Obama's green plan: lessons from Minnesota

Going green can be rough going, politically speaking.

Minnesota's experience in that regard gives a preview of the bumps in President Obama's road as his administration moves to take measure of the nation's greenhouse gas emissions and set up a system for curbing them.

Minnesota and other Midwestern states are several steps ahead of the federal government in addressing the emissions, which scientists blame for climate change. Their experience suggests that real gains can be made.

But it won't be easy. And it definitely will not be peaceful.

David Thornton has worked for two years on Midwestern versions of Obama's proposal. He is assistant commissioner of the Minnesota Pollution Control Agency.

"The one thing I have learned is that it is very, very complicated, and I would not be surprised if it takes more time than people are thinking it will to settle on how this should be done at the national level," he said.

Another clear lesson is that all of us are in for major changes of consciousness and maybe lifestyle too — from the placement of shrubs in our yards to models of vehicles in our garages.  

"At a minimum it's quite likely that people are going to be much more aware of the issue of greenhouse gas emissions and their decisions on a day to day basis — their lifestyle: heating and cooling their homes and cooking their food and getting back and forth to where they want to go," he said.

Anyone who wants to keep check on how politicians and bureaucrats handle the upcoming decisions also faces a hefty load of homework. After spending most of last week mucking around in the shallowest of the issue's murky waters, I can say that with authority.

An essential first step
Best to begin with the most recent developments.    

The U.S. Environmental Protection Agency made a major stride last week when it proposed a rule requiring power plants, oil refineries, factories and other industries to measure and report their greenhouse gas emissions. After a 60-day period for comment and hearings, the EPA plans to make the rule final this fall. And in 2011 industries would have to begin by reporting 2010 emissions.

Sen. Amy Klobuchar, D-Minn., is among many who hailed the EPA move as "an essential first step towards a cap-and-trade system to reduce emissions." (As one of her first moves in Congress, Klobuchar had pushed for funding to develop the registry that EPA will compile with the reports.)

The cap-and-trade system would begin with strict limits on emissions of carbon dioxide and other greenhouse gases. Utilities and companies that emit the gases would have to buy allowances to do so. For the trading piece of the scheme, someone could exceed a limit by buying unused portions of someone else's allowance. Depending on the system's rules, they also may be able to buy and sell offsets — say, a carbon-capturing stand of trees.   

Candidate Obama pledged while campaigning to create such a system, and last month President Obama began making good on the pledge by including cap and trade in his budget plan. (PDF) He set goals of reducing the emissions about 14 percent below 2005 levels by 2020 and 83 percent below by 2050. Obama anticipates raising $646 billion from 2012 to 2019 by auctioning rights to emit the gases.

Taking measure in Minnesota
It's hard to say at this point how Obama's plan would play out in Minnesota. The state accounts for less than 2.5 percent of the nation's greenhouse gas emissions. But through 2005, the state's gross emissions had been rising faster than the nation as a whole — up 32 percent from 1990 while nationwide emissions rose by only 16 percent.

Calculated on a per-person basis, each Minnesotan emitted about 30 metric tons of gross carbon dioxide in 2005, compared with a national average of about 24 tons per person. (More details can be found here. [PDF])

The state's emissions turned a corner in 2006 and started declining, the PCA and the Department of Commerce reported to the Legislature this year. But more recent data isn't available to show whether the downturn is lasting.

Speedier and more precise estimates of the emissions could come from a bill Sen. Yvonne Prettner-Solon,  DFL-Duluth, introduced in the Legislature which would require emitters to report their greenhouse gas outputs to the state, much as the EPA proposes to do on a national level.

Recognizing that the problem is real here, Midwestern states and the Canadian province of Manitoba agreed (PDF) in 2007 to set up a regional cap-and-trade system.

Committees working on the project through the Midwestern Governors Association are drafting a proposed rule that could come for a vote in the Minnesota Legislature next year. They also are assessing the plan's economic impacts.

Momentum for the regional plan likely will continue even though the federal plan eventually could supplant it. Work underway in the Midwest "will help inform the national debate and identify issues that are of key importance to Midwestern states," said Thornton at the PCA.

