1.1 	A bill for an act
1.2 	relating to environment; establishing principles of a cap and trade program for 
1.3 	greenhouse gas emissions; requiring studies; appropriating money;proposing 
1.4 	coding for new law in Minnesota Statutes, chapter 216H.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [216H.10] TITLE.
1.7 	This act may be cited as the Green Solutions Act of 2008.

1.8 	Sec. 2. [216H.11] CAP AND TRADE PROGRAM.
1.9 		Subdivision 1.Intent. It is the intent of the legislature that Minnesota participate in 
1.10 	the midwest regional cap and trade program to help achieve the greenhouse gas emissions 
1.11 	reductions goals established in section 216H.02, subdivision 1.
1.12 		Subd. 2. Principles. The legislature recognizes that the atmosphere and climate are 
1.13 	common assets, and damage to them by greenhouse gas emissions are costs now borne 
1.14 	by the public. Capping greenhouse gas emissions gives a market value to the ability to 
1.15 	emit, and that market value should accrue to the public. It is the intent of the legislature 
1.16 	that any cap and trade program:
1.17 	(1) should cover as many emitting sectors as is administratively feasible, but 
1.18 	excluding sectors from which emissions cannot be reliably quantified; 
1.19 	(2) should provide that the allowances created under a cap and trade system should 
1.20 	accrue to the benefit of the public. To the extent that allowances are distributed through 
1.21 	an auction, the revenue would help consumers and energy-intensive industries pay their 
1.22 	energy costs and reduce their energy costs more quickly. Business concerns about paying 
1.23 	the cost of allowances must be balanced with benefit to the public;
2.1 	(3) should allow auctions to be phased in if necessary to protect consumers and 
2.2 	industries from sudden price increases, provided that protections are in place to ensure 
2.3 	that windfall profits do not accrue to entities allocated allowances during the transition; 
2.4 	(4) should be designed to obtain the emission reductions necessary to meet the cap 
2.5 	from the capped sectors themselves rather than from sectors outside the cap;
2.6 	(5) should not increase the emissions cap by allowing the issuance of allowances 
2.7 	beyond the limits specified in section 216H.02; and 
2.8 	(6) should provide for equity to communities at risk of disproportionate economic 
2.9 	and environmental impacts.

2.10 	Sec. 3. [216H.12] MIDWESTERN GREENHOUSE GAS ACCORD.
2.11 	(a) By January 15, 2009, the commissioner of commerce and the commissioner of 
2.12 	the Pollution Control Agency shall submit a report to the chairs and ranking minority 
2.13 	members of the senate and house of representatives committees with primary jurisdiction 
2.14 	over energy policy, environmental policy, and transportation policy regarding:
2.15 	(1) the status of the development of a model rule establishing a regional cap and 
2.16 	trade program under the Midwestern Greenhouse Gas Accord;
2.17 	(2) implementation mechanisms in the model rule, including required legislation;
2.18 	(3) whether the regional cap and trade program will operate in a time frame that will 
2.19 	allow Minnesota to meet the greenhouse gas reductions goals under section 216H.02, 
2.20 	subdivision 1; and
2.21 	(4) an evaluation of legislation enacted or pending in congress to implement a 
2.22 	federal cap and trade program and whether implementation of a regional program is 
2.23 	consistent with a federal program.
2.24 	The report must address the degree to which any model rule being developed under 
2.25 	the Midwestern Greenhouse Gas Accord incorporates the principles set forth in section 
2.26 	216H.11, and will operate in a time frame that will allow Minnesota to meet its greenhouse 
2.27 	gas emissions reduction goals under section 216H.02, subdivision 1. If a model rule 
2.28 	incorporating those principles and in accord with the state's emissions-reduction goals is 
2.29 	not yet ready for adoption, or is unlikely to be adopted, the report must identify options 
2.30 	for Minnesota to supplement the regional agreement with state policies, to join another 
2.31 	regional cap and trade program, or to implement a cap and trade program in Minnesota 
2.32 	alone.
2.33 	(b) The legislative greenhouse gas accord advisory group is composed of six 
2.34 	members of the legislature, appointed as follows:
3.1 	(1) two members of the majority party in the senate, appointed by the majority 
3.2 	leader, and one member of the minority party, appointed by the minority leader; and 
3.3 	(2) two members of the majority party in the house of representatives, appointed by 
3.4 	the speaker of the house of representatives, and one member of the minority party in the 
3.5 	house of representatives, appointed by the minority leader.
3.6 	The legislative advisory group serves in an advisory capacity to the governor's Midwestern 
3.7 	Greenhouse Gas Accord stakeholder group, and may request regular briefings from 
3.8 	that group, in addition to participating and offering advice in meetings where regional 
3.9 	negotiations take place. The appointing authorities under this paragraph must complete 
3.10 	their appointments by June 1, 2008. The advisory group expires when the governor 
3.11 	dissolves the Midwestern Greenhouse Gas Accord stakeholder group.
3.12 	(c) Any cap and trade agreements entered into are not effective in Minnesota until 
3.13 	enacted into law.

