Policy pathways for decarbonizing the manufacturing sector

 As Minnesota advances toward its goal of net-zero emissions by 2050 — what are some of the most actionable and cost-effective decarbonization opportunities for this sector?  

 In April, Fresh Energy and The 2035 Initiative co-authored a new study, “Advancing Industrial Electrification in Minnesota,” that charts practical policy pathways for decarbonizing the manufacturing sector.  

Listen to this latest episode to hear from the report's authors, including The 2035 Initiative’s Dr. Leah Stokes and Dr. Eric Masanet and Fresh Energy’s Brandon Isakson, with opening remarks from Pete Wyckoff, Deputy Commissioner of Energy Resources at the Minnesota Department of Commerce and Kate Knuth, Climate Director at the Minnesota Pollution Control Agency. The group will dig into the details of the report, discuss policy pathways, and answer audience questions. 

Resources:

• Download the study
• View a recording of the webinar

Fresh Energy’s mission is to shape and drive bold policy solutions to achieve equitable carbon-neutral economies. Together we are working toward a vision of a just, prosperous, and resilient future powered by a shared commitment to a carbon-neutral economy. Learn about Fresh Energy's work and our bold "Vision 2030: Fresh Energy's Strategic Framework" at our website fresh-energy.org.


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Transcript

00:00:11 Jo Olson 

Hello, and welcome to Decarbonize, the Clean Energy Podcast from Fresh Energy. 

00:00:16 Jo Olson 

Fresh Energy is a Minnesota nonprofit working to speed our state's transition to a clean energy economy. 

00:00:23 Jo Olson 

My name is Jo Olson, and I'm the Chief Communications Officer at Fresh Energy. 

00:00:27 Jo Olson 

Today we're sharing a recording from our May 14th webinar about policy pathways for decarbonizing the manufacturing sector in Minnesota. 

00:00:37 Jo Olson 

Let's dive in. 

00:00:39 Jo Olson 

So hello, welcome to our webinar. 

00:00:41 Jo Olson 

It's called Policy Pathways for Decarbonizing the Manufacturing Sector. 

00:00:45 Jo Olson 

It's co-hosted by Fresh Energy and the 2035 Initiative at UC Santa Barbara. 

00:00:52 Jo Olson 

My name is Jo Olson, and I am the Chief Communications Officer at Fresh Energy. 

00:00:57 Jo Olson 

If you haven't heard of us before, Fresh Energy is a nonpartisan, nonprofit, clean energy advocacy organization aiming to shape and drive bold policy solutions to achieve an equitable, carbon-neutral Minnesota and Midwest. 

00:01:11 Jo Olson 

So before I pass the mic first, yes, this webinar will be recorded. 

00:01:15 Jo Olson 

If you have to leave early, don't worry. 

00:01:18 Jo Olson 

We'll send you an e-mail with a link to the recording probably tomorrow morning. 

00:01:22 Jo Olson 

Second, some of you submitted questions ahead of time when you registered. 

00:01:26 Jo Olson 

We love that. 

00:01:26 Jo Olson 

We'll be getting to the questions at the end. 

00:01:29 Jo Olson 

But if you didn't submit your question ahead of time, please use that Q&A function on Zoom. 

00:01:33 Jo Olson 

It's at the bottom of your screen. 

00:01:35 Jo Olson 

Just click the button. 

00:01:36 Jo Olson 

You can fill in your question there. 

00:01:38 Jo Olson 

And if you see other people's questions that you like, you can upvote them, and they'll rise to the top of the list. 

00:01:44 Jo Olson 

Now, I'm absolutely thrilled to introduce Dr. 

00:01:48 Jo Olson 

Leah Stokes, who will be guiding us through today's conversation. 

00:01:52 Jo Olson 

An expert in climate and energy policy, Dr. 

00:01:54 Jo Olson 

Leah Stokes is the Anton Vonck Associate Professor of Environmental Politics at UC Santa Barbara and author of the award-winning Short Circuiting Climate Policy book, which examines the role that utilities have played in promoting climate denial and rolling back clean energy laws. 

00:02:12 Jo Olson 

So currently, 

00:02:13 Jo Olson 

Leah's finishing her next book. 

00:02:15 Jo Olson 

It's called The Carbon Wave, and it's set to release this fall. 

00:02:18 Jo Olson 

It tells the inside story of how the largest climate law in American history was passed. 

00:02:24 Jo Olson 

So Leah, thank you so much for joining us. 

00:02:26 Jo Olson 

It's been a few years since you were a keynote speaker at Fresh Energy's Benefit Breakfast, and we're really excited to be doing another event with you today. 

00:02:35 Leah Stokes 

Yeah, right back at you, Joe. 

00:02:38 Leah Stokes 

It's been so wonderful to be partnered with Fresh Energy over so many years, and we're really excited to be releasing and launching this report today about advancing industrial electrification in Minnesota. 

00:02:50 Leah Stokes 

We have some really awesome people for you to hear from, including some intro remarks from Pete Wyckoff and Kate Knuth. 

00:02:57 Leah Stokes 

And before we get to that, I just want to give you the agenda for today. 

00:03:01 Leah Stokes 

So we're going to do welcome and introductions. 

00:03:04 Leah Stokes 

We're going to have those intro remarks. 

00:03:07 Leah Stokes 

Then primarily Eric Masanet, myself, and Nate Mariano will go through the report overview and the findings. 

00:03:15 Leah Stokes 

And then at the end, there will be time for questions. 

00:03:17 Leah Stokes 

So if you have questions that you'd like to ask about other things that we found in the report or things you'd like us to look into the future, we're happy to take those questions. 

00:03:25 Leah Stokes 

And then we'll be closing it off for the day. 

00:03:27 Leah Stokes 

So really excited to have you all here. 

00:03:30 Leah Stokes 

And with that, I believe I'm going to pass it over to Brandon, who is going to introduce himself briefly. 

00:03:37 Brandon Isakson 

Yeah, thanks so much, Leah and the 2035 Initiative team for all the support here and joining us for this webinar today. 

00:03:45 Brandon Isakson 

I'm Brandon Isaacson. 

00:03:47 Brandon Isakson 

I'm the Managing Director of Industry here at Fresh Energy. 

00:03:51 Brandon Isakson 

came on about a year ago to to spin up our industry and agriculture programs and thinking about the low to medium temp heat opportunity, clean heat opportunity. 

00:04:02 Brandon Isakson 

I've been really excited to to work with with the 2035 initiative team. 

00:04:06 Brandon Isakson 

And with that, I'm just going to pass it over to Eric. 

00:04:15 Eric Masanet  

Thanks. 

00:04:15 Eric Masanet  

Thanks, Brandon. 

00:04:17 Eric Masanet  

Hello, everyone. 

00:04:17 Eric Masanet  

My name is Eric Masanet. 

00:04:18 Eric Masanet  

I'm a professor here at UC Santa Barbara in the Bren School of Environmental Science and Management, and also in the Department of Mechanical Engineering. 

00:04:26 Eric Masanet  

So here at UCSB, I lead the Industrial Sustainability Analysis Lab, where we develop models and data sets to really shine a light on the opportunity space for different industrial sectors to achieve sustainability goals. 

00:04:39 Eric Masanet  

And I'm really excited to share some of our results with you today. 

00:04:44 Eric Masanet  

And with that, I'll pass it back over to Leah. 

00:04:46 Leah Stokes 

Yes, and now I have the distinct honor of introducing one of my friends, Pete Wykoff. 

00:04:52 Leah Stokes 

Pete is a superstar. 

00:04:53 Leah Stokes 

He is also the Deputy Commissioner of Energy Resources at the Minnesota Department of Commerce. 

00:04:59 Leah Stokes 

And he was appointed to that role in September 2024. 

00:05:03 Leah Stokes 

He's an environmental scientist by training and an emeritus professor at the University of Minnesota Morris. 

00:05:09 Leah Stokes 

He holds a PhD in ecology from Duke University. 

00:05:13 Leah Stokes 

And before joining Commerce, he served as the senior energy policy advisor to the great U.S. 

00:05:19 Leah Stokes 

Senator Tina Smith, who we all love. 

