decision.

These recent state actions highlight the complexity of the energy transition and the diversity of state energy policy priorities. State legislatures will continue to devise ways to manage the transition in ways that reflect their unique state circumstances and best serve their diverse populations.

Enabling a Diverse Energy Economy

As the nation transitions to a low-carbon energy system, a number of states are exploring ways to maintain or create viable economic opportunities associated with new clean energy technologies and business models. This includes policies to support existing nuclear power generation, promote the development of advanced nuclear power projects, and spur investments in hydrogen and carbon capture and sequestration (CCS). Often these policies are attempts to support workers and communities that are, or are projected to, experience negative economic impacts from the transition away from fossil fuel production.

To meet clean energy goals, support workers, and maintain the reliability of the energy system, at least five states have enacted policies in recent years to keep existing nuclear power plants operating. The most common policy, known as zero emissions credits (ZECs), provides direct payment for every megawatt hour of carbon-free power generated by qualifying nuclear power plants. The Illinois legislature was the first to enact a ZECs policy in 2016 and acted again in 2021 to expand its support as a part of SB 2408. The intent of this policy was to protect both the carbon-free electricity produced by these plants and the jobs associated with them.

State policy to preserve the existing nuclear fleet is complemented by recent federal action. The Infrastructure Investment and Jobs Act (IIJA) passed by Congress created the $6 billion Civil Nuclear Credit (CNC) Program to help maintain the country’s fleet of existing nuclear reactors. Subsequently, in September 2022 California enacted SB 846 authorizing a limited-term extension of the Diablo Canyon Power Plant’s license, structured to take advantage of the opportunity for federal support. The plant was scheduled to retire in 2025, but may now remain in operation until 2029 or beyond. In November 2022, the U.S. Department of Energy (DOE) announced that the first award under the new CNC program would be made to Pacific Gas & Electric (PG&E), Diablo Canyon’s owner. PG&E could receive approximately $1.1 billion in credits to extend the plant’s operation for five years.

However, preserving existing nuclear power plants is not the only area where states have identified nuclear as an important resource for the decarbonization and economic development during the energy transition. Other states see new, advanced nuclear technology as an opportunity to provide economic benefits to communities impacted by the transition away from fossil fuels. In particular, a number of states with economies tied to coal have enacted policies aiming to leverage the existing workforce and infrastructure to support a transition toward nuclear. In fact, the concept of coal-to-nuclear conversions—building advanced nuclear generation on the site of retiring or retired coal power plants—has gained steam in recent years. Recently, the DOE published a study exploring the potential challenges and benefits of coal-to-nuclear and concluded that 80% of nearly 400 retired and operating coal plants in the U.S. would be good candidates to host an advanced reactor facility.

Wyoming was the first state to enact a coal-to-nuclear policy in 2020; HB 74 targeted retired coal units for redevelopment through small modular reactors (SMRs). Similarly, the Montana legislature adopted SJR 3 to study the feasibility of replacing certain coal-fired units with advanced nuclear generation and enacted HB 273 to repeal a state law that required citizens to vote on the approval of any new nuclear power project in the state—a change that could make it easier to develop new nuclear facilities. Finally, in 2022 Indiana enacted SB 271, directing the state PUC to develop rules regarding the construction and operation of SMRs at retiring coal and natural gas facilities and offering financial incentives for public utilities to recover costs for the development of these facilities.

In addition to supporting nuclear power, in recent years a number of states have been active in passing legislation to support the development of CCS projects. Alabama SB 36 expanded the types of gases that can be stored in underground caverns to include carbon dioxide. Similarly, Indiana (HB 1209), Utah (HB 244), and West Virginia (HB 4491) created permitting and regulatory processes for underground carbon dioxide storage. As federal support for CCS continues, states are likely to continue taking action in this area. In many cases, state legislatures see CCS as an opportunity to support economic development in communities and regions historically reliant on fossil fuel production.

