Minnesota regulators on Thursday said burning wood or trash to generate electricity could be considered carbon-free under the state's landmark 2040 climate law, depending on how emissions are counted.

The Minnesota Public Utilities Commission's (PUC) decision was a loss for environmental nonprofits that wanted to rule out garbage and wood incineration because it creates climate-warming pollution when burned.

The PUC chose not to do that and instead took a bigger view, aiming to weigh initial emissions against other factors such as how much carbon an energy source would produce naturally anyway. That kind of analysis would help answer questions such as whether burning garbage for electricity is a climate benefit because it avoids methane released from landfills.

The Legislature defined carbon-free in its law simply as "technology that generates electricity without emitting carbon dioxide." But utilities, environmental groups and others were sharply divided over how to interpret that.

Katie Sieben, a DFLer who chairs the commission, said taking action to rule out wood burning, for one example, would require the PUC to wrongly act like a "mini Legislature."

"It's not our job to write the legislation," she said.

The Minnesota Center for Environmental Advocacy and the Sierra Club said the PUC's ruling undermined the carbon-free law. "The commission's decision distorts Minnesota's landmark carbon-free law by allowing greater reliance on our most carbon-intensive sources of electricity," said Barbara Freese, an attorney for the Center for Environmental Advocacy.

Besides wood and garbage, the PUC decision will impact the future of hydroelectric power, hydrogen combustion, fossil fuels paired with technology to capture and store carbon emissions, and more.

The commission drew hundreds of public comments, including input from electric utilities, state lawmakers, local elected officials, environmental nonprofits, Gov. Tim Walz's pollution regulators, North Dakota's governor, the forestry and paper industry and labor unions.

Debate over climate impact

Wind, solar and nuclear power drew broad support as the PUC considered the issue. Wood and garbage burning were more controversial.

A dozen environmental organizations and some DFL lawmakers wanted the PUC to decide that any electric plant that emits carbon at the point of generation — such as incinerating wood and garbage — would not be considered carbon-free.

The state's biggest electric utilities, as well as the Minnesota Pollution Control Agency (MPCA) and the state Department of Commerce, said the law should take other factors into consideration.

They backed a "life-cycle analysis" of net emissions. Supporters of wood burning argue it can be carbon-neutral because wood would emit greenhouse gases as it decomposes or if it burned in a wildfire.

There is a similar debate for garbage, which creates methane emissions if buried in a landfill. The MPCA views burning garbage to create electricity as a better option.

Kirk Koudelka, an assistant commissioner at the MPCA, said Thursday he wanted to make sure the state didn't cause unintended consequences of creating more carbon emissions by focusing only on the electric sector.

Wood and waste burning may not count as fully carbon-free after a life-cycle analysis. Power companies can get partial credit toward meeting a certain percentage of carbon-free electricity under the law. The details of how a utility operates, such as where it sources wood, could matter significantly.

Many environmental groups argued that burning wood isn't actually carbon-neutral. Several, for instance, cited 2017 California data compiled by the Center for Biological Diversity in Tucson, Arizona, that found carbon emissions from burning "woody biomass" were about twice that of coal plants and more than four times more polluting than using gas plants to produce electricity.

Joe Sullivan, a DFLer and vice chair of the PUC, said those issues can be hashed out later, after more research and when utilities submit energy supply plans to the commission. "I don't want to salt the earth on the front end," he said. "We have a whole process to figure it out."

Biomass, a term for organic material that includes wood and garbage, made up just 2% of electric generation in the state last year, according the state Department of Commerce.

Still, Minnesota Power is one utility that has considered expanding its biomass capability because the region has an abundance of wood scraps from a large forestry industry that would otherwise go unused. The Duluth-based company said it might consider converting its large coal plant in Cohasset, Minn., to run on biomass, though that wouldn't replace all of the power lost when Minnesota Power stops using coal at the facility by 2035.

Plus, the utility wants more always-available power options when the wind is not blowing and the sun is not shining. There are few alternatives to fossil fuels in that case.

In its climate law, the Legislature said the garbage-burning Hennepin Energy Recovery Center in downtown Minneapolis is specifically not considered carbon-free. DFL lawmakers did not want to extend the center's life.

Carbon capture could get partial credit

Another question for the commission was hydroelectric dams. Most environmental organizations and utilities view hydroelectric power as emissions-free, though submerged plants decaying in reservoirs emit greenhouse gas, albeit far less than natural gas and coal.

Commenters also debated how to count electricity generation from fossil fuels paired with carbon capture technology. North Dakota Gov. Doug Burgum and other top state officials also urged the PUC to let utilities receive full or partial credit for using carbon capture, saying it would extend the life of coal plants in North Dakota that provide power to Minnesota.

On Thursday, the PUC voted to approve a method for determining partial compliance with the law for carbon capture.