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Minnesota Legislature

Office of the Revisor of Statutes

HF 3195

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to environment; establishing principles of a cap and trade program for
greenhouse gas emissions; establishing a climate trust fund, and specifying its
goals and uses; requiring studies; appropriating money from the general fund;
proposing coding for new law in Minnesota Statutes, chapter 216H.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [216H.10] FINDINGS; TITLE.
new text end

new text begin (a) The legislature finds that a cap and trade program, combined with supporting
policies, will achieve Minnesota's greenhouse gas emissions reduction goals in a
cost-effective manner. These goals, established in section 216H.02, subdivision 1, require
reductions of 15 percent from 2005 levels by 2015, 30 percent by 2025, and 80 percent
by 2050. The legislature further finds that the right to emit greenhouse gases should be
auctioned to emitting facilities rather than allocated at no cost, with proceeds from the
auction returned to citizens and invested in projects that reduce greenhouse gas emissions
and advance the transition to a low greenhouse gas-emitting economy in a manner that
maximizes public benefits and minimizes public costs. The legislature concludes that a
greenhouse gas cap and trade program is best pursued in cooperation with other states
and encourages the continued development of a midwestern cap and trade program. The
legislature finds that the interests of the public are best served by a cap and trade program
that is broadly based, simple, predictable, equitable, and transparent. The legislature
intends that the activities undertaken pursuant to this program complement, and do
not interfere with, efforts to achieve and maintain federal and state ambient air quality
standards and to reduce toxic air contaminant emissions.
new text end

new text begin (b) This act may be cited as the Green Solutions Act of 2008.
new text end

Sec. 2.

new text begin [216H.11] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Allowance. new text end

new text begin "Allowance" means a permit that allows the owner of
that permit to emit a specified amount of carbon or carbon-equivalent into the atmosphere.
new text end

new text begin Subd. 2. new text end

new text begin Cap and trade program. new text end

new text begin "Cap and trade program" means a program that
limits the number of allowances of greenhouse gases sold to facilities and allows facilities
to buy, sell, and trade allowances in order to comply with the limit.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 4. new text end

new text begin Greenhouse gases. new text end

new text begin "Greenhouse gases" means carbon dioxide, methane,
nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride emitted by
anthropogenic sources within the state and from the generation of electricity imported
from outside the state and consumed in Minnesota.
new text end

new text begin Subd. 5. new text end

new text begin Greenhouse gas emissions. new text end

new text begin "Greenhouse gas emissions" means emissions
of greenhouse gases into the atmosphere. Carbon dioxide that is injected into geological
formations to prevent its release to the atmosphere in compliance with applicable laws,
and carbon dioxide associated with the combustion of fuels other than coal, petroleum,
and natural gas, are not greenhouse gas emissions.
new text end

Sec. 3.

new text begin [216H.12] CAP AND TRADE PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Intent. new text end

new text begin It is the intent of the legislature that a cap and trade program
be implemented in Minnesota to help achieve the greenhouse gas emissions reductions
goals established in section 216H.02, subdivision 1. Any cap and trade program adopted
in Minnesota must be in accord with the principles specified in this section.
new text end

new text begin Subd. 2. new text end

new text begin Sectors included. new text end

new text begin The cap and trade program must apply, at a minimum, to
the following sectors: electricity generation, large industrial facilities, transportation fuels,
natural gas sold to heat buildings, and landfills. The commissioner shall add additional
sectors if the commissioner determines that:
new text end

new text begin (1) significant reductions in greenhouse gas emissions may be made cost-effectively
by a sector's inclusion in the cap and trade program;
new text end

new text begin (2) inclusion of the sector does not unduly burden the administration of the cap
and trade program; and
new text end

new text begin (3) the sector's greenhouse gas emissions and reductions can be reliably measured
and verified.
new text end

new text begin Subd. 3. new text end

new text begin Auction. new text end

new text begin All allowances issued by the state under a cap and trade program
must be distributed through auction to individual facilities that are part of the sectors
specified in subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Reductions from outside program prohibited. new text end

new text begin Greenhouse gas emissions
reductions must be made from Minnesota facilities in sectors included in the cap and
trade program. Greenhouse gas emissions reductions associated with projects outside the
sectors covered by the cