Minnesota vs. N. Dakota: Who’s more energy diverse?
At the end of June, North Dakota’s Governor and its two U.S. Senators were keynote participants at the Renewable Energy Action Summit in Bismarck. These policymakers touted North Dakota’s diverse and robust energy sector as a model for a potential national energy plan.
This seems a little ironic considering the gas and oil boom is generally the first thing that comes to mind when people think of North Dakota energy. In reality, North Dakota's policymakers have a point. The state has made great strides to diversify in the last decade. Remember, the state exports most of that gas and oil. Still, holding up Minnesota's northwest neighbors as a national model for energy diversification is a huge stretch.
When you boil it down, Minnesota has taken more decisive steps to develop a comprehensive energy policy that could serve as a national model. Here’s how the two states stack up in relevant categories.
Electricity Generation Diversity:
In 2001, North Dakota got a whopping 95.5% of the electricity it generated from coal. Minnesota got 69.1% of its total electricity generation from coal in that year but relied on nuclear power for much of the rest. In the next decade North Dakota saw a rapid expansion of wind power in the state but saw little diversification elsewhere. In Minnesota, we saw less reliance on coal and nuclear through the expansion of wind, natural gas and biomass sources.
Renewable Energy and Biofuel Policies:
While both North Dakota and Minnesota offer corporate, income, property and sales tax incentives for renewable energy projects, Minnesota offers a greater variety of incentives to encourage renewable energy growth, such as Community-Based Energy Development (C-BED) and various state loans and grants to foster renewable projects. Most notably, Minnesota has a mandated Renewable Portfolio Standard that requires utilities to get 25% of the electricity they sell to consumers from renewable sources by 2025 (30% by 2020 for Xcel Energy). North Dakota has only a stated goal of 10% by 2015 with no mandate attached. The state has already achieved this objective by generating over 14% of its electricity from wind in 2011.
Regarding biofuels, both states utilize a variety of measures to promote and support the ethanol and biofuel industries, but they differ in approach. North Dakota offers tax credits, grants and incentives for the production of ethanol and biofuels, and provides ethanol producers with counter-cyclical financial supplements to buffer the industry against hard times. Minnesota offers tax credits and grants, but also has mandates that require ethanol and biodiesel blends in all gasoline and diesel sold in the state. In addition, Minnesota requires state agencies to use ethanol and biodiesel vehicles when possible.
Energy Efficiency Efforts:
Utilities in both North Dakota and Minnesota offer rebates and incentives for energy efficient appliances, water heaters and light bulbs, quality insulation, thermal storage units and other means. State policy in Minnesota, however, has taken action to decouple utility profits from quantity of electricity produced, removing the disincentive for utilities to promote conservation to consumers. In addition, Minnesota requires utilities to develop Conservation Improvement Plans every three years and invest a portion of their gross operating revenues into those plans. North Dakota’s state policy does not make these efforts to encourage conservation and energy efficiency.
In addition, Minnesota has mandatory residential and commercial building energy codes that implement greater energy efficiency through a variety of building requirements. North Dakota has no statewide mandatory building energy codes, but rather leaves this to local jurisdictions.
Minnesota has no oil, natural gas or coal deposits to speak of. North Dakota has four lignite coal mines but does not extract coal on a scale similar to giants like Wyoming, West Virginia or Kentucky.
North Dakota has extracted modest levels of natural gas and oil, but recent technology improvements have resulted in an oil and gas boom in the state. The amount of natural gas it extracts every year has more than doubled since 2005, and the level of crude oil it extracts every year has increased five-fold in the same time.
Although this boom is a monetary windfall for the state, the process of extracting and transporting these resources comes with consequences for local communities, environments and air quality for neighboring states. It's difficult to say how Minnesota would react to similar energy resource wealth, but I would like to think we would manage safety, public health and environmental concerns with the utmost care.
Diverse and Robust?
North Dakota should be lauded for diversifying its electricity generation by expanding wind energy. But North Dakota could do more to encourage other forms of energy and reduce its total energy consumption by taking more aggressive state energy policy approaches similar to Minnesota, such as Renewable Portfolio Standards, energy efficiency efforts, mandatory building energy codes and required fuel blends to promote biofuels.
North Dakota’s oil and gas sector is certainly robust at the moment. But is this the result of good state policy or having the right natural resources at the right time? The oil and gas boom have definitely brought tax dollars to the state, but it also has impacts on local communities, environments and neighboring states. When it comes to a national energy plan, Minnesota’s would be a better, comprehensive and more progressive model.