The nation's governors typically give a State of the State address before their state legislatures at the start of the legislative session, highlighting the state's fiscal condition, the prior year's accomplishments and successes, upcoming priorities for the new year, and broad policy proposals. In addition, several governors outlined specific energy and water policy initiatives, while others provided a general energy policy direction.
The Take
Out of the 44 2022 State of the State addresses reviewed, energy and environmental topics were mentioned, however briefly, by 34 governors. Most of them did so in the context of the transition to cleaner fuel sources, EVs and an effort to embrace new energy technologies. Several governors expressed concerns about the ongoing "climate crisis" and the reliability of the electric grid.
An examination of 2022 gubernatorial priorities and legislative proposals on the topic of energy reflects a groundswell of momentum toward renewable energy resources, EVs and broader adoption of updated, efficient interconnection infrastructure to support them. However, regional politics and economic factors tend to shape differences in energy policymaking on a wide range of issues, which is still the case on the topic of renewable energy and a transition away from fossil fuels.
Using this year's addresses as a starting point, Regulatory Research Associates, a group within S&P Global Commodity Insights, examined the energy-related initiatives and goals laid out by U.S. governors, layering in state legislative activity. The results show a sharp focus on increasing state targets for EV implementation, expanding EV charging infrastructure, and establishing EV rebates. Other energy-related themes in 2022 include the use of renewable energy for myriad reasons, not limited to climate change impacts: an increasing number of governors cited economic benefits such as job growth and the ability to attract new companies to do business in their respective states.
Electric vehicles
Comments from a large number of governors outlining their priorities for the year alluded to the potential for a ramp-up in activity on EVs and EV infrastructure in the near term. While many of these addresses were given before the price of gasoline skyrocketed to above-average levels, plenty of governors expressed great interest in EVs, with some governors touting new EV job growth and investments in their respective states.
In his speech, Arkansas Gov. Asa Hutchinson spoke of the state's progress in the industry, which included "[recruiting] the headquarters of an EV manufacturing company, Canoo" and Standard Lithium "piloting the production of a critical element in the supply chain for electric vehicles" in south Arkansas.
Hutchinson also mentioned the creation of the Arkansas Council on Future Mobility, which became official on Feb. 22 through Executive Order 22-06, and is tasked with "identifying state laws and regulations that create a barrier to the development and enhancement of electrification, autonomous vehicles, drone delivery, and advanced air mobility in Arkansas." In addition, the council is to examine workforce training, accessing federal funding and is directed to give the governor a final report on its findings and recommendations by Nov. 30. The council comprises 20 appointed members from various state agencies, the private sector and academia.
Kentucky Gov. Andy Beshear stated that "Kentucky is leading on electric vehicles" and highlighted several companies investing in the state, including Ford Motor Co. and its partner, SK Innovation Co. Ltd., which are planning to build the nation's largest EV battery plants in Kentucky. The two companies announced the plan to create a technologically advanced battery manufacturing campus back in September and are expected to begin production in 2025. The companies plan to invest $5.8 billion in building the new manufacturing plant and expect to create approximately 5,000 new jobs within the state.
Illinois Gov. J.B. Pritzker acknowledged the passing of the Reimagining Electric Vehicles in Illinois Act, which provides "attractive incentives for electric car manufacturers to set up shop in Illinois and bring new jobs to [the] communities." Specifically, the new law provides exemptions on income tax withholding, utilities tax, training, and equipment/capital costs for eligible manufacturers of EVs, EV components and EV power supply equipment.
Almost 10 years ago, a handful of states — California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island, and Vermont — formed the Multi-State Zero Emission Vehicle, or ZEV, Task Force, and signed a memorandum of understanding committing to the successful implementation of state ZEV programs. These states, and later New Jersey, committed to having at least 3.3 million ZEVs on the road by 2025.
In July 2020, 15 states and the District of Columbia signed an MOU to accelerate the market for electric medium- and heavy-duty vehicles, with a goal to ensure that 100% of all new medium- and heavy-duty vehicles sales be ZEVs by 2050 with an interim target of 30% ZEV sales by 2030.