Another option for diversifying the energy mix is the production and use of hydrogen, which can be produced from a variety of resources, including natural gas, nuclear power, biomass and renewable generating resources like solar and wind. It can be used in electricity generation, to power vehicles, and in many other applications. State legislatures have taken a variety of actions recently to position their states to be leaders in the hydrogen economy. Many of these bills created study committees or task forces to study the opportunities associated with hydrogen. For example, Arizona SB 1396 established a hydrogen study committee to recommend legislation related to the production, distribution, and storage of hydrogen, while Hawaii SB 2283 commissioned a study of the potential for the production and use of renewable hydrogen. Similarly, Connecticut (HB 5200) and Illinois (SB 3613) established task forces to study hydrogen production and potential uses. With ongoing federal support for hydrogen and industry efforts to take advantage of the available tax credits, expect state legislatures to continue to consider policies related to the production and use of hydrogen.

State action in these areas is complemented by ongoing and new federal resources. The DOE has been funding research and development of carbon capture and storage (CCS) technologies and the IIJA appropriated more than $10 billion for carbon capture, direct air capture, and industrial emission reduction. The Inflation Reduction Act (IRA) subsequently increased the availability of the federal income tax credits available for domestic CCS projects (often referred to as “45Q credits”) and extended the deadline to begin construction on 45Q credit-eligible projects from 2026 to 2033. The IIJA also included funding for Regional Hydrogen Hub’s and Electrolysis and Clean Hydrogen Manufacturing and Recycling programs. The IRA then created a hydrogen production tax credit (PTC) and expanded an investment tax credit (ITC) to include hydrogen projects and hydrogen storage technology.

As the growth in renewable energy generation accelerates, the states cited above have explored supports for other energy sources in order to buffer the economic, social and technological challenges associated with the energy transition.

Electrifying Transportation

As the electricity generation mix transitions to no- and low-carbon sources, electrifying the transportation system represents a key tool to reduce GHG emissions and improve local air quality. While the federal government has enacted considerable new support in the form of resources for electric vehicle charging infrastructure and tax credits for the purchase of new and used vehicles, states continue to consider policies to both encourage transportation electrification and manage the impacts of that transition on transportation funding and the electricity generation, transmission, and distribution systems. As electric vehicle adoption expands, there has been a focus on expanding public EV charging infrastructure and increasing access for renters and those living in multi-unit dwellings. Continued interest also exists in mechanisms to collect road maintenance fees from EV owners to offset gas tax revenues that will be lost from increased vehicle fuel efficiency and growing EV adoption.

On the charging front, in recent years Kansas (HB 2145), North Dakota (SB 2091) and South Carolina (SB 304) exempted EV charging suppliers from regulation by the state PUC, allowing suppliers more flexibility to earn revenue from their equipment. Maryland (HB 110) prohibited apartments, condominium associations, and similar organizations from banning or unduly restricting EV charging installation, removing a hurdle for multi-unit dwelling owners. Other states have begun explicitly requiring builders or state agencies to include EV charging infrastructure in newly constructed buildings and parking facilities. At least nine states—including New Jersey, Oregon, Virginia, Washington, and Washington, D.C.—have passed laws directly requiring builders to include, or at least offer, EV charging equipment in new construction. Some of these states enacted or expanded new construction requirements. For example, Washington (HB 1287) and Oregon (HB 2180) enacted new laws requiring updates to the state building code that will require a certain percentage of parking at new buildings to be wired for EV charging.

As states anticipate the impacts of EV adoption on already-declining gas tax revenues, alternative methods of raising road maintenance revenue are being explored. Fourteen state or regional pilots have received federal grants to explore road use charge (RUC) or vehicle miles traveled (VMT) systems. California, Oklahoma, Oregon, Utah, Virginia, and Washington all enacted legislation in 2021 to establish or expand RUC programs and studies. At least seven states have implemented taxes on EV charging, typically on a cents-per-kilowatt-hour (kWh) basis. Among those, Oklahoma enacted HB 2234, which sets a new 3-cents-per-kWh tax on electricity used for EV charging at public charging stations. Nevada (SB 384) and Minnesota (SB 1602) recently considered but did not pass legislation that would have placed a kWh tax on electricity from both private and public charging equipment. Utah took a different approach in deciding to tax a percentage of the sale of electricity for EV charging when it enacted HB 301 in 2023. Starting in 2024, a new 12.5% tax will be added to the cost of electricity at commercial charging stations. At the same time, the state’s gas tax was lowered by 2 cents per gallon.  It is likely that more action could be seen in other states as lawmakers look for ways to address the expected decline in gas tax revenues and fill gaps in road infrastructure funding.

