Michigan 2050 Carbon Neutrality Goal Could Be An Economic Engine

Michigan’s new economywide 2050 carbon neutral proposal vaults it into the vanguard of United States climate ambition. It’s just the fourth such goal nationwide with interim targets of 28% carbon reductions compared to 2005 by 2025, 52% by 2030, and carbon neutrality by 2050, going net negative thereafter.

The MI Healthy Climate Plan draft aims for 50% renewable energy by 2030, closing all coal plants by 2035, building charging infrastructure to support 2 million electric vehicles (EVs) by 2030, and directing at least 40% of all investments toward vulnerable communities.

Michigan’s location and economy, along with its commitment to environmental justice, make this a trailblazing climate policy. As the first Midwestern state targeting carbon neutrality, this comprehensive plan could supercharge Michigan’s economy by creating massive local demand for its most iconic economic output – automobiles. And, because it’s home to both disadvantaged and coal-dependent communities, the state has a unique opportunity to deliver benefits from the clean energy transition to residents.

But to truly make a difference on climate, Michigan must avoid a rush to add gas infrastructure, while tackling building and industrial emissions. The carbon neutrality plan is still being finalized, but implementing comprehensive policy could establish a blueprint for a prosperous safe climate future for other manufacturing-reliant states to follow.

2050 carbon neutrality goal creates “significant opportunities”

In September 2020, Governor Gretchen Whitmer’s executive directive established the Council on Climate Solutions and Office of Climate and Energy within the Department of Environment, Great Lakes, and Energy (EGLE), tasking them with developing Michigan’s action plan to reach economywide carbon neutrality. The MI Healthy Climate Plan draft was shaped by input from hundreds of residents and businesses across the state, and EGLE anticipates finalizing the plan within a few months.

Michigan requires a unique decarbonization approach. It had the 10^th most energy-related carbon dioxide emissions of any state in 2020 according to the U.S. Energy Information Administration, and statewide CO₂ emissions primarily come from the power sector (27%), transportation (27%), and industry (22%). The MI Healthy Climate Plan prioritizes achieving carbon neutrality through a just transition, noting “we are at the front edge of a historic global transformation to a carbon neutral economy that will present us with significant opportunities if we act wisely and aggressively.”

Clean power and electric vehicles create economic upside through a just transition

In addition to cutting power sector emissions by closing all coal plants in 2035 and reaching 50% renewables in 2030, the plan directs all state facilities to use 100% in-state renewables by 2025 and reduce energy use in state facilities 40% by 2040.

These goals pair well with Michigan’s utilities. DTE Energy is targeting net-zero emissions by 2050, Consumers Energy is targeting zero coal by 2025 and net zero by 2040, and four other smaller utilities are targeting 80% to 100% emissions reductions by 2050.

Michigan’s coal transition aspirations match a statewide trend: Only one existing coal plant is slated to still be operational after 2028, while one other existing plant’s power purchase agreement with Consumers expires in 2025. Nearly every existing coal plant statewide costs more to operate than replacement with new local wind or solar, and the two outlier plants were only 14% to 15% cheaper than in-state renewables, meaning they will likely soon lose their cost competitiveness.

The plan’s transportation targets create economic upside for Michigan’s largest employer, the auto industry, which is already transitioning toward EVs. Installing charging infrastructure to support 2 million EVs by 2030 will pave the way to the state’s goal of 50% new light-duty vehicle and 30% of medium- and heavy-duty vehicle sales being electric by 2030, along with transitioning the state-owned fleet to 100% zero-emission vehicles (ZEVs) by 2045.

Michigan’s electrified transportation aspirations could pay dividends on Detroit’s EV investments as local demand spurs local sales. GM will only sell ZEVs by 2035, and just announced a $7 billion investment to expand EV production in the state. Ford is investing $30 billion in EVs by 2030, and the Chrysler brand will only sell EVs by 2028.

This clean energy transition will generate decades of investment, which the MI Healthy Climate Plan directs toward a just transition for all its citizens. Dedicating at least 40% of all climate investments toward vulnerable communities will ensure Michigan’s frontline communities suffering the worst climate change and pollution impacts will have resources to build a resilient future.

The plan also devotes funding to transition workers and communities economically dependent upon existing coal plants, while helping residents access clean energy careers through expanded workforce development, job training, and apprenticeship programs. Transportation alternatives are also provided via new public transit, “last mile” options, and biking infrastructure investments. 

But by design, the MI Healthy Climate Plan leaves many details undefined, and this is where it could become a truly transformative blueprint for climate action.