Several of these states have already begun to accelerate those goals. For example, during her State of the State address, New York Gov. Kathy Hochul said, "New Yorkers deserve 21st-century infrastructure." In the governor's State of the State book, Hochul pointed to legislation enacted in September 2021 which requires 100% of in-state sales of new passenger cars and trucks shall be zero-emissions by 2035, medium-duty and heavy-duty vehicles by 2045 and off-road vehicles and equipment by 2035. The new law also directs the state Department of Environmental Conservation to develop a ZEV market development strategy by January 2023. Within the state book, Hochul also committed to electrifying the state's light-duty fleet by 2035 to complement President Joe Biden's commitment to electrifying the federal light-duty fleet.
Hochul also announced that she will propose legislation requiring that, by 2027, all new school bus purchases are zero-emissions, and by 2035, all school buses on the road will be zero-emissions. The announcement comes on the heels of the New York City Council voting to require all city-owned school buses to be battery-electric by Sept. 1, 2035.
In his speech, Nevada Gov. Steve Sisolak said the state was "investing in things like clean-energy school buses, which will be funded, in part, by fines on corporate polluters," as well as transportation electrification across the state. In 2019, Sisolak signed Senate Bill 299, which allows school districts to apply for Electric Vehicle Infrastructure Demonstration money to purchase electric school buses, getting up to 75% of the costs of a new bus covered.
Hawaii Gov. David Ige spoke of federal funding provided by the federal infrastructure law, in which Ige estimates roughly $2.8 billion will be available to "further boost the development of transportation [and] clean energy." Ige is committed to establishing a rebate for families seeking to purchase EVs in the future. In 2021, Ige signed House Bill 552, which establishes clean ground transportation goals for state agencies on a staggered basis, achieving a 100% passenger vehicle clean fleet by December 31, 2030. Additionally, the new law states that beginning Jan. 1, 2022, all new light-duty motor vehicles that are passenger cars purchased for the state's fleet shall be ZEVs.
With Michigan's historical ties to the auto industry, Michigan Gov. Gretchen Whitmer notes that the state is "building on [its] rich auto manufacturing heritage and moving towards a clean energy future." During her speech, Whitmer proposed a "combined $2,500 EV rebate for families-$2,000 for the car and $500 for in-home charging equipment," which would build on the $7,500 federal EV credit.
Several governors spoke of improving their state's transportation infrastructure, including EV charging.
Rhode Island Gov. Dan McKee expressed the state's intention to "create a statewide network of electric car charging stations and converting [its] public transportation vehicles to electric."
"We'll repair roads and bridges, invest even more in public transit, and build out EV infrastructure. So important for the future," said Delaware Gov. John Carney during his State of the State address. In 2021, Carney signed Senate Bill 21 into law, which creates a more accessible charging station infrastructure within the state. Specifically, the new law permits state agencies to charge a fee for public or employee use of EV supply equipment installed by the agency so long as the fees do not exceed the agency's costs.
"Our electric grid will soon be carbon-free, and our transportation system is soon to follow," stated Connecticut Gov. Ned Lamont. "Our budget provides for hundreds of electric charging stations as our state transitions to an all-electric fleet."
While states are looking to provide incentives to purchase EVs and ramp up investments in EV infrastructure, a few states have recently begun adopting certain ZEV regulations, specifically California's ZEV regulations.
California's ZEV regulations mandate that a certain percentage of the vehicles delivered for sale in a state are ZEV vehicles. Manufacturers receive credits for each delivered vehicle based on the type of vehicle, range and other factors, and each year, manufacturers must meet a ZEV credit amount that is based on average annual sales.
Delaware became the most recent state to adopt these regulations on March 3.
As California Gov. Gavin Newsom said in his state of the state address, "for years, [California has] set the rules, and others have followed." Newsom also stated that clean energy is the most significant economic opportunity, with the "perfect example [being California's] dominance in EV sales and manufacturing." According to data released by the California Energy Commission, the state has surpassed 1 million cumulative EV sales after selling roughly 247,000 new battery-electric and plug-in hybrid vehicles in 2021. In 2018, former Gov. Jerry Brown signed Executive Order B-48-18, setting a state target of 5 million ZEVs on the road by 2030 and 250,000 EV charging stations by 2025.