In addition to state action, the federal government has made a variety of new commitments to transportation electrification, many of which have spurred state responses. For example, the IIJA created a new Clean School Bus Program administered by the Environmental Protection Agency (EPA) that will provide $5 billion over five years to replace existing school buses with zero- and low-emission models. A number of states, including New York and Colorado, subsequently took legislative action to support the goal of electrifying the school bus fleet. Enacted in 2022, Colorado SB 193 created a $65 million state grant program for electric school buses to complement the new federal program. New York’s 2022 State Budget included a requirement that all new school bus purchases be zero emission by 2027 and that all buses in operation be electric by 2035. The budget also included $500 million to help districts meet these requirements.

The concurrent transition in how the nation generates electricity and how it is used, particularly the shift from fossil fuels to electricity as a source of propulsion in vehicles, highlight both the challenges and opportunities inherent in this transition. State legislatures are playing a key role both in encouraging the electrification of transportation and addressing the implications of that transition.

Supporting the Energy Workforce

As the U.S. navigates the clean energy transition, issues facing the energy workforce have been at the forefront. The two primary issues are the displacement of workers in fossil fuel industries and the development of a clean energy workforce.

State legislatures have been active incorporating supports to develop the clean energy workforce in larger economic development bills. For example, New Jersey AB 4 is a general economic recovery bill that provides tax credits and other incentives for renewable energy developments that create jobs for the state’s energy workforce. Similarly, California SB 7 allows the governor to fast-track development projects, including renewable energy generation and clean energy manufacturing projects. While the law does not explicitly address workforce transition issues, it is designed to streamline and promote jobs and training programs in the clean energy industry.

Some states also enacted legislation specifically targeted at the development of a clean energy workforce. Most notably, Illinois’ SB 2408 included numerous provisions designed to help displaced fossil fuel workers and establish a clean energy workforce for the state. The new law creates the Energy Transition Assistance Fund and allocates funds to support state workforce development and transition. Additionally, the act creates a Clean Jobs Workforce Network Hub program, which establishes 13 hub sites aimed at leveraging community-based organizations to provide resources, information and support for workers to enter the clean energy sector. The law also includes a section referred to as the Displaced Energy Workers Bill of Rights. It includes benefits for displaced workers, such as advanced notice of plant or mine closures, education for displaced workers on available assistance programs and resources, consultation with workers on employment and educational opportunities, and training, career counseling, financial, and retirement planning services.

Colorado is another state seeking to support displaced workers, enacting HB 1290 to provide additional funding to the state’s Office of Just Transition. The bill provided $8 million in grants and an additional $7 million for new coal transition worker assistance programs. Colorado also enacted HB 1149 which is aimed at promoting energy sector career pathways in higher education. Similarly, California SB 162 established the Community Economic Resilience Fund to provide grants aimed at resolving economic and workforce issues resulting from the transition to carbon neutrality. These economic development grants will provide relief to displaced energy workers by funding training programs, supporting regional workforce initiatives, and promoting growth and innovation in key industries.

As the energy sector grapples with the ongoing transition, state legislatures are likely to continue to look for ways to cushion the impact on existing workers and provide pathways into new energy jobs.

Protecting Customers

The clean energy transition also has implications for energy consumers, particularly consumers who may already be struggling to bear the “energy burden.” Studies have shown that communities of color and low-income families pay a significantly higher share of their income in energy costs. National data show that on average, low-income households pay nearly 9% of their income in energy costs—three times more than non-low-income households. An estimated 25% of households have a high energy burden, considered to be above 6% of household income. An additional 13% of American households have a severe energy burden of paying more than 10% of their income on energy.

State legislatures are cognizant that state policies driving the transition to clean energy and industry investments to meet those state policy requirements may increase costs for customers. Many state legislatures are exploring ways to protect customers, particularly low-income customers, from increasing costs associated with the energy transition.