00:05:21 Leah Stokes 

He also worked for former U.S. 

00:05:23 Leah Stokes 

Senator Al Franken and at the U.S. 

00:05:25 Leah Stokes 

Department of Energy. 

00:05:27 Leah Stokes 

At Commerce, he has been a central figure in bringing... 

00:05:30 Leah Stokes 

federal clean energy funds to Minnesota and standing up new energy programs across the state. 

00:05:35 Leah Stokes 

So as part of this industrial electrification webinar, we are really honored to have some introductory remarks, remarks from Pete. 

00:05:41 Leah Stokes 

So with that, I'm going to turn it over to Pete. 

00:05:44 Pete Wyckoff 

Thank you so much, Leah. 

00:05:46 Pete Wyckoff 

So Minnesota is a state that has big goals. 

00:05:49 Pete Wyckoff 

We have a goal of net zero greenhouse gas emissions economy-wide by 2050. 

00:05:55 Pete Wyckoff 

That is a tall order, as everybody understands on this webinar. 

00:05:58 Pete Wyckoff 

If we're going to meet it, we need to work on every sector of the economy. 

00:06:02 Pete Wyckoff 

Officially, industrial emissions are 18% of our state's net emissions. 

00:06:07 Pete Wyckoff 

Industrial sources, as many of us know, can be some of the most difficult to tackle, but there are low-hanging fruit. 

00:06:13 Pete Wyckoff 

And as is usually the case, the key to rapid progress is via electrification. 

00:06:19 Pete Wyckoff 

Luckily, the state of Minnesota since 2023 has had a clean electricity standard, so our grid is getting cleaner every year. 

00:06:26 Pete Wyckoff 

By law, we will be 100% clean by 2040. 

00:06:30 Pete Wyckoff 

The report you guys are going to hear about today identifies a big barrier to industrial electrification. 

00:06:36 Pete Wyckoff 

That's a particularly prominent problem in Minnesota. 

00:06:39 Pete Wyckoff 

The problem is the gas is relatively cheaper than electricity for many applications. 

00:06:44 Pete Wyckoff 

This gap is is a. 

00:06:48 Pete Wyckoff 

Big problem in Minnesota and means that decarbonization via electrification is not something likely to just take care of itself. 

00:06:56 Pete Wyckoff 

Policies and nudges are going to be necessary. 

00:06:59 Pete Wyckoff 

For a hot minute, and I worked on these policies with Leah when I was in Washington, D.C., the federal government stepped forward to provide those nudges via the Bipartisan Infrastructure Act of 2021 and the Inflation Reduction Act of 2022, which provided tax credits, grants, and low-interest loans 

00:07:16 Pete Wyckoff 

They were all deployed to reduce emissions. 

00:07:19 Pete Wyckoff 

And studies suggested that those incentives would be enough to bend the industrial emission curve. 

00:07:25 Pete Wyckoff 

My favorite grant during that era was to Kraft Heinz to decarbonize the Velveeta and Cheez Whiz plant in Minnesota. 

00:07:32 Pete Wyckoff 

$170 million for what was billed as the Delicious Decarbonization Grant. 

00:07:39 Pete Wyckoff 

But as we all know, the feds have done an abrupt about face. 

00:07:43 Pete Wyckoff 

Many of the grants and tax credits are gone or on their way out. 

00:07:46 Pete Wyckoff 

Delicious decarbonization sadly was revoked. 

00:07:50 Pete Wyckoff 

But the problem, of course, remains, and we need to find a way to give those nudges without a helpful federal government. 

00:07:56 Pete Wyckoff 

We in the Minnesota Department of Commerce Energy Division are working on the issue in concert with Five Lakes Energy. 

00:08:02 Pete Wyckoff 

So is the Minnesota Pollution Control Agency via their own commission study and a surviving 200 million IRA CPRG grant. 

00:08:10 Pete Wyckoff 

And we're working with other agencies on an industrial decarbonization group convened this year by the governor's office. 

00:08:16 Pete Wyckoff 

So this study and this webinar today are all very timely. 

00:08:20 Pete Wyckoff 

And I'll turn it back to you, Leah. 

00:08:24 Leah Stokes 

Thanks so much, Pete. 

00:08:25 Leah Stokes 

I liked your concrete, real-world example of that factory. 

00:08:30 Leah Stokes 

And it's sad to hear it's not moving forward yet. 

00:08:32 Leah Stokes 

But as you point out, the problem has not gone away. 

00:08:34 Leah Stokes 

So someday, we will make that progress again. 

00:08:38 Leah Stokes 

Our next introductory speaker is Kate Knuth. 

00:08:41 Leah Stokes 

She is the climate director at the Minnesota Pollution Control Agency, where she not only manages the agency's climate change mitigation and adaptation operations, but also coordinates across the state agencies to implement Minnesota's climate action framework. 

00:08:55 Leah Stokes 

So a really important coordinating role. 

00:08:58 Leah Stokes 

A former Minnesota state legislator, Kate has helped advance landmark climate and environmental legislation, including bills that addressed greenhouse gas emissions reduction goals and identified hazardous chemicals in children's toys. 

00:09:10 Leah Stokes 

Very important. 

00:09:11 Leah Stokes 

Somebody needs to be thinking about that. 

00:09:13 Leah Stokes 

She has also served on Minnesota's Environmental Quality Board and as Chief Resilience Officer for the city of Minneapolis. 

00:09:20 Leah Stokes 

She holds a doctorate in conservation and brings over two decades of experience in public service, academia, and community engagement to her work on climate and action in Minnesota. 

00:09:30 Leah Stokes 

So with that, please welcome Kate. 

00:09:33 Kate Knuth 

Thank you, Leah, and thank you to the 2035 Initiative as well as Fresh Energy. 

00:09:38 Kate Knuth 

I am very excited to learn at this webinar, and I've perused the report. 

00:09:45 Kate Knuth 

And to me, it is another sign that there is increasing interest in building momentum to have decarbonization. 

00:09:55 Kate Knuth 

unleashed in the industrial sector, so My colleague Pete talked about some of the things I was going to mention again a reminder 18% of the total emissions for the state of Minnesota in the Industrial sector that is the fourth largest sector, but of note it is oh it is the largest sector that has seen increases since 2005 so the challenge has been getting more difficult since 2005 which is the baseline year that we use in the state of Minnesota for our 

00:10:25 Kate Knuth 

neutrality, getting to carbon neutrality by 2050. 

00:10:29 Kate Knuth 

So we have work to do there. 

00:10:31 Kate Knuth 

And not surprising to this group, it's mostly burning stuff for heat. 

00:10:35 Kate Knuth 

And so dealing with the heat challenge, it's part of the big challenge in the building sector, too, is we need to figure out how to have heat or better use heat or better move heat around, better create heat without burning a whole bunch of stuff all the time. 

00:10:52 Kate Knuth 

And so 

00:10:54 Kate Knuth 

We are taking that on. 

00:10:57 Kate Knuth 

And I think the thing that I wanna highlight for this group as you're thinking about this in the overall context, the numbers around some of this work can be, if you look just at the numbers and the lines, a little disheartening at times. 

00:11:12 Kate Knuth 

And when I think about, you talk about that 20 year career, back in 2007, I was in the legislature when we passed 

00:11:21 Kate Knuth 

25% clean electricity standard, and we blew all of that out of the water. 

00:11:26 Kate Knuth 

We made faster progress, even though we hemmed and hawed, could we go that fast? 

00:11:30 Kate Knuth 

And I think the electricity sector, with a 50% reduction in the state of Minnesota, that didn't just happen because we thought it was a good idea. 

00:11:40 Kate Knuth 

It happened because of policy change, because of private investment, because of 

00:11:45 Kate Knuth 

Research that improve the technologies it happened for a whole host of reasons and we need to apply that same kind of thinking with different specifics Into the other sectors and in particular today We're talking about the industrial sector and the thing that I'm excited about is I do see that momentum grow up We have the pull back on the federal incentives and policies, which I think it 

00:12:09 Kate Knuth 

talked about. 

00:12:10 Kate Knuth 

But in Minnesota, we see and we have an increased focus on the industrial sector in the Climate Action Framework. 