Retiring coal while avoiding a rush to gas

Strengthening statewide climate policy starts with electricity. Michigan has cut power sector emissions 14% since 2005, but estimates it must reduce the sector’s carbon intensity 80% by 2030 relative to 2005 to be on track for the 2050 carbon neutrality target. Fortunately, the state was at nearly 42% clean electricity in 2020 (32% nuclear and nearly 10% renewables), so if it keeps all existing nuclear online and hits 50% renewables, Michigan would be at 82% clean energy.

The state could also accelerate power sector decarbonization by helping utilities retire coal plants, swap capital investments from coal to renewables, and save operational costs through policies like coal plant securitization – which it is already doing with Consumers.

Michigan could also reduce its natural gas reliance, which currently provides 26% of statewide electricity, and avoid new gas investments. DTE and Consumers Energy provide 70% of statewide power supply, but both have pending long-term integrated resource plans which could continue this reliance – Consumers’ even proposes acquiring gas generation. State regulators could aid this process by requiring all-source procurement whenever utilities propose new generation resources.

Greenlink Analytics modeling forecasts adding additional in-state clean energy by 2050 while closing all gas generation facilities would drive $10 billion in new statewide investment, spur 50% energy sector job growth, and create $8 billion in consumer savings with $7.70 total benefits for every $1 spent.

Millions of electric vehicles need smart charging and consumer incentives

The MI Healthy Climate Plan’s approach to transportation sector emissions centers on EVs, and could strengthen Michigan’s economy.

Adding charging infrastructure to support 2 million EVs is transformative, but those chargers must be installed in the right locations. Polling shows the largest roadblock to increased EV sales is the unavailability of charging stations, so new chargers must be at least as convenient as existing fueling stations.

Michigan’s policymakers could meet this need for passenger vehicles by providing incentives to install chargers at single-family homes and multi-unit dwellings, requiring new housing be equipped to support EV charging, and prioritizing public charging stations in rural and underserved communities. Medium- and heavy-duty vehicle electrification demand could be met by prioritizing locations at existing truck stops, parking depots, and warehouses.

EV incentives should run at least through 2030 to match the state’s sales targets, be offered as point-of-sale rebates, and include dedicated funding for public and private fleet conversions. Rebates should be scaled to provide proportionally higher incentives for low- or medium-income households, extended to qualifying used EVs, and targeted toward communities most impacted by transportation pollution. Finally, Michigan could adopt the “Advanced Clean Trucks Rule” adopted by six other states, which could save fleet operators billions while cutting emissions.

Environmental mapping to ensure investments improve equity

Directing climate investments toward vulnerable communities and developing a clean energy workforce through job training and apprenticeship programs must be precisely targeted. The University of Michigan partnered with Michigan Environmental Justice Coalition to map EJ communities in a screening tool, and policymakers should institutionalize the tool’s use while providing funding for continued improvements. Requiring state programs to use it for directing investments will be invaluable in making and measuring progress toward equity goals.

Michigan could also emulate Illinois’ Climate and Equitable Jobs Act, which requires 100% clean electricity but prioritizes community-based renewable energy investments and inclusive workforce training programs targeting historically disadvantaged communities.

Michigan can’t overlook industrial and building sector emissions

Unfortunately, industrial emissions are omitted from the draft plan, but they compose more than a fifth of statewide CO₂ pollution, so enacting policies to decarbonize industry is critical to achieving Michigan’s goals. Industrial sector decarbonization policies can increase industrial energy efficiency, promote material efficiency and smart resource use, accelerate industrial electrification, and may encourage a shift to green hydrogen, bioenergy, and carbon capture.

Policy options include emissions intensity standards for materials like steel and cement similar to those enacted in Ontario, energy efficiency standards for industrial equipment, financial support for innovative clean production processes, and using Michigan’s green bank to provide financing for clean heavy industrial equipment. While the plan does target strengthening public and private-sector procurement programs to favor low-carbon and circular-economy products, much more is needed to decarbonize the state’s industrial sector.

The plan also overlooks building emissions, saying further analysis is needed, but at 12% of statewide emissions, this must be addressed to reach economywide carbon neutrality. Policymakers could cut building emissions, indoor air pollution, and consumer bills while encouraging electrification. Statewide building codes could require steadily increasing energy efficiency improvements for existing buildings or electric-ready construction supporting electrified appliances. Consumer incentives could also transition from gas to electric appliances when they are ready to be replaced, and encourage simultaneous weatherization or efficiency projects with electrification upgrades to support customer adoption. And, Michigan could ensure the market is ready for increased electrification while spurring job creation by promoting contractor training and incentives for electric appliance installation.

Carbon neutrality, cleaner air, stronger economy

Michigan’s policymakers deserve praise for taking the first step toward carbon neutrality – setting ambitious goals. Now comes the hard part of establishing the exact policy pathway to 2050.

If done right, the clean energy transition could generate massive economic growth, creating more jobs and a cleaner environment, and neighboring states could follow Michigan’s lead toward a safe climate future.