3.14 	Sec. 4. [216H.13] STUDIES.
3.15 		Subdivision 1.Governance study. The commissioner of commerce may contract 
3.16 	with the University of Minnesota or other state public institutions of higher education or 
3.17 	may issue a request for proposals for a study that describes and analyzes several options 
3.18 	regarding how decisions on expenditures of revenues captured by any cap and trade 
3.19 	program may be made. The study must examine: 
3.20 	(1) the role that the legislature, citizens, technical experts, and state agencies may 
3.21 	play in decision making; and 
3.22 	(2) innovative decision-making structures and processes, including the 
3.23 	Legislative-Citizens Commission on Minnesota Resources, and other examples in 
3.24 	Minnesota and other states and countries that may offer useful models to consider. The 
3.25 	results of the study must be reported to the chairs and ranking minority members of the 
3.26 	senate and house committees with primary jurisdiction over energy and environmental 
3.27 	policy by January 15, 2009. The commissioner may combine the study under this 
3.28 	subdivision with the study described in subdivision 2.
3.29 		Subd. 2.Economic and emissions study. The commissioner of commerce shall 
3.30 	conduct a study of the economic, environmental, and public health costs and benefits of a 
3.31 	cap and trade program incorporating the principles established in section 216H.11. The 
3.32 	study shall consider the impact of the cap and trade program on individual industrial 
3.33 	sectors subject to the program and on the state economy and consumers, and how 
3.34 	expenditures of any auction revenues on the measures identified in subdivision 3 can 
4.1 	reduce the economic costs and increase the economic, environmental, and public health 
4.2 	benefits. The study must include: 
4.3 	(1) estimates of allowance prices and rates of investment by facilities subject to the 
4.4 	cap and trade program in infrastructure and equipment to reduce emissions of greenhouse 
4.5 	gases over time;
4.6 	(2) estimates of increases in energy prices for fuels that produce greenhouse gas 
4.7 	emissions, the impact of price increases on businesses and family income, and the degree 
4.8 	of regressivity of the price increases and how to avoid regressive impacts;
4.9 	(3) projections of likely revenues if allowances are auctioned; 
4.10 	(4) a detailed estimate of the degree to which different levels of expenditures of 
4.11 	auction proceeds on the options listed under subdivision 3, clauses (1) to (6), would:
4.12 	(i) reduce greenhouse gas emissions;
4.13 	(ii) reduce economic costs to industry and households;
4.14 	(iii) yield jobs and other economic benefits by stimulating economic activity, 
4.15 	promoting the growth of new businesses, reducing how much money leaves the state to 
4.16 	buy fossil fuels, or other means;
4.17 	(iv) result in environmental and public health co-benefits by reducing pollutants 
4.18 	other than greenhouse gases, improving habitat, or other means; and 
4.19 	(v) otherwise meet the goals identified in subdivision 4; 
4.20 	(5) discussion of the potential for any allowances allocated by the program to lead to 
4.21 	windfall profits rather than be used to reduce consumer prices;
4.22 	(6) an analysis of options to mitigate adverse competitive impacts on state businesses 
4.23 	and methods to reduce disruptive impacts on workers, businesses, and consumers;
4.24 	(7) options for criteria that decision makers can use to determine how to allocate 
4.25 	expenditures among the spending options listed under subdivision 3, balancing the goals 
4.26 	set forth in subdivision 4; 
4.27 	(8) analysis of various mechanisms for protecting job loss in energy intensive 