00:12:16 Kate Knuth 

In the Goal 6, in the clean economy sector, there's much more discussion about industrial sector emissions reductions. 

00:12:23 Kate Knuth 

There's actual businesses who are building and growing to figure out the challenge of heat and actually not just figure out, but get it implemented. 

00:12:33 Kate Knuth 

And I think about geothermal companies, heat pump companies, 

00:12:39 Kate Knuth 

Minnesota businesses that are doing this work and set to expand and really interested So we see it in the private sector. 

00:12:46 Kate Knuth 

We also see it in our focus across state government we have Groups that have been we have a group working across multiple agencies with collaboration focused on the one Minnesota 

00:13:02 Kate Knuth 

goal area process, but also we are investing planning dollars into what we call a deep dive on industrial innovation or decarbonization, which we think will help align and make clear the path forward. 

00:13:16 Kate Knuth 

And we see it in grant focus. 

00:13:19 Kate Knuth 

If I can put things in the chat, my team at the PCA holds the center of our big Climate Smart Food Systems Initiative grant. 

00:13:27 Kate Knuth 

And we have two RFPs open right now for industrial decarbonization. 

00:13:32 Kate Knuth 

One is for technical assistance and planning, just over $7 million. 

00:13:36 Kate Knuth 

And one is for implementation. 

00:13:39 Kate Knuth 

It's a $40 million RFP. 

00:13:41 Kate Knuth 

And therefore, this work in the 

00:13:46 Kate Knuth 

in the food system. 

00:13:47 Kate Knuth 

So as you'll see in the report, the food system is a big deal in Minnesota. 

00:13:50 Kate Knuth 

The food part, the food manufacturing is a big part and beverage is a big part of the sector overall. 

00:13:57 Kate Knuth 

So those are really exciting. 

00:14:00 Kate Knuth 

pieces of movement, I think setting up the groundwork to take that transformative leap. 

00:14:04 Kate Knuth 

So I'm excited to learn with all of you today from the folks going deep on some key parts of making the progress in this area and 

00:14:16 Kate Knuth 

Thank you all for being here and nerding out in this important but sometimes opaque industrial innovation slash decarbonization space. 

00:14:24 Kate Knuth 

So I'll turn it back to you, Leah. 

00:14:26 Leah Stokes 

Well, thank you so much, Kate, for your leadership and great comments. 

00:14:30 Leah Stokes 

And hopefully today we will make it a little less opaque, a little more clear. 

00:14:33 Leah Stokes 

And with that, Brandon's going to provide some broader context before we really dive into the report findings, so take it away, Brandon. 

00:14:42 Brandon Isakson 

Yeah, thank you. 

00:14:44 Brandon Isakson 

Thank you, Pete and Kate for those wonderful introductions. 

00:14:47 Brandon Isakson 

I think you did a great job teeing this up and covering that industrial emissions are a major target for improvement in the state and that a large portion of those industrial emissions are related to fuel combustion for process heat. 

00:15:00 Brandon Isakson 

So again, this study was built to identify opportunities for advancing electrification in order to provide clean, efficient heat to those facilities. 

00:15:13 Brandon Isakson 

And I think Pete as well did a good job touching on the diverse portfolio of emissions that we have from industry. 

00:15:19 Brandon Isakson 

We have over 8,500 different industrial manufacturing facilities. 

00:15:25 Brandon Isakson 

Both Pete and Kate touched on the fact that we have, as a whole, around 18% of our state's emissions coming from industry. 

00:15:33 Brandon Isakson 

This map gives you a little glimpse into the location of some of those highest point sources for emissions. 

00:15:40 Brandon Isakson 

And, you know, facilities that use low to medium temperature process heat are where we're seeing the earliest pathways for electrification. 

00:15:48 Brandon Isakson 

Alternatively, operations like iron mining and processing, things like that that require higher heat and are generally more challenging to electrify, you know, those are gonna be, you know, later considerations. 

00:15:59 Brandon Isakson 

Again, where are those low-hanging fruit opportunities? 

00:16:02 Brandon Isakson 

And I'll let Eric and Leah speak more on this, but the new report identified, again, within that food and BEV space, 

00:16:11 Brandon Isakson 

some of the the soybean beet sugar and ethanol manufacturing subsectors. 

00:16:16 Brandon Isakson 

Those have the most favorable economics for electrification while accounting for significant emission reduction opportunities. 

00:16:26 Brandon Isakson 

And 

00:16:27 Brandon Isakson 

again why electricity why electrification well Pete touched on it you know 100% clean electricity by 2040 law makes it pretty clear that electrified Technologies present a clear pathway to emissions reduction within facilities and you 

00:16:42 Brandon Isakson 

I think you all touched on some other really important mandates and programs that the state is building traction from. 

00:16:49 Brandon Isakson 

Really love the Climate Smart Food Systems program and a lot of other opportunities that we can leverage for success. 

00:16:57 Brandon Isakson 

And I don't have time to highlight each of those, so I'm glad that we got to touch on those a little bit briefly. 

00:17:02 Brandon Isakson 

This isn't a complete list in front of you, but. 

00:17:05 Brandon Isakson 

just making the point that Minnesota has a very supportive ecosystem and a lot of people have been doing great work to begin. 

00:17:13 Brandon Isakson 

And there's also a widespread understanding that we not only need to reduce emissions, but there are economic development and labor opportunities and additional benefits from reducing reliance on fuel imports. 

00:17:26 Brandon Isakson 

Now, how do we rank in comparison to other states that are tackling this transformation? 

00:17:30 Brandon Isakson 

Well, this map, compiled by ACEEE, this tracks planning and deployment of two primary electric heat technologies, those being industrial heat pumps and thermal batteries. 

00:17:43 Brandon Isakson 

And as a nation, we're still early in this journey, but you can see some of that momentum building for deployment. 

00:17:49 Brandon Isakson 

And unfortunately, this map is a bit out of date. 

00:17:53 Brandon Isakson 

The one pin you can see there in Minnesota, 

00:17:55 Brandon Isakson 

was that delicious decarbonization program with Kraft Heinz that Pete touched on and um you know unfortunately a casualty of lost federal funding in 2025 whether or not they're pursuing funding elsewhere I can't speak to that um but that just brings up the point that you know despite the supportive ecosystem that we have here we're currently not seeing meaningful adoption of these electrified industrial Technologies and 

00:18:22 Brandon Isakson 

That's understandable for now. 

00:18:24 Brandon Isakson 

Again, we're early in the game, but how are we going to truly encourage deployment moving forward? 

00:18:29 Brandon Isakson 

And even for operators that may have sustainability goals and targets or a direct desire to modernize and electrify, there are still hurdles that need to be overcome. 

00:18:39 Brandon Isakson 

So how can we work together to create that landscape that pushes and pulls those folks along and encourages adoption? 

00:18:51 Brandon Isakson 

One of the things I really appreciate about the newly updated climate action framework is that it calls out an important and unfortunate, unfortunate truth, which is that we are not currently on the pathway to net zero by 2050, and we need to make some serious changes to get there. 

00:19:07 Brandon Isakson 

So that requires significant policy and regulatory reform, and it also requires investment. 

00:19:15 Brandon Isakson 

And another new 

00:19:17 Brandon Isakson 

Pollution Control Agency study notes that those proactive investments are necessary and fiscally responsible because the cost of being reactionary significantly outweighs the cost of investing now. 

00:19:33 Brandon Isakson 

And it's also important to note that we're not operating in a vacuum. 

00:19:37 Brandon Isakson 

A number of other states are actively tackling industrial emissions and 

00:19:41 Brandon Isakson 

And we can look elsewhere to understand what's working, what kinds of policies are moving the needle toward adoption, and which ones are likely to fall flat. 

00:19:49 Brandon Isakson 

Fortunately, last fall, the 2035 initiative published their national level report, the Clean Heat Climate Opportunity, and that provides a great understanding of the unique challenges that states face, but it also highlights the most approachable pathways that we can be pursuing. 

00:20:08 Brandon Isakson 

It's been really exciting to work with Leah and Eric and Nate and the entire 2035 Initiative team. 