Colorado Gov. Jared Polis notes that the state "will continue making targeted investments to improve air quality monitoring and enforcement, increase the availability of clean transportation options like electric school buses, accelerate our transition to a cleaner economy, and apply real accountability as we seek and secure environmental justice for those who are most impacted."
Extreme weather events and the ongoing climate crisis
In 2021, states were slammed with a wide range of unprecedented weather events, devasting parts of the country. Wildfires raged through the western U.S., while catastrophic hurricanes battered the Gulf and East Coast. Unprecedented heat waves scorched the Pacific Northwest, and extreme winter weather immobilized Texas and parts of the Midwest. Deadly tornados ripped across the central and southern U.S., and massive flooding led to destruction throughout the country.
According to the National Oceanic and Atmospheric Administration, in 2021, there were "20 separate billion-dollar weather and climate disasters, putting 2021 in second place for the most disasters in a calendar year, behind the record 22 separate billion-dollar events in 2020." These events resulted in roughly $145 billion in damages, with Hurricane Ida, the February winter storm and the western wildfires topping the list.
"There's one more critical piece of our plan to rebuild our infrastructure — making it more resilient against climate change," stated New York Gov. Hochul. The governor went on to say that such events can no longer be classified as rare and that "the next one is coming."
Hochul stated that "the cost of inaction is too great to bear" and highlighted her proposal of increasing the Clean Water, Clean Air and Green Jobs Environmental Bond Act by $1 billion, which rounds out the total to $4 billion. The act, which will be placed before voters during the November 2022 general election, would allocate the funds to various environmental protection programs and projects related to restoration and flood risk reduction, open space land conservation, climate change mitigation, and water quality improvement and resilient infrastructure.
In 2021, New York passed Senate Bill 4824A, which requires each electric utility to prepare and submit a climate change vulnerability study to the New York Public Service Commission by June 2023. The utilities must then submit a climate resilience plan to the commission within 60 days of filing the study. On Feb. 24, Gov. Hochul signed Assembly Bill 8763, which modified the law mentioned earlier, ensuring that the commission will review the climate resiliency plans separately from rate cases. In addition, AB 8763 requires the commission to authorize utilities to recover costs associated with projects laid out in climate resiliency plans in the context of rate cases through a "climate resiliency cost recovery" surcharge.
Oregon Gov. Kate Brown said, "[E]very year I have been Governor we have seen more extreme weather than the last. We have experienced unprecedented devastation, from historic drought to expansive flooding, to a deadly heat dome and massive power outages from winter storms. And the effects of every one of these extreme weather events were felt across the Oregon landscape. Climate change is a hammer hitting us in the head. Over the past two years, we've invested hundreds of millions of dollars and called upon Oregonians to help one another prepare for, respond to, and recover from climate-related disasters. … We must act now, decisively, to lower carbon emissions, transition to clean energy sources, and ensure a just transition for our historically-underserved communities."
Several bills have advanced through the Oregon Legislature this year that would help the state lower carbon emissions. Senate Bill 1518, which passed both the House and Senate, would establish a 27-member Task Force on Resilient Efficient Building. The task force would be responsible for identifying and evaluating policies related to building codes and building decarbonization for new and existing buildings that would enable the state to meet greenhouse gas emissions reduction goals and to make policy recommendations to the interim committees related to the environment before the 2023 regular session.
Another bill that has passed both chambers of the legislature, House Bill 4139, requires the state's department of transportation to establish a program for greenhouse gas reduction that assesses the greenhouse gas emission from concrete, asphalt paving mixtures, steel products, and other products identified to be attributable to certain materials used in construction and maintenance activities for the state's transportation system.
Gov. Lamont notes that Connecticut has "been hit by some of the most severe storms in [its] history" and that the state is "making a big investment in hardening [its] electric grid against future threats — be it storms or cyberattacks."
