Michigan legislation proposes 2030 coal phase-out, fossil-free energy by 2035

Michigan lawmakers introduced a package of legislative bills April 13 that would codify Gov. Gretchen Whitmer's 2022 climate plan, which requires utilities in the state to phase out all coal-fired power generation by 2030.

The legislative package of seven bills would also require utilities to provide 100% carbon-free energy by 2035 and achieve 2% annual energy efficiency savings starting in 2026. Other measures focus on building efficiency and clean fuels.

Michigan's two largest power utilities, DTE Energy Co. and Consumers Energy Co., have been on board with Whitmer's climate plan to take the state to net-zero emissions by 2050. Both companies have outlined strategies for shedding their coal-fired generating units and ramping up renewables in coming years, but those plans are not yet fully aligned with the legislation.

"We look forward to working with the Michigan legislature to implement key elements of the governor's MI Healthy Climate Plan," DTE Energy Chairman and CEO Jerry Norcia said in a statement after the lawmakers announced their plan in March. "As the largest investor in renewable energy in Michigan, we are well positioned to facilitate the economy-wide decarbonization that the governor's plan envisions."

Coal plants generated 32% of Michigan's electricity in 2021, according to US Energy Information Administration data, while renewable sources accounted for just 11%.

DTE Energy's proposed integrated resource plan calls for the utility's last coal-fired units to be closed in 2035, five years later than the proposed legislation would require. However, the company's overall carbon reduction targets are ahead of the state's, DTE spokesman Peter Ternes said in an email.

For its part, Consumers Energy Co. is planning to retire two of its last coal-fired units in 2023 and the remaining three in 2025. While the company is expecting to get 90% of its power from fossil-free generation by 2040, the legislation would require it to be fossil-free by 2035.

"Actions matter, which is why we recently announced a sweeping proposal to stop using coal as a fuel source for electricity by 2025 — 15 years faster than currently planned," Consumers Energy spokesperson Brian Wheeler wrote in an email. "Our Clean Energy Plan would make the company one of the first in the nation to go coal-free and calls for a significant buildout of solar, storage and energy efficiency investment."

The Michigan legislation comes at a perfect time as utilities can now access tax credits and other funding for renewable energy projects through the Inflation Reduction Act, said Charlotte Jameson, chief policy officer for the nonprofit Michigan Environmental Council.

The council and other environmental advocacy groups have been weighing in on DTE Energy's long-term resource planning process, pushing for an earlier closure of the 3,086-MW Monroe coal-fired plant.

"It's going to be tough," Jameson said of meeting the legislation's goals. Utilities are "way too slow building out renewables and without additional action by the legislature they will continue to replace coal with natural gas."

S&P Global Commodity Insights reporter Karin Rives produces content for distribution on Capital IQ Pro.