00:20:15 Brandon Isakson 

Their thought leadership has been really helpful. 

00:20:17 Brandon Isakson 

We appreciate their desire to chart out tailored policy and regulatory solutions that can help us move the needle here in Minnesota. 

00:20:24 Brandon Isakson 

And with that, I'm going to hand it back to Leah. 

00:20:29 Leah Stokes 

Thank you so much, Brandon. 

00:20:30 Leah Stokes 

I think you really laid out the context here so clearly for all of us. 

00:20:35 Leah Stokes 

And so now we're going to jump into the report findings. 

00:20:39 Leah Stokes 

The first thing I'm going to share is a way that you can download the report if you'd like to. 

00:20:45 Leah Stokes 

You can obviously take a picture of this with your phone if you're on a computer and somehow have a phone, or you can obviously just do this later too. 

00:20:52 Leah Stokes 

But this is the report. 

00:20:54 Leah Stokes 

It's called Advancing Industrial Electrification in Minnesota. 

00:20:58 Leah Stokes 

And I want to give a shout out to the team who worked so hard on this, including Nate Mariano, Eleanor Thomas, Olivia Quinn, and of course, Brandon Isaacson from Fresh Energy. 

00:21:06 Leah Stokes 

It's been a great partnership to work with folks in Minnesota. 

00:21:10 Leah Stokes 

So what are the key findings of our study? 

00:21:13 Leah Stokes 

Well, the first thing is that the industrial sector and targeting low and medium temperature process heat, which I'm going to get into in more detail, has a big potential to cut pollution. 

00:21:23 Leah Stokes 

So we're talking about 62 million metric tons just in Minnesota alone. 

00:21:28 Leah Stokes 

And this would come from electrifying key heat sources in the food and beverage, pulp and paper, and chemical sectors. 

00:21:36 Leah Stokes 

So this represents a 66% reduction in in-scope process heat emissions through 2050. 

00:21:42 Leah Stokes 

And it provides massive health benefits, right? 

00:21:45 Leah Stokes 

Because when we are burning fossil fuels, as we know, it creates particulate matter and other air pollutants that harm human health. 

00:21:52 Leah Stokes 

And so there's a lot of reasons to do this, I suppose $77.2 billion worth of reasons. 

00:22:00 Leah Stokes 

One of the big things we try to do in our work is help narrow in on what technologies might be best positioned to move first. 

00:22:08 Leah Stokes 

And as Kate previewed, those are things like soybeans, beet sugar, and ethanol manufacturing in the case of Minnesota. 

00:22:16 Leah Stokes 

And those emission savings, from an economic perspective, can be thought of as below $100 per metric ton of CO2 equivalent. 

00:22:24 Leah Stokes 

Now, as one of the challenges, as Pete mentioned, in Minnesota, it's that there's a high spark gap between electricity and gas costs. 

00:22:32 Leah Stokes 

What does that mean? 

00:22:33 Leah Stokes 

It means that if you just keep burning on-site fossil fuels, natural gas, to, for example, run a boiler at a factory, that is cheaper than replacing it with a heat pump or an electrode boiler. 

00:22:45 Leah Stokes 

I'm going to show you how much cheaper. 

00:22:47 Leah Stokes 

But, of course, policy can step in here, as Pete discussed. 

00:22:50 Leah Stokes 

So if we, for example, have electricity tariffs, 

00:22:54 Leah Stokes 

that incentivize people to electrify, just like we do in the residential sector with electric vehicles, right? 

00:22:59 Leah Stokes 

We say, if you get an EV, you could have a different electricity tariff. 

00:23:03 Leah Stokes 

So that's something that we can think about. 

00:23:05 Leah Stokes 

And the other thing is that if we incentivize high temperature heat pumps with energy efficiency, that's when we start to see the best economics, the lowest increased demand on the grid. 

00:23:15 Leah Stokes 

Energy efficiency at the plant level can really help pencil out these economics. 

00:23:20 Leah Stokes 

And there are other important ways to think about how we can manage load on the grid as we electrify these facilities. 

00:23:26 Leah Stokes 

These are things like thermal energy storage that can draw down extra power in the middle of the day when renewables are very plentiful, and then use it at times when the grid is dirtier or more constrained, as well as geothermal, which allows for direct heat generation rather than using an electric technology. 

00:23:45 Leah Stokes 

As we know, and as Kate mentioned, industrial manufacturing requires heat, right? 

00:23:50 Leah Stokes 

So when we are making things in Minnesota, whether it's beet sugar or cheeses or anything in between, it requires heat, both for the upstream steam production, as well as for downstream processes, things like dryers, for example. 

00:24:07 Leah Stokes 

They're often direct combustion dryers. 

00:24:11 Leah Stokes 

Low to medium temperature process heat, which you can see here, we're defining in the sub-300 degrees centigrade range, so in these blue colors. 

00:24:21 Leah Stokes 

The good news is that that represents 77% of manufacturing heat demand in Minnesota. 

00:24:26 Leah Stokes 

So it's not like in this particular state, there's a massive amount of higher temperature heat. 

00:24:33 Leah Stokes 

Of course, it's about a third. 

00:24:35 Leah Stokes 

Well, no, not quite a third. 

00:24:37 Leah Stokes 

It's about, let's say, 

00:24:40 Leah Stokes 

a fifth of the heat. 

00:24:43 Leah Stokes 

But that means that we can work on the other four fifths for now, like Pete was talking about, right? 

00:24:48 Leah Stokes 

We have the technologies we need for this low and medium temperature process heat. 

00:24:52 Leah Stokes 

And as Brandon pointed out, the goal needs to be to deploy them, even if there are going to be other industries that might be more challenging down the road. 

00:25:01 Leah Stokes 

So when we're looking at 

00:25:03 Leah Stokes 

food and beverage, pulp and paper and chemicals here. 

00:25:07 Leah Stokes 

You can see here a map that is similar to the one that Brandon showed of where the largest facilities are. 

00:25:12 Leah Stokes 

And when we had good data from the federal government, this was all reported through the Greenhouse Gas Reporting Protocol that they are, of course, trying to dismantle. 

00:25:22 Leah Stokes 

Because if you can't see it, then it doesn't happen, I suppose. 

00:25:25 Leah Stokes 

But the interesting thing is that these are facilities happening across the state in lots of different sectors. 

00:25:32 Leah Stokes 

which means that there's a lot of opportunity to try to work on electrification. 

00:25:37 Leah Stokes 

So what are the technologies that we're actually talking about that are commercially available to electrify low and medium temperature process heat? 

00:25:44 Leah Stokes 

Well, there are things that you've probably heard of, like heat pumps and electrode boilers, and maybe things you haven't heard of, like resistance ovens, which basically just means an electric oven. 

00:25:58 Leah Stokes 

induction cooking and sterilization, UV sterilization. 

00:26:01 Leah Stokes 

So basically what we can do and what Eric is going to talk about in more detail is understand how a plant operates today and what machines are burning fossil fuels, and then understand how those machines could be swapped out for clean electric alternatives. 

00:26:14 Leah Stokes 

And there's so many technologies already commercialized today. 

00:26:17 Leah Stokes 

And so why should we do this? 

00:26:21 Leah Stokes 

Well, there's a lot of reasons. 

00:26:22 Leah Stokes 

It creates cleaner air for local communities. 

00:26:25 Leah Stokes 

It helps Minnesota meet those goals that Kate and Pete were talking about and Brandon. 

00:26:32 Leah Stokes 

It creates an opportunity to leverage advanced manufacturing technology and create a leadership position. 

00:26:38 Leah Stokes 

As Brandon showed, it's not like there's other states way up in front of this. 

00:26:41 Leah Stokes 

could be an opportunity for Minnesota to really lead. 

00:26:44 Leah Stokes 

It creates economic competitiveness when you have, for example, carbon border adjustment. 

00:26:49 Leah Stokes 

mechanisms on goods. 

00:26:51 Leah Stokes 

So if you're manufacturing something and you can show that you did it in a low-carbon way, that can make a big difference. 

00:26:56 Leah Stokes 

And it's going to support resilient domestic clean energy supply chains and high-quality jobs for American workers as we work to upgrade these factories through electrification and energy efficiency. 

