From an overall energy markets and climate policy perspective, building new fossil fuel infrastructure would not be a good long-term deal for Minnesota’s environment and taxpayers.
Once the up-front costs of building new fossil fuel infrastructure have been sunk, fossil fuels would continue to be processed for several decades into the future, long past the time when they would ordinarily become economically unviable. This effect is called infrastructure lock-in. It would lead to increased costs for everyone involved, increased pollution into Minnesota’s air and water, and increased greenhouse gas emissions that intensify the climate crisis.
In 2017 the Minnesota Legislature passed a law allowing Minnesota’s largest utility, Xcel Energy, to build a natural gas power plant in Sherburne County without going through the usual regulatory process. This was reflected in their most recent integrated resource plan (IRP). It would be a combined cycle natural gas plant, as opposed to a natural gas “peaker” plant. It would emit over 1.2 million tons of carbon dioxide equivalent (CO2e) per year for an estimated lifetime of 30 years. This alone would increase Minnesota’s electricity sector emissions by nearly 4 percent at a time when rapid decarbonization is critical.
The natural gas plant would provide baseload power that some say is a necessary replacement for the coal plants that would be retired significantly ahead of schedule under Xcel’s IRP. However, recent studies have found that those coal plants are already more expensive than local renewable energy sources. Furthermore, natural gas is only less emissions intense than coal if methane leakage is minimal throughout the supply chain, which is not always the case.
These coal plants might have already been retired if it wasn’t for the inertia of infrastructure lock-in. The same problem would happen in the future if the proposed natural gas plant is built. Prices of renewable electricity sources are already approaching the levels of natural gas prices. As that trend continues, ratepayers would be left holding the bill for the extra costs of unnecessary fossil fuel infrastructure.
The proposed replacement for Enbridge’s Line 3 tar sands oil pipeline would transport 760,000 barrels per day through northern Minnesota. The oil flowing through it would lead to significant particulate air pollution, along with nearly 200 million tons of CO2e emissions per year. That is more than the entire state of Minnesota emitted in 2016. This project would potentially increase total U.S. emissions by 2.75 percent, at a time when leadership on climate action is greatly needed. Over the estimated lifetime of the proposed pipeline, it would lead to 10 billion tons of CO2e emitted. This represents 1.59 percent of Earth’s carbon budget needed to limit global warming to a relatively safe level of 1.5’C.
Using Minnesota’s social cost of carbon, the oil flowing through Line 3 would cost over $8 billion per year in climate impacts alone. For comparison, Minnesota’s two-year state budget, passed in May, is $48.3 billion. It is also very likely that the pipeline would spill oil at least once in its estimated lifetime. This would damage northern Minnesota’s natural ecosystems and resources that we all depend on, and taxpayers would be left footing the bill for cleanups. Furthermore, as transportation electrification continues, that will mitigate some demand for oil.
While pipelines and electricity generation facilities are subject to two very different sets of laws and regulatory processes, both fossil fuel infrastructure examples discussed here are affected by public policy and legislation. There has been a great deal of discussion about market-based policies such as a carbon fee and dividend. However, restrictive supply-side fossil fuel policies are also needed to complement market-based policies.
Policies that restrict fossil fuel usage ensure that they are not burned, preventing their associated emissions. They are easy to administer, and send a clear signal that doesn’t depend on commodity price volatility. Furthermore, they don’t allow corporations to overproduce fossil fuels in anticipation of future carbon price increases. Delays in construction of the Line 3 project have already been effective in causing oil supply curtailments.
The negative impacts of climate change are already being experienced by all Minnesotans, and restricting fossil fuel infrastructure would help to mitigate them in a way that doesn’t unduly impact our pocketbooks.
Jacob Herbers is a researcher at the University of Minnesota Humphrey School’s Center for Science, Technology, and Environmental Policy.
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