During his state of the state and budget address, Idaho Gov. Brad Little proposed to prioritize $15 million "to strengthen Idaho's energy sovereignty," with the funds being used to "to protect utility corridors from natural disasters such as wildfire and to improve grid resilience for critical infrastructure like hospitals and schools."
Energy independence and clean energy sources
The idea that technological advancements, innovation and a broader push for less carbon-intense energy sources are set to transform the global landscape has gradually become accepted as truth within the U.S. energy industry, which continues to evolve and transition toward cleaner and more energy-efficient ways of providing electric and gas services.
Alaska Gov. Mike Dunleavy stated that he envisions "an Alaska that is energy independent and a leader in renewable energy whether it be hydro, tidal, geothermal, wind, solar, or other … [Alaska has] abundant renewable resource potential, and we can turn that potential into a reality that will lower costs for all Alaskans, and invite industries to invest in our Great State as well." During the 2022 legislation session, Alaskan lawmakers introduced legislation that would establish a renewable portfolio standard requiring a load-serving entity subject to the standards of an electric reliability organization to derive 80% of the utility's net electricity sales from renewable energy resources by 2040.
In Iowa, Gov. Kim Reynolds spoke of the importance of renewable fuels and energy and that the state must "continue to embrace an all-of-the-above approach, where we support energy sources that come from right here in Iowa." According to the U.S. Energy Information Administration, Iowa is the top ethanol-producing state in the nation and leads the country in biodiesel production
During his address, Wyoming Gov. Mark Gordon criticized the federal government's energy policy and asked federal lawmakers to "give [Wyoming] the tools and the chance to make this nation energy independent again." Gordon went on to say that the state "has it all: the best wind, solar, gas, coal, nuclear and the ability to store 50 years' worth of our nation's total carbon emissions."
Gordon spoke of "innovation, not regulation" as the path towards energy independence and to "simultaneously solve the world's climate concerns." He advocates for an "all-of-the-above energy strategy," which includes new opportunities in "advanced nuclear; carbon capture utilization and sequestration; bio-energy [carbon capture, utilization and storage]; hydrogen; better, cleaner ways to burn and use coal."
Utah Gov. Spencer Cox highlighted a measure that would "help Utah become the nation's leader in sustainable energy development." The measure, Senate Concurrent Resolution 3, "recognizes that renewable energy production is increasing across the state and the country and there is a heightened need for critical minerals, rare earth elements, and many other minerals, including copper, to meet the infrastructure, collection, distribution, and transmission requirements to foster a reliable and affordable energy economy." Additionally, the resolution "resolves that the state of Utah and relevant federal agencies work together to promote national security, economic prosperity, and sustainability through efficient promotion and utilization of the many resources of the state of Utah."
Cox added, "[W]e can no longer be reliant on foreign countries — some of whom actively seek to do us harm — to be the primary suppliers of our country's clean energy future."
A champion for clean energy, Washington Gov. Jay Inslee said that the state "will meet the challenge of climate change while building the clean energy future with good jobs." Inslee also noted that the state can "improve conditions for developers to grow clean energy resources."
New Hampshire Gov. Chris Sununu said "clean, reliable, and affordable offshore wind energy will be a reality" for the state. In July 2021, New Hampshire created and funded the Office of Offshore Wind Industry Development within the state Department of Energy. The office is tasked with supporting the work of the New Hampshire members of the Gulf of Maine Intergovernmental Offshore Wind Renewable Energy Task Force, the New Hampshire Commission to Study Offshore Wind and Port Development, and coordinating the state's offshore wind industry economic development policy.
On Feb. 10, the New Hampshire Departments of Energy, Business and Economic Affairs, and Environmental Services released a report on the historical and forward-looking greenhouse gas reduction potential of offshore wind in the Gulf of Maine. Within the report, it states that "any policy or program that New Hampshire establishes to support the development of wind energy production in the region will likely have a net positive impact on New Hampshire and the New England region's greenhouse gas emissions above and beyond any direct economic impact."
Regulatory Research Associates is a group within S&P Global Commodity Insights.
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