00:27:07 Leah Stokes 

And with that, I'm going to pass it over to Eric to really get into the weeds here. 

00:27:11 Eric Masanet  

Thanks, Leah. 

00:27:12 Eric Masanet  

And it's my pleasure to get into the weeds because we have a lot of interesting modeling work that supports our conclusions. 

00:27:18 Eric Masanet  

But our key question is, you know, what we want to do is look at where there are opportunities that are technologically and economically feasible to begin electrifying industrial process heat today. 

00:27:30 Eric Masanet  

So of course, we need solutions for high temperature processes. 

00:27:34 Eric Masanet  

Of course, there'll be other technologies to eventually reach net zero. 

00:27:37 Eric Masanet  

But as Brandon mentioned, and Leah also supported, 

00:27:41 Eric Masanet  

We need to get moving today. 

00:27:44 Eric Masanet  

So in our project, we focused on four major technologies. 

00:27:49 Eric Masanet  

So as Leah showed in the previous slides, there are numerous electrified technologies that are on the shelf today that could be rolled out. 

00:27:56 Eric Masanet  

We focused on four technologies that hold a lot of potential for Minnesota and also are ready to go today. 

00:28:03 Eric Masanet  

These include in the top row of this figure, two primary ways of making steam for the plant, either a drop-in electrode boiler, these are boilers that have been around for 

00:28:11 Eric Masanet  

a long time. 

00:28:12 Eric Masanet  

They're essentially drop-in replacements for natural gas or other fuels. 

00:28:16 Eric Masanet  

And on the right, an emerging class of technologies, high temperature heat pumps, which are being proven out today, which instead of combusting fuel or using electrical resistance, they move heat from a source outside the factory into the process to create heat in a much more efficient way. 

00:28:32 Eric Masanet  

On the bottom, we also looked at key downstream technologies in typical industrial plants, where we're using natural gas or other fuels to create heat for a 

00:28:41 Eric Masanet  

baking or ovens or for drying and so forth. 

00:28:44 Eric Masanet  

We have electrified solutions for those unit processes as well. 

00:28:48 Eric Masanet  

So we also looked at industrial ovens and industrial dryers as technologies that are ready to go to begin moving the needle today. 

00:28:57 Eric Masanet  

And because there's no one-size-fits-all for any individual plant or state or sector, we also wanted to look at a range of different possibilities. 

00:29:07 Eric Masanet  

So what you're seeing here is a list of scenarios that we considered in our modeling efforts and which you'll see play out in the results as we present them. 

00:29:15 Eric Masanet  

So the key is we want to compare everything to today's technology setup, mostly running on natural gas and natural gas-based technologies. 

00:29:24 Eric Masanet  

And we categorized our technologies into two primary buckets. 

00:29:27 Eric Masanet  

The first is drop-in solutions. 

00:29:29 Eric Masanet  

And again, these are solutions that are essentially one-to-one replacements of the equipment that's already there today. 

00:29:35 Eric Masanet  

And then we also considered more advanced solutions. 

00:29:37 Eric Masanet  

And that's primarily the use of high-temperature heat pumps because they are a little bit more complex to install, require some re-engineering of some of the plant processes. 

00:29:46 Eric Masanet  

And if we go from top to bottom in the table, you'll notice that what we're doing is we're raising the level of ambition, but also adding in energy efficiency. 

00:29:56 Eric Masanet  

Because when you upgrade an industrial plant, it's a great time to also go in and update the technologies, update the insulation, update the control systems that minimize the amount of energy required in the 1st place when you replace 

00:30:10 Eric Masanet  

a natural gas technology with an electrified technology and you'll see the power of efficiency in some of the results that we show. 

00:30:18 Eric Masanet  

So one challenge 

00:30:20 Eric Masanet  

with industrial decarbonization has always been that manufacturing can be quite complex. 

00:30:25 Eric Masanet  

There's no doubt about that. 

00:30:26 Eric Masanet  

But we don't have to let complexity be a barrier to identifying smart policies. 

00:30:31 Eric Masanet  

So in our project, we are taking a pretty detailed engineering approach to quantifying the opportunities for electrification in the sectors that matter in Minnesota. 

00:30:42 Eric Masanet  

And the way we do this is we develop what we call process archetypes. 

00:30:45 Eric Masanet  

And you're seeing a picture of 1 here for beet sugar manufacturing, which is fairly prominent in Minnesota. 

00:30:50 Eric Masanet  

If you're a process engineer, you'll understand these sort of diagrams really well. 

00:30:55 Eric Masanet  

And if you're not, I'll explain that now. 

00:30:56 Eric Masanet  

Essentially what we do is we want to look inside the plant to understand how you actually make the product. 

00:31:02 Eric Masanet  

What are the key unit process steps? 

00:31:04 Eric Masanet  

What temperatures are required? 

00:31:05 Eric Masanet  

What types of fuels? 

00:31:06 Eric Masanet  

How does one process relate to another? 

00:31:08 Eric Masanet  

If you take the time to model a plant in this sort of detailed bottom-up fashion, it gives us a lot of power to look at different technologies. 

00:31:15 Eric Masanet  

Next slide, please, Leah. 

00:31:17 Eric Masanet  

So in this particular example, you've seen 2 unit processes turn green. 

00:31:21 Eric Masanet  

This is where in the model we're swapping out a natural gas boiler, 

00:31:24 Eric Masanet  

or a natural gas drying unit with electrified options. 

00:31:28 Eric Masanet  

And if we can model the systems in this way, we can capture any sort of process interdependencies. 

00:31:35 Eric Masanet  

We make sure that you're still able to produce the same amount of product. 

00:31:38 Eric Masanet  

We can calculate new temperatures and so forth. 

00:31:40 Eric Masanet  

In short, what this allows us to do is have a really rigorous basis for our recommendations. 

00:31:45 Eric Masanet  

And we can acknowledge that these plants are complex, but we can also show that we've modeled those complexities and that our results are taking them into account. 

00:31:54 Eric Masanet  

Next slide, please. 

00:31:56 Eric Masanet  

So we can also employ heat pumps. 

00:31:59 Eric Masanet  

Next slide, please. 

00:32:00 Eric Masanet  

As well as swapping in those technologies. 

00:32:02 Eric Masanet  

But the other really, I think, strong advantage to this approach is if you can capture the energy and the mass flows and all the unit process technologies and their efficiencies, 

00:32:11 Eric Masanet  

It also gives us a sandbox, a virtual sandbox, to look at the potential for energy efficiency. 

00:32:17 Eric Masanet  

So using this modeling approach, we can look at a whole range of efficiency upgrades that could occur in parallel as a plant electrifies its core processes, including things like improving process controls, reducing heat losses, optimizing steam traps. 

00:32:31 Eric Masanet  

Each of these is a variable in the model, and it allows us to show the power of efficiency for the sectors in question. 

00:32:39 Eric Masanet  

And so we've done this for all of the sectors that you see. 

00:32:41 Eric Masanet  

here. 

00:32:42 Eric Masanet  

So we're not just treating chemicals and pulp and paper and food and beverage as abstract sectors that all look the same, right? 

00:32:49 Eric Masanet  

Each of the bullet points here requires its own detailed set of models, which we've done. 

00:32:54 Eric Masanet  

So we can really pinpoint opportunities at the level of a beet sugar manufacturing plant or a wet corn milling plant or an ethyl alcohol manufacturing plant. 

00:33:02 Eric Masanet  

Next slide, please. 

00:33:04 Eric Masanet  

So by doing this, it also gives us a way to quantify just how much low and medium temperature heat could be decarbonized through electrification today in the plants that exist in Minnesota with typical processes. 

00:33:20 Eric Masanet  

And so what you'll see here is the Minnesota chemical sector does have quite a bit of potential. 

00:33:24 Eric Masanet  

In fact, most of the heat required in those plants is low and medium temperature, that's a left hand graph, all the way over on the right for food and beverage. 

00:33:33 Eric Masanet  

there's a little bit smaller opportunity, but still quite large for electrifying low and medium temperature heat. 

00:33:38 Eric Masanet  

But I'd love to draw your attention to the middle here. 