The COVID-19 pandemic and the associated economic disruption highlighted the risks faced by many customers who may struggle to manage their energy costs, particularly if they face loss in employment or income. A U.S. Census Household Pulse Survey in July 2021 found over 80 million Americans were having trouble paying bills like rent and utilities during the pandemic. In 2020 and 2021, many state legislatures considered establishing and extending utility disconnection moratoriums to protect individuals and families from losing access to essential services during hardships. While many of these moratoria have been allowed to expire as state economies have recovered from the pandemic, some states considered whether certain protections for vulnerable populations should be made permanent. For example, Washington HB 1490, which was considered in 2021 and 2022, would have permanently extended the state’s moratorium on disconnections for low-income and disabled residents.

Some state legislatures have expanded access and funding for payment assistance programs to reduce customers’ energy burden, while others have required utilities to offer repayment plans to customers facing financial hardship.

Several states recently enacted new utility bill payment assistance programs, such as Percentage of Income Payment Plans (PIPP), to insulate low-income customers from rising energy costs. These plans allow low-to-moderate income customers to pay a fixed percentage of their income in monthly energy or utility costs rather than being charged at a retail rate. Rhode Island’s HB 5809 establishes that customers below 150% of the federal poverty level who receive assistance through LIHEAP will not pay more than 4% of their annual gross household income for electricity. Illinois enacted similar legislation, SB 265, establishing that customers will not be required to pay more than 6% of their income on gas and electric utility bills. Oregon HB 2739, which caps monthly utility payments for low-income customers, required utilities to collect fees to fund low-income assistance programs.

Virginia enacted SB 851 to promote a clean energy transition that benefits low-income and historically economically disadvantaged communities by including an expansion of the state’s PIPP to reduce energy costs. Notably, the bill also requires the state PUC to ensure the development of new or expanding energy facilities does not have a disproportionate impact on historically economically disadvantaged communities. Additionally, the commission was directed to consider whether the placement of renewable energy facilities provides benefits to those communities and displaced fossil fuel workers. Colorado’s HB 1105 bolstered the state’s low-income utility payment assistance programs. Two other Colorado bills—SB 272 and SB 1266—consider how the state’s clean energy transition would impact “disproportionally impacted communities” and bring energy and environmental justice issues to the forefront.

The growing awareness of the distributional impacts of the energy transition has led states to attempt to address these issues by weaving equity considerations into broader energy policies. For example, in 2019, New York enacted SB 6599, which revamped the state’s RPS to ensure disadvantaged communities receive 40% of the overall benefits of spending on clean energy programs and projects as part of the energy transition. In 2021, Oregon’s emissions standards legislation (HB 2021) tasked the Community Renewable Investment Program with providing direct benefits to disadvantaged communities in the form of energy resilience, economic development, energy cost savings and involvement in the siting, planning, and evaluation of community renewable projects. Washington SB 5126 established the state’s emissions trading market and directed proceeds from the auction of emissions allowances toward environmental justice communities and tribal nations. The Washington Environmental Justice Council is charged with distributing the funds and must ensure that 35% of investments are made in ways that benefit the most vulnerable communities.

Similarly, the federal government has placed a new emphasis on energy justice as part of the energy transition. President Biden’s Justice40 Initiative  promises to deliver at least 40% of the overall benefits from federal investments in climate and clean energy to disadvantaged communities. In addition, the administration has created the Interagency Working Group on Coal & Power Plant Communities & Economic Revitalization, focused on delivering federal resources to help revitalize communities with strong economic ties to fossil fuel industries that have been affected by the energy transition.

As the energy transition evolves, it is likely that state legislatures will continue to explore policies that both broaden the benefits of the transition and protect customers from the negative effects. For additional information on state legislative activity related to energy justice, see NCSL’s publication Energy Justice and the Energy Transition.

Conclusion

The energy transition is a broad, complex, multifaceted and long-term evolution that will affect all aspects of energy systems in the U.S. Navigating that transition in a way that meets environmental goals, maintains access to and affordability of energy, helps workers and communities adapt to changes, and promotes the reliability and resilience of the system will require concerted and ongoing effort by all levels and branches of government in collaboration with industry and consumer advocates. State legislatures have a key role in that process, both directing the pace and scope of the transition, and managing the effects on the environment, the economy, and the public.