4.28 	industries subject to competition from outside the Midwestern Greenhouse Gas Accord 
4.29 	region including steel, cement, paper, pulp, aluminum, and chemicals, including an 
4.30 	analysis of possible mechanisms to account for the greenhouse gas emissions associated 
4.31 	with the production and transportation of imported goods; and 
4.32 	(9) analysis of various mechanisms to provide for equity to communities at risk of 
4.33 	disproportionate economic or environmental impacts.
4.34 	The study shall consider the data and policy recommendations developed through 
4.35 	the Minnesota Climate Change Advisory Group as well as the growing literature related to 
4.36 	reducing greenhouse gas emissions. By January 15, 2009, the study must be submitted 
5.1 	to the chairs and ranking minority members of the senate and house of representatives 
5.2 	committees with primary jurisdiction over energy policy and environmental policy.
5.3 		Subd. 3.Expenditures to be studied. The study required under subdivision 2 shall 
5.4 	consider the impacts of the following types of expenditures:
5.5 	(1) direct per capita rebates to Minnesotans;
5.6 	(2) grants and incentives to consumers to invest in energy efficiency and utilize 
5.7 	renewable energy sources, or in other technologies, products or practices that help 
5.8 	Minnesotans reduce energy costs, energy consumption, and greenhouse gas emissions; 
5.9 	(3) financial assistance to businesses that install technologies that reduce their 
5.10 	facilities' greenhouse gas emissions, targeting energy-intensive industries facing 
5.11 	competitors not subject to comparable regulation including, but not limited to, steel, pulp, 
5.12 	paper, cement, chemicals, and aluminum; 
5.13 	(4) investments in public infrastructure that reduce greenhouse gas emissions; 
5.14 	(5) investments in worker training and retraining programs; and 
5.15 	(6) incentives for carbon sequestration on forest and farmland.
5.16 	A majority of expenditures from the fund must be directed to uses under clauses (1) 
5.17 	and (2). 
5.18 		Subd. 4.Study criteria.  The study required by subdivision 2 shall determine the 
5.19 	extent to which expenditures on the measures identified in subdivision 3 assist Minnesota 
5.20 	in its transition to a low greenhouse gas-emitting economy, and increase the economic 
5.21 	gains and reduce the dislocating impacts of the transition. Specifically, the study shall 
5.22 	discuss the extent to which expenditures meet the following goals:
5.23 	(1) produce cost-effective emission reductions;
5.24 	(2) increase sustainable economic development, job creation, and job growth;
5.25 	(3) reduce greenhouse gas emissions in sectors that do not participate in the cap 
5.26 	and trade program;
5.27 	(4) reduce disruptive economic impacts of the transition on workers, businesses, 
5.28 	and consumers;
5.29 	(5) equitably distribute the costs and benefits among state residents, communities, 
5.30 	and economic sectors;
5.31 	(6) assist low-income and other consumers to reduce their costs associated with 
5.32 	greenhouse gas emissions; and
5.33 	(7) protect and enhance public health, environmental quality, wildlife habitat, and 
5.34 	the state's natural resources.

5.35 	Sec. 5. ASSESSMENT; APPROPRIATION.
 6.1 	The commissioner of commerce may assess up to $500,000 under Minnesota 
6.2 	Statutes, section 216B.62. The sum assessed is appropriated to the commissioner for the 
6.3 	purpose of section 4. The assessment is not subject to the cap on assessments provided 
6.4 	by Minnesota Statutes, section 216B.62, or any other law.

6.5 	Sec. 6. EFFECTIVE DATE.
 6.6 	Sections 1 to 5 are effective the day following final enactment.