00:33:40 Eric Masanet  

So in the pulp and paper industry, this is an industry that relies a lot on combined heat and power and process integration, and they burn a lot of biogenic fuels. 

00:33:49 Eric Masanet  

So wood waste and black liquor and so forth. 

00:33:51 Eric Masanet  

In this report, we didn't try to tackle those sources of fuel use for low and medium temperature process heat because they're a little bit harder to decarbonize, but we wanted to shine a light 

00:34:03 Eric Masanet  

on their contribution to emissions in Minnesota so that we didn't oversimplify for that sector. 

00:34:09 Eric Masanet  

But moving forward, those end uses can be electrified. 

00:34:12 Eric Masanet  

It just means we have to think about process integration and combined heat and power and what to do about potentially stranded byproduct fuels. 

00:34:20 Eric Masanet  

So I'd love to step you through some of our results. 

00:34:23 Eric Masanet  

So here in the first graph, we're looking at all three of the major sectors rolled up to the highest level. 

00:34:30 Eric Masanet  

And what you can see from top to bottom is we're going from baseline total energy demand for these plants. 

00:34:36 Eric Masanet  

And we're looking at our drop-in scenarios and down to our advanced electrification scenarios with maximum efficiency. 

00:34:42 Eric Masanet  

So a few key findings. 

00:34:43 Eric Masanet  

First is efficiency can really make a big difference. 

00:34:46 Eric Masanet  

So what you're seeing with the yellow bars is how much of the fuel could be replaced through clean electricity. 

00:34:52 Eric Masanet  

And you'll notice that the bars are also getting shorter as we add efficiency in. 

00:34:56 Eric Masanet  

So there's a dual benefit here. 

00:34:58 Eric Masanet  

As we move for any of these sectors towards more advanced electrification with maximal efficiency, we're requiring less energy in the 1st place, and we're able to electrify quite a bit of the unit processes. 

00:35:10 Eric Masanet  

And replacing some fairly 

00:35:12 Eric Masanet  

dirty burning fuels like fuel oil, natural gas, and potentially even coal in the food and beverage industry. 

00:35:18 Eric Masanet  

Next slide, please. 

00:35:20 Eric Masanet  

And we also have to take into account that the grid is not a static entity. 

00:35:25 Eric Masanet  

So we look out to 2050 with our models, and we take into account the grid decarbonization plans that Minnesota has, which are quite ambitious. 

00:35:34 Eric Masanet  

to show that if we start on the left, what we're seeing is the baseline emissions today by running on fossil fuels. 

00:35:40 Eric Masanet  

And it's acknowledged that if we electrified everything today, unless we can maximize the efficiency, you may see an increase in greenhouse gas emissions. 

00:35:49 Eric Masanet  

Only in the short term, though, as the grid continues to decarbonize, which is critically important, suddenly those grid investments pay off. 

00:35:56 Eric Masanet  

We've electrified the plants, and you can see that as we move from left to right, emissions substantially drop. 

00:36:01 Eric Masanet  

So electrification with clean 

00:36:04 Eric Masanet  

grid transition is going to save a lot of CO2 emissions in the states. 

00:36:09 Eric Masanet  

And it also has pollution co-benefits. 

00:36:11 Eric Masanet  

So in this graph, we're highlighting that we also looked at criteria air pollutants as part of our analysis. 

00:36:18 Eric Masanet  

We did a lot of detailed modeling about emissions at very local scales, NOx, SO2, and PM 2.5. 

00:36:25 Eric Masanet  

Compared to the baseline scenario, it's a win-win. 

00:36:27 Eric Masanet  

We're saving lots of critical pollutants as well. 

00:36:32 Eric Masanet  

The only outlier is SO2 in the very short term until the grid decarbonization catches up. 

00:36:38 Eric Masanet  

And then lastly, these human health benefits really save a lot of money. 

00:36:43 Eric Masanet  

So there are tremendous human health co-benefits. 

00:36:46 Eric Masanet  

So by electrifying these low and medium temperature processes, you could avoid billions of dollars in cumulative health effects out to 2050. 

00:36:54 Eric Masanet  

Thousand, 20,000 days of work loss that would be avoided, 100,000 plus asthma attacks. 

00:37:00 Eric Masanet  

These come with real human health benefits that should also get strong consideration alongside carbon and other benefits to Minnesota and to these industrial plants. 

00:37:10 Eric Masanet  

Back over to you, Leah. 

00:37:12 Leah Stokes 

Thanks so much, Eric. 

00:37:14 Leah Stokes 

That was really helpful. 

00:37:15 Leah Stokes 

I'm gonna just finish up our results here by talking about the economics of electrification and what that really means for policy design in Minnesota. 

00:37:23 Leah Stokes 

So as we've been mentioning, electricity costs are a challenge here, right? 

00:37:28 Leah Stokes 

But when we look at what we call advanced electric technologies, which is basically those high temperature heat pumps, 

00:37:35 Leah Stokes 

the economics work out a lot better. 

00:37:37 Leah Stokes 

So yes, they're still going to increase costs when we look at them, but they're a lot more efficient, and so they're going to use less kilowatt hours in order to make the same amount of heat than an electrode boiler. 

00:37:50 Leah Stokes 

This is really parallel to what you see in the building sector when you know about building decarbonization, which is that a resistance electric heater is far less efficient, it's like an electrode boiler, than a heat pump or an industrial heat pump, right? 

00:38:05 Leah Stokes 

So 

00:38:05 Leah Stokes 

That is really the point, that you can save a lot over time by reducing your electricity costs if you go with high temperature heat pumps. 

00:38:14 Leah Stokes 

The Minnesota spark cap, as we've been saying continuously, is a barrier to industrial electrification. 

00:38:19 Leah Stokes 

And as Pete said, this isn't all just going to happen on its own. 

00:38:23 Leah Stokes 

Right now, the industrial rate is about 9 cents a kilowatt hour in Minnesota. 

00:38:28 Leah Stokes 

And what we show is that it would need to be about half that to be around 4.5 cents a kilowatt hour to really have a break even rate. 

00:38:38 Leah Stokes 

And that's under an optimistic scenario. 

00:38:40 Leah Stokes 

Our optimistic scenario is when we assume that heat pumps don't cost that much and you can install them easily, right? 

00:38:46 Leah Stokes 

If we take 

00:38:47 Leah Stokes 

a more average or conservative scenario, the electricity prices need to be even lower. 

00:38:52 Leah Stokes 

So thinking about how we can create a beneficial electrification rate, like a tariff at a public utility commission in Minnesota, that would allow these customers who choose to electrify to get a lower rate, just like we let those EV owners do it, is I think a really important priority to think about from a policy perspective. 

00:39:14 Leah Stokes 

But that being said, we always want to look for opportunities today. 

00:39:18 Leah Stokes 

And here again, we show the optimistic and the conservative scenarios. 

00:39:22 Leah Stokes 

And we basically show that when you look at those high temperature heat pumps, those industrial heat pumps, and you combine them with energy efficiency, looking at the top right circles in this graph here, you can see that things like ethanol and beet sugar, 

00:39:38 Leah Stokes 

They start to be in the money, and they have pretty big emissions savings too, because the size of those circles shows you how big the emissions are, soybeans as well. 

00:39:47 Leah Stokes 

But that is an optimistic take, right? 

00:39:50 Leah Stokes 

If these technologies end up being more expensive, and we, of course, look in the literature to try to make estimates of how much these things cost, and so we create a range here, like an uncertainty range. 

00:39:59 Leah Stokes 

So it could be that they end up being more expensive too. 

00:40:02 Leah Stokes 

But those are perhaps sectors to really think about as early actors, things like beet sugar, ethanol, and soybeans, for example. So when we look at the policy scenarios that we model here, we think about the business as usual case, right, where you have no policy support. And what we find, unsurprisingly, is that isn't going to cause a lot of industrial electrification. 

00:40:28 Leah Stokes 

Then we look at policies that try to reduce the upfront CapEx investment, which is like the policies that Kate talked about from that federal grant that's targeting the food and beverage sector in Minnesota to help companies say, hey, I want to electrify, you know, let me help you do that with some upfront capital costs. 

00:40:48 Leah Stokes 

If we were to have a new federal government and a new Congress, things that could be on the table, for example, not at the state level, but at the federal level, would be things like an investment tax credit or a production tax credit that would be on the production OpEx side, but an investment tax credit that could help with the upfront costs. And there are states like Colorado who are already doing these kinds of policies. And there can also be grant-making programs that can go for up to 100% of the cost. New York State has been doing things like this. 

00:41:18 Leah Stokes 

We can also think about the operating costs. And that's where it's really important to focus our attention in Minnesota because of the spark gap. And that's why I've been talking so much about a reduced electricity rate. We look at the data and say that it probably needs to be about half as high per kWh. So from 9 cents down to about 4 1/2 cents to make it pencil out. 

00:41:39 Leah Stokes 

for these factories. And federally, again, there could be opportunities. For example, Senator Martin Heinrich from New Mexico, who was the ranking member of the Energy Natural Resources Committee, has a lot of interest in a clean heat production tax credit. So we look at what that would do. And of course, you can do both things. You can help with the upfront capital costs, and you can also help with the operating costs. So what does that look like in practice? Well, again, using our optimistic scenario here, you can see that no policy 

00:42:09 Leah Stokes 

Some, it's pretty hard to have projects be in the money, right, from a net present value perspective. And especially if you take a more conservative case in terms of how much it's going to cost, it's really, really hard. Doing an upfront capital CapEx program up to 30%, again, doesn't move the needle a lot just because the spark gap is really the big driver in Minnesota of those cost differences. If you combine upfront capital, 

00:42:37 Leah Stokes 

grant program or tax credit at the state level or federally of something like 30% with a 25% drop in the electricity tariff, then you start to see some stuff come into the money as a break-even point. 

00:42:50 Leah Stokes 

But even if you were to just do the one thing that I've been talking about, which is cutting that electricity tariff for industrial consumers who have electrified in half, you can see that that really does start to move things into the money. And if we were to have a future Congress that passed a bill like the one that Senator Heinrich has been working on, that production tax credit for clean heat, you can see that that would put a lot of projects into the positive range. 

00:43:16 Leah Stokes 

Now, of course, upfront costs vary by technology, and so policy support is really needed. So again, if we look at the no policy, if we compare it to a gas, like let's say you just have a boiler and it dies and you have to replace it with a gas boiler. So that's that dashed line. So that's what we're comparing it to. You can see that putting in an electrode boiler actually is not that expensive, right? It's pretty much the same. 

00:43:43 Leah Stokes 

But putting in those heat pumps has a very large range, and it's a lot more money from a CapEx perspective. If you had a program at the state level to reduce CapEx by 25%, it would definitely put electrode boilers, which have that operating cost penalty into the CapEx money, but then you'd pay for them a lot in the kilowatt hours over time. And something like a 50% program would really bring a lot more projects in. And you could also think, as we've been talking about it, about just trying to get some demonstration projects going by doing something like a 

00:44:13 Leah Stokes 

50 percent or 100 percent CapEx support program. Now, of course, this is going to increase grid demand. We have many other things that are stressing our grid demand right now, like electrifying the transportation sector, and of course, data centers and AI. But it's our view that this is an essential thing to add to the grid. We want to continue to manufacture goods, it's really important for jobs. 

00:44:40 Leah Stokes 

We need these goods as a society. Let's just make them cleaner. And the way we can do them is adding them to the grid. So we need our planning processes to start understanding where these facilities are located and what new additional load they're going to be bringing to the grid. And be thinking through how we can design these retrofits such that they don't add as much to the grid. And that's using things like thermal energy storage or 

00:45:05 Leah Stokes 

even traditional battery storage, although that would be more expensive, or geothermal when it's available, because that obviously reduces the amount of grid demand. And now one thing I want to really leave you with, that even as we talk about the spark gap being so problematic, it's very important to understand that fuel costs are not a big proportion of total production costs. So if, for example, we look at producing one pound of cheddar cheese, 

00:45:33 Leah Stokes 

If that costs $5.98 right now, if you were to electrify that plant, we would only increase that cost by $0.02, so it would go up to $6, right? For soybeans, if it's $310 to make a ton of soybean meal, it goes up by $2.17. 

00:45:52 Leah Stokes 

And for ethyl alcohol, which is a commodity, it does go up by more. So it would be like nine cents on $2.16 for a gallon of ethanol. So that's perhaps a larger share. But the way to think about this is, is this a commodity? Can this company absorb some of these costs within their production? Because adding two cents to a pound of cheese is not really that big of a deal in terms of how we think about this. So it is possible that some companies 

00:46:22 Leah Stokes 

with ESG goals, right, who still believe in that kind of a thing, could move forward anyway, because they think, what, we can absorb this two cents, because fuel costs are just not a big input into the production process for a lot of processes. 

00:46:37 Leah Stokes 

I just want to raise your attention to the fact that these heat systems are ready to deploy. Brandon showed a map, I believe from ACEEE, that shows some of where those facilities are across the country. Just want to highlight a couple that we talk about a lot in the food and beverage pulp and paper and chemical sectors. So Nile Systems, for example, is working on a lumber drying heat pump dry kiln, and it's saving a lot of energy. And that's happening in a bunch of different states. 

00:47:04 Leah Stokes 

There's a facility under production in upstate New York for ethanol that's going to use heat pumps, including waste heat recovery heat pumps, and in the future, industrial heat pumps as well, like an air source high temperature heat pump. And then our favorite is New Belgium Brewing in Colorado, which is using an air source high temperature heat pumps. And some of the main companies that make these technologies are Atmos Zero and Skyfen, and they're out there really trying to create a pipeline 

00:47:34 Leah Stokes 

of new projects. The last thing I will say, and then we're going to have opportunity for questions, so please feel free to put your questions in the question entering chat thing, or if you really can't find that, you can put them in the chat and we will have time for some questions. But the last thing I really want to draw your attention to is that earlier last year, we did publish a report looking at geothermal as a solution to 

00:48:01 Leah Stokes 

low and medium temperature process heat. And of course, there's been so much attention on geothermal right now. Fervo went public yesterday, for example. They're a geothermal electricity generating company. But the thing is that if you have a geothermal electricity plant, it turns out that you can basically use the heat waste stream as extremely, extremely cheap heat as an input into, for example, an industrial process. The challenge is, of course, co-location, making sure that these things 

00:48:31 Leah Stokes 

happen in the same way. And there are examples around the world, like in New Zealand, where pulp and paper processes are done in a place where there is geothermal, and that waste heat from a geothermal power plant can be used. There's also a garlic drying facility, and I always get it wrong, but I think it's in Nevada that does this already. So the takeaway here is that Minnesota can and must and should electrify industrial processes. 

00:48:57 Leah Stokes 

How can the state go about this? Well, it's not going to happen naturally, but it can happen with good policy. There's things like beneficial utility rate structures for clean industrial heat for those companies that choose to move forward. It can be those grants and loans like the one that Kate talked about in the climate smart food systems. And that is open right now for organizations that want to move forward. 

00:49:19 Leah Stokes 

Integrating industrial electrification into cap and invest plans is something that I know Fresh Energy is very interested in. Supporting electrification in integrated resource plans and future of the gas docket. So making sure that we're really planning for this new load in our electricity system. And I think such an important, it sounds kind of fuzzy, but it's actually quite important, is knowledge support for facilities interested in electrification. 

00:49:44 Leah Stokes 

so often in all parts of our lives, we can just do the same thing. We think, oh, I always did it this way, so I'll do it like that. So a plant could be coming to the end of its industrial boiler and just be thinking it's going to replace it because that's what they think they can do and not really understand that there are these other technologies out there. So for example, in places like Pennsylvania, the governor is working to convene companies, convene 

00:50:07 Leah Stokes 

heat pump manufacturers and really share that information as a sort of matchmaking process to try to find companies that want to electrify and companies that can help them electrify. And I think that's super important. We did make an interactive web tool for our national results that, of course, you can zoom in on the great state of Minnesota and click on any of these facilities and really understand them. And I think that's important to understand, okay, what might the economics look like here and help people think through how to move forward on these projects. 