Buzz saw of opposition
It also will give the Midwest a fall back in case Washington can't pull together agreement on a national system. This is going to be contentious. Even people who agree wholeheartedly on the broad strategy and goals for a cap-and-trade system find ample grounds to fight over the details.

The Midwest initiative hit a buzz saw of opposition from chambers of commerce and manufacturing groups. In February, the Minnesota opposition — working under the umbrella organization "Partners for Affordable Energy" — released its own study predicting dire economic consequences from the Midwestern initiative and other steps the state is taking to curb emissions.

"Minnesota households and industries will incur incremental costs of $42 billion over the next 40 years to reduce Minnesota emissions while having no impact on efforts to reduce national emissions," the group concluded (emphasis theirs).

While the opposition focused on the regional plan, the proposed national approach hardly gets a warm welcome at the Minnesota Chamber of Commerce.

"China and India are major sources of greenhouse gas emissions, so unless they are in the deal we don't make a whole lot of progress on significant reduction," said Bill Blazer, the chamber's spokesman.

Costs associated with the plan will drive companies overseas, he predicted.

Counting the cost
Under Obama's proposal, companies would need to buy a $13 to $20 permit for each ton of carbon emitted, Business week reported.

"Even at the lower range of $13 per ton, energy companies and utilities would likely pass along the added cost to consumers.," Business Week said. "It's estimated the price of gasoline would go up by 12 cents a gallon and the average electricity bill by about 7% nationally—and far higher in states more dependent on coal."

Critics, including some congressional Democrats, say the heaviest costs would fall on the Midwest and the South where a good share of the electricity comes from coal-fired plants.

Business Week also noted, though, that a workable cap-and-trade market would provide a "green stimulus," boosting energy efficiency and renewable energy efforts and also giving business executives more certainty about future energy costs.

"The Obama team points out that its cap-and-trade plan returns much of the money raised by permit sales to consumers nationwide in the form of lower taxes, so many people come out ahead," it said.

And research by the Environmental Defense Fund indicates that, at least in theory, the Midwest would benefit from the most new jobs.

Blazer at the Minnesota chamber is not convinced.

"If somebody wants to get a competitive edge, they will go to you-pick-the-country where they are not under a cap-and-trade system," he said. "That will hurt the U.S. economy and U.S. workers. Secondly, they will be in a country where there is no control of greenhouse gas emissions, so we will get the worst of both worlds. We will get fewer jobs, and we won't solve the environmental problem."

Amplify the Minnesota opposition to a national level, and you get a sense of the uproar that is coming.

Who is in and who is out?
One point of contention is where to set the threshold for reporting emissions.

The proposed federal rule would require facilities that emit 25,000 metric tons or more a year of greenhouse gases to submit reports. That would leave out the vast majority of small businesses, says the EPA, while still covering 85 to 90 percent of total national emissions.

Bill Grant, the Midwest director of the Izaak Walton League, is not so sure about the coverage claim even though he supports the idea of a uniform national system.

"There will be arguments about whether the threshold set for reporting is too high. ... whether it is allowing too many small to medium sized emitters go without reporting," Grant predicted.    

The EPA says most of agriculture would not be required to report except for about 50 large manure management systems.

But in Minnesota that would exempt a major source of the emissions. Electric utilities are by far the state's largest source. Second are the many vehicles we drive. Agriculture is third.

The question of how much to require of agriculture has sparked heated argument during regional planning, said Grant, who serves on Gov. Tim Pawlenty's Minnesota Climate Change Advisory Group.

"There was a lot of debate about...whether large feedlots would have to report," Grant said. "Some of it was pretty contentious....There was a lot of pushback from the agricultural community here in Minnesota."

While Minnesota and the other Midwestern states already have settled some points of contention, Grant said everyone has "a lot of work to do and some hard choices to make," in the coming months.

The sum of it all is that the country may be on the brink of massive change, said Professor Steven Taff, an economist at the University of Minnesota.

"We face major change if, as a country, we take carbon seriously," Taff said. "But we are still just talking about it. We haven't done it yet."

Sharon Schmickle writes about national and foreign affairs and science. She can be reached at sschmickle [at] minnpost [dot] com.