While 2022 was the year in which significant climate legislation had passed at the federal level, 2023 was the year in which states led the way in passing consequential bills.
While blue states such as California and New York were expected to lead the pack in climate change legislation, there have been a few states that came out of the woodwork to vie for the status of green champion, namely Michigan. Republican states, on the other hand, have moved to strip regulators’ ability to analyze environmental impacts.
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Here’s the rundown of the most significant climate measures passed by states in 2023:
Michigan’s clean energy legislative package
The Wolverine State passed a raft of clean energy bills in November that implements one of the most ambitious clean energy standards in the Midwest and establishes the state as a major leader in combating emissions, comparable to blue states such as New York or California.
The legislation requires utilities to produce electricity using 100% clean energy by 2040. To reach the ambitious goal, utilities will need to follow deadlines to help them gradually transition to the clean energy standard.
The package’s measures reform how the state’s regulatory agency, the Michigan Public Service Commission, will plan for future operations, requiring it to consider factors such as climate, equity, and affordability when creating long-term power generation plans. The legislation also will create an office aiding localities in transitioning from fossil fuel to clean energy jobs.
The bills also will create stricter energy efficiency standards, allow more residents to have access to rooftop solar energy projects, and grant state regulators authority over large-scale clean energy permitting.
Passage of legislation such as this was once unthinkable in a state known for blocking regulations that aimed to curb pollution from factories seen as the backbone of the economy. However, the signing of the clean energy bills brought attention to the changing tides within the state and subsequently raised the profile of Gov. Gretchen Whitmer (D-MI).
California’s climate disclosure laws
California is going the distance in requiring large companies to disclose their greenhouse gas emissions.
In October, Gov. Gavin Newsom (D-CA) signed into law a bill that will force California regulators to draft rules requiring all public and private companies whose annual profits exceed $1 billion to disclose both their direct and indirect greenhouse gas emissions by 2025. By 2027, the legislation will go even further, requiring companies to disclose all “scope 3” emissions — not just the emissions produced in their operations, but also those generated by their supply chains or by consumers who use their products.
More than 5,300 companies are expected to be affected by the legislation, including major players such as Apple and Amazon. Failure to comply with it will result in fines of up to $500,000 per year.
The state also passed companion legislation that will require companies with more than $500 million in annual profits to disclose any climate-related financial risks every other year, beginning in 2026. Failure to comply will result in penalties of up to $50,000 annually.
The two bills are some of the most aggressive climate disclosure bills to be passed by a state. The Securities and Exchange Commission has been weighing a similar proposal that would compel companies nationwide to disclose climate-related risks, but the rule has yet to be finalized.
New York’s gas stove ban
New York became the first state to ban natural gas stoves and other fossil fuels in most new buildings, marking a huge win for environmentalists, but later catalyzing legal action from trade groups who argue the state does not have the authority to enforce the ban.
Signed into law in May, the ban encompasses gas-powered stoves, furnaces, and propane heating. The measure will incentivize the use of heat pumps and induction stoves, which produce fewer emissions than traditional appliances, instead. It also will require all-electric appliances in new buildings that are smaller than seven stories by 2026, and for taller buildings by 2029.
However, there are exceptions to the ban. Large commercial and industrial buildings, such as restaurants and hospitals, will not be affected by the law.
It still remains to be seen if the ban can be upheld in court. Gas and construction trade groups took legal action in October to block the ban, arguing that the law violates the Energy Policy and Conservation Act of 1975, a preexisting federal statute that regulates energy use. The lawsuit was filed by the National Association of Home Builders and the National Propane Gas Association, among others, and lists the New York Department of State as a defendant.
Montana’s ban on climate analysis
With a number of states passing measures that seek to combat climate change, Montana is going the other direction with a law barring the state from analyzing the effects of climate change on large fossil fuel and industrial projects.
The bill, which was signed into law in May, will prevent state regulators from analyzing greenhouse gas emissions and environmental effects when approving large projects. Supporters of the measure argue that the bill underscores that lawmakers are the ones to write policy — not judges or other entities. The sponsor of the measure, Republican state Rep. Josh Kassmier, said the bill was in direct response to a judge revoking a permit the state issued for NorthWestern Energy, a gas plant.
The measure was one of the most controversial bills presented to the state legislature this session, with the bill drawing more than 1,000 comments — 95% of which opposed the measure, according to the Montana Free Press.
The anti-ESG wave
Several states passed measures this year aimed at limiting the practice of investing based on environmental, social, and governance factors, otherwise known as ESG investing, maintaining Republican promises to do away with the method on the grounds that it undermines returns for customers.
According to a report by environmental group Pleiades Strategy, 16 states have passed laws this year attacking ESG investing in various versions. One measure in Kansas will prevent the state from entering into any contracts with fund managers that consider ESG factors — a bill that moved through the Republican state legislature and became law after Gov. Laura Kelly (D-KS) declined to veto it. A similar bill in Texas will prevent insurers from doing the same.
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Other states, such as Alabama, Arkansas, Idaho, and Utah, passed measures limiting states from contracting with financial firms that they say engage in boycotts against fossil fuels or otherwise favor left-of-center causes.
But even as legislative momentum continues to rise in opposition to ESG investing, many of the measures that were introduced into state legislatures either stalled or were watered down once they became law. What resulted, however, was fuel to the flames against the investment practice and obstructed efforts from financial firms to address climate change.