00:50:37 Leah Stokes 

And with that, we're very excited to take some questions. So I'll invite the panelists to come on video, and I will go to the Q&A. And I have a question from Drew Harper, which is, was there an analysis, and please, other people, find the Q&A and put your questions in there. Was there an analysis to determine if it would be more cost effective to encourage vehicle electrification rather than incentivizing ethanol electrification? 

00:51:07 Leah Stokes 

So this is a comment and a question that we get regularly. We are not ethanol advocates by any means, but our decision-making from an analysis perspective is that we have to take the world as it is with the pollution today as it is, and we have to model how those facilities could be electrified. If people do not believe that ethanol facilities 

00:51:29 Leah Stokes 

should exist. That is a valid position, but it is not what we're doing in this report, if that makes sense. So that's pretty much what I would say, like outside the scope of what we're trying to do. What we are trying to do is an engineering techno-economic analysis that is credible for plant operators and policymakers to help them make decisions about electrifying a given plant. 

00:51:52 Leah Stokes 

It is very valid to ask questions about the system. And obviously, both Eric and I and Brandon all spend time thinking about the system that creates pollution. But that is not what we're doing in this specific report. I don't know if Eric or Brandon want to say anything else. Otherwise, I've got another question teed up. Okay. 

00:52:15 Leah Stokes 

So the next one is Timothy Rudnicki. He says, when you speak of cost, I don't hear about the cost of burning fuel, the cost to our climate and its impact on insurance rates. So those things are what we are talking about when we talk about cost. We are talking about 

00:52:31 Leah Stokes 

Things like, you could think of the social cost of carbon, you could think about how we value health benefits. So the slide that Eric talked through where he showed up to $7.2 billion just from the conventional air pollutants. So yes, those are absolutely costs. 

00:52:48 Leah Stokes 

that we value and discuss throughout the report. So people are welcome to look at that. And we don't get into the relationship to insurance rates. If we wanted to do an analysis like that, what we would have to do is look at emissions. 

00:53:01 Leah Stokes 

push those through probably like a general equilibrium or climate science modeling framework, then look at how much that increases warming, and then make some kind of assumption about how that then impacts impacts, and then how that drives up insurance rates. So you can see that would be like a pretty technical and additional analysis that would involve a lot more modeling. And the answer wouldn't necessarily be that credible in terms of like, here's a direct link from a factory in Minnesota all the way through insurance rates. So it is true, of course, that 

00:53:31 Leah Stokes 

climate change drives up insurance costs, but again, a little bit about our outside of our scope. Anything Chris or Brandon want to jump in there? 

00:53:41 Brandon Isakson 

Yeah, I would just point again to, I only had one brief slide on this, but PCA just in March presented to the legislature, the Climate Adaptation and Resilience Cost Study. 

00:53:54 Brandon Isakson 

that very much kind of tries to capture the the cost of inaction versus the cost of proactive solutions and quantifying that massive gap between inaction and uh annual adaptation costs and it's much broader than industry but um a really good resource there 

00:54:14 Leah Stokes 

Great. We've got a question from Chris Frauten at Atmos Zero, a great company making heat pumps. So we appreciate your work. And Chris says, did you look at the value of flexible electric assets? And I'll ask Eric to answer this one, of flexible electric assets to the grid. For example, the ability to send excess renewables into steam systems or unload electric technologies and move to gas when there is a grid event that needs more generation. 

00:54:41 Leah Stokes 

like using a virtual power plant? Eric, you want to do a first cut of that one? 

00:54:44 Eric Masanet  

All right, I'll just, that's a great question. And the quick answer is we're working on it now. So the first step in this overall project was to model the plants, understand the role of different technologies, assess the cost, the technical feasibility of electrification, 

00:55:01 Eric Masanet  

and understand if there's an opportunity there. But you're absolutely right. Like in the future, electrifying some of these core process heating unit processes could also bring benefits to the grid. If you can shift schedules, operate them when there's more renewables, potentially store energy on site when you have more renewables, send electricity back through storage. That's something we're considering now in our current phase of work, but it all starts from this foundation that we've built up in the current report. 

00:55:31 Leah Stokes 

Yes, totally agree with Eric. We're very interested in things like load shifting, because that changes when you have a big new load on the grid, how that load can be managed. This is a parallel conversation to how people think about data centers or AI, right? If this load can be flexible, that can really help with grid planning. And so things like thermal energy storage, this virtual power plant concept of being paid, for example, to ramp down demand at times of grid constraint, these are ways that all this new load 

00:56:01 Leah Stokes 

can be managed a lot more effectively. Another question comes from Cameron Kaye, which is, What can an individual actor, one who doesn't work in the manufacturing industry, do to accelerate the decarbonization of this sector? I'm going to let Brandon take the first whack at that one. 

00:56:22 Brandon Isakson 

Yeah, I mean, I think there's a lot of different ways to engage. 

00:56:26 Brandon Isakson 

you know, first off, you know, supporting the folks that have been working on this for a long time. So, you know, engage with Fresh Energy and the ecosystem of advocates and continue to work with us to learn and promote these solutions and get in front of your legislators and work together to, again, create this ecosystem to move together. 

00:56:52 Brandon Isakson 

And there's a lot of different ways to get involved in processes, thinking like on that last point from Atmosero there, we have multiple PUC dockets in the near term, just on the horizon, thinking about thermal energy storage, large load tariffs, some of those considerations that are open to the public to engage in. 

00:57:16 Leah Stokes 

Yeah, I will just say that 

00:57:19 Leah Stokes 

Partnering with an organization like Fresh Energy, and there are other ones in the area like Five Lakes. I'm going to mess them up. Maybe Brandon can tell us some more organizations. But that is the way that you can really amplify your voice and increase your impact. Because organizations like Fresh Energy have relationships with legislators. They know when the legislative session is happening, and they can help you plug into efforts and work. And there can be things like writing your legislator that you can do. 

00:57:50 Leah Stokes 

Or if you want to take a much heavier lift, really getting involved essentially in a campaign. You know, I think one thing that we hope coming on the backside of this report is that there will be opportunities next year in Minnesota to think about introducing bills that do some of the things that we are talking about. So for example, directing a public utility commission to create a beneficial electrification tariff. And it can be really exciting and fun to get involved in work like that to make a difference. 

00:58:18 Leah Stokes 

And certainly what I do on a day-to-day basis, even though my day job is technically being a professor, I still do a lot of this kind of campaigning work, largely right now in the state of California where I live, but you can actually make a massive difference. And that is basically what my book is about that comes out, how everyday people can change policy. And all of us who have talked today have had that personal experience. Most of us have PhDs, it's kind of funny, but we wouldn't think of us as some ivory tower people. We're involved 

00:58:48 Leah Stokes 

We're getting things done, and that is because we are working in partnerships with other groups, so finding ways that you can do that, whether it's a volunteer, whether it's part of your job, can really be a hugely rewarding and fun and challenging experience, so I just really encourage people to find ways to plug in, and I'm sure Fresh Energy is a great one-stop shopping option. 

00:59:09 Leah Stokes 

All right, well, we've come to the top of the hour. Thank you all so much for joining us. We hope you found this interesting, inspiring, provocative, insightful, all of the above. And I just want to send, lastly, a big thank you to the folks at Fresh Energy, including Joe and Brandon, for helping to organize this webinar, and to all of you for coming. And I hope you all have a wonderful rest of your day. 

00:59:33 Jo Olson 

Thank you for subscribing to our podcast. You can stay up to date on Fresh Energy's work at fresh-energy.org or follow us on social media. Mark your calendar to join us next week at our loggers and legislation gathering to unpack the Minnesota legislative session on Thursday, May 21 at 5 p.m. at Urban Growler. Registration is free and your first drink is on Fresh Energy. 

00:59:59 Jo Olson 

You can support Fresh Energy's work to drive bold, policy solutions to achieve equitable, carbon-neutral economies in Minnesota and beyond. Head over to our website for the latest news from Fresh Energy and to make a donation. Thank you to the band Palm Psalms for providing our theme song. It's called DGAF, and it's off of their album O2 Haka. Get the latest from the band at palmsalm.com.