BISMARCK — With fossil fuel companies staring down new financing barriers in an increasingly climate-conscious market, North Dakota lawmakers are looking to put possibly hundreds of millions of state dollars behind low-emissions energy projects in the next two years.

The effort comes under the banner of the proposed Clean Sustainable Energy Authority, a board that would oversee a hefty state fund and recommend grants and loans for projects aimed at cutting carbon output in the energy sector.

"To me, the most important part of the bill is us defining what 'clean and sustainable' is,” said Rep. Glenn Bosch, R-Bismarck, whose House Bill 1452 would establish the program. "Not how other people view it, but how we view it as a state."

But this effort to finance cleaner energy projects, which is backed by much of the Legislature's Republican leadership, has drawn opposition from two strange bedfellows: small government conservatives and environmental activists. Both have questioned the sincerity of the authority's "clean and sustainable" mission and raised concerns over the proposal to funnel large sums of state funding into support for private companies.

"It’s trying to prop up the fossil fuel industry and trying to put that square peg into the round hole of clean energy," said Wayde Schafer, a spokesman for North Dakota’s chapter of the Sierra Club. Environmental groups like the Sierra Club have taken particular issue with the representation on the Clean Sustainable Energy Authority, which would have majority stakeholders from the fossil fuel industry, and predict it would line the pockets of coal and oil companies while largely ignoring renewable resources like wind and solar.

Newsletter signup for email alerts

And though fossil fuel groups have countered that such a project would offer a critical assist in efforts to reduce the carbon footprint of some of North Dakota's core industries, the rift reflects larger disagreements over how the state should define clean energy amid shifting market winds in other parts of the country.

"The whole thing seems kind of rigged, stacked in favor of the fossil fuel industry," Schafer said of the proposal. "If you're creating a clean, sustainable energy authority, it seems like you’d want to be more inclusive and more balanced. This is not."

Shifting winds

The effort to launch a Clean Sustainable Energy Authority in North Dakota comes against the backdrop of rising tides for green energy and renewable resources. President Joe Biden’s administration has signaled regulatory crackdowns on the fossil fuel industry, while Wall Street investors have increasingly looked to put their money behind clean energy projects — a blow to funding streams for oil and coal.

Over the course of this legislative session, the scope of the Clean Sustainable Energy Authority has gotten bigger. An initial modest appropriation was bumped up to a replenishing $40 million to be used for grants and loans. And last week, an amendment tacked onto a separate bill, not yet approved by the full House and Senate, would balloon the authority’s fund to include another $250 million, marked explicitly for low-interest loans.

This large pool would be overseen by a 16-member authority beneath the state's Industrial Commission. Eight members would have voting power: its Legislature-appointed chairman, two members appointed by the Lignite Research Council, two appointed by the Oil and Gas Research Council, one member appointed by the Western Dakota Energy Association and two members appointed by the Renewable Energy Council.

This controlling majority of fossil fuel groups has been critiqued by both environmental groups and libertarian-minded North Dakotans like Dustin Gawrylow, director of the North Dakota Watchdog Network, who said the makeup looks "kind of like a dog and pony show" for the oil and coal industries. At a recent committee meeting Gawrylow told lawmakers that the Clean Sustainable Energy Authority's "deck is clearly stacked" to subsidize traditional energy.

Sen. Jessica Bell, R-Beulah, a coal country representative and chair of the Senate Finance and Tax Committee, rejected arguments that these industries would have an outsized say in where the money goes and noted that coal, oil and renewables each have a two-vote share.

The recent addition of $250 million to the authority’s fund has also proven a sticking point. Bell, who works for the state's largest coal producer, said that any energy project applying for funding from the authority will be eligible for loans out of the $250 million pot. Senate Majority Leader Rich Wardner, however, characterized the addition differently. Though he noted that a variety of projects would be able to apply for the funding, he said the money would very likely go into Project Tundra, the billion dollar carbon capture project that state officials hope will deliver a breakthrough for the long-term viability of the state’s coal industry.

“We’ve been talking about this from the very beginning,” Wardner said of the $250 million. “I want to make sure that we take care of this project because we feel that it’s crucial for our energy future.”

The likelihood that this money goes into carbon capture is an added concern for North Dakota environmental groups and some small government conservatives, who often note that the technology, though aimed at cutting carbon emissions, is expensive and unproven at Tundra's massive scale.

“If this is going to Project Tundra,” said Dakota Resource Council director Scott Skokos, “we’re throwing $250 million of our state funding at something that not even banks would pay for.”

Still, ethanol producers and fossil fuel groups like the North Dakota Petroleum Council and the Lignite Energy Council see the proposal as a positive environmental step for the state. Both lobbying groups have pushed for the formation of a Clean Sustainable Energy Authority as an important measure for tackling the emissions concerns that have dogged the oil and coal industries, and which may pose the most substantial threats to their favorability in the market in the coming years.

Petroleum Council president Ron Ness said North Dakota shouldn’t allow its coal and oil industries to decline even as troves of natural resources remain in the ground. And he questioned why environmental groups oppose a project aimed at making that process cleaner.

"For anybody to suggest that any energy source can’t do better — that there’s not better technology — I think that’s very short-sighted," he said. "Are they really proponents of clean energy or are they opponents of fossil fuels?”

For veteran GOP adviser Robert Harms, one of the founders of the state's oil tax piggy bank known as the Legacy Fund, the dollar figures attached to the Clean Sustainable Energy Authority raise worries about the management of state funding over the longer term. A longtime consultant to the oil industry who now represents wind clients, Harms said he sees the Clean Sustainable Energy Authority as "a worthwhile, noble exercise," but added that the current form of the bill could mean that hundreds of millions of dollars are doled out with little public transparency.

Rather than constructing a panel "dominated by coal and oil and gas," Harms suggested that a better system would result from an authority with transparent decision-making and an even playing field for both the state's fossil fuel and clean energy interests.

"Don't make it look like what it appears to be," he said. "Make it real."

Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.