Federal freeze on energy and climate funding causing concern, confusion in Minnesota
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More than $250 million in federal funds promised to the Minnesota Department of Commerce for energy efficiency, home weatherization and other clean energy related programs has been frozen by the Trump administration for the past several weeks.
It’s part of billions of dollars in grants for climate and energy programs nationwide that came out of the bipartisan infrastructure law, passed in 2021, and the Inflation Reduction Act, approved the following year, that the federal government has paused for review.
Some of that money has been released since federal judges ordered the funding to be unfrozen. But state and local officials say a lack of communication has led to confusion and uncertainty.
“We’re hoping that these things calm down, and we get to a point where these contracts are just flowing because they’re doing really important things,” said Pete Wyckoff, deputy commissioner of energy resources at the Minnesota Department of Commerce.
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Among the work being impacted is the department’s Weatherization Assistance Program, which provides free home energy upgrades to lower and middle income homeowners. About $76 million dollars for the program, scheduled to be disbursed over the next seven years, is on hold.
The money pays for home energy-saving and safety improvements including insulation, furnace maintenance, heating and exhaust systems, windows, and new smoke and carbon monoxide detectors.
“We’ve been given no explanation for why the money stopped flowing, but it is something that has real consequences for Minnesotans across the state, and from our point of view, represents federal government messing with what they’re obligated to do,” Wyckoff said.
The state partners with dozens of nonprofits around the state to manage the work. Those groups first send energy auditors to evaluate homes, and then hire contractors to do the work.
One of those organizations is Three Rivers Community Action in Rochester. Courtney Dugstad, chief operating officer, said $150,000 in federal funding to the organization is currently frozen. That’s enough to upgrade about ten homes.
“We’re talking about households that have your grandmother in them. We’re talking about households with young children that are maybe living without adequate heat or unsafe environments,” said Dugstad.
Another $150 million has been frozen for programs designed to give rebates of up to $8,000 to homeowners who make home efficiency upgrades, and rebates of up to $14,000 for homeowners who install heat pumps, new electric panels, wiring and electric appliances.
In response to a request for comment, a spokesperson for the Department of Energy said only that the agency “is complying with recent court orders related to funding.”
Wyckoff testified on the funding freeze at a recent state senate committee hearing, where he told legislators the commerce department is “trying to bring in millions, if not billions of federal funding” to help the state transition to a carbon-free electric system, which is required by 2040 under a recently passed state law.
He said more than $2 billion in federal funding that has already been allocated, but hasn’t been frozen, is also at risk. That includes a massive renewable energy grant to rural electric cooperatives in the state, and a nearly $1 billion grant to create a Midwest hydrogen hub to be located partly in Minnesota.
Several Republican lawmakers expressed support for the funding freeze, citing recent instances of fraud, including the Feeding our Future scandal, as evidence that public funding needs to be scrutinized.
“We’re wasting a lot of money, and we need to clean that up,” said Sen. Steve Green, R-Fosston.
Sen. Jason Rarick, R-Pine City, acknowledged it may be unprecedented for the federal government to freeze funding already approved.
“I think the fraud that we’ve seen in Minnesota over the last few years is unprecedented as well,” Rarick said. “So if any state is going to have questions as to why we would put a pause on funding, Minnesota should not be one of those states.”
Additional climate-related funding from the U.S. Environmental Protection Agency remains mired in uncertainty.
Last year the agency announced nearly $200 million in grants to Minnesota for so-called “Climate Pollution Reduction Grants.”
That money was also frozen by the Trump administration. State officials heard last week the funding would be released. But the uncertainty is causing heartburn for organizations banking on the funds.
Ramsey/Washington Recycling & Energy (R&E), which processes waste for the two metro area counties, received a $10 million grant through the program to build a regional anaerobic digestion facility. The project is designed to process up to 75,000 tons of food scraps and other organic waste every year.
That waste, when left to decompose in landfills, is a large generator of methane, a potent greenhouse gas and climate change contributor. The project will instead convert that waste into a renewable natural gas and biochar, a charcoal-like product that stores carbon and filters water.
With that promised federal funding, R&E entered into a 20-year contract with a private firm to build the nearly $150 million facility.
But the agency won’t receive the $10 million in federal funding until the project is completed, which is scheduled for 2027. And executive director Trista Martinson said she’s uncertain the money will still be there by then.
“There’s still a lot of unknowns and we're all really unsure of what happens next,” said Martinson. “Typically, if you were awarded federal funds, that was something you could count on. Now we’re in an era that it’s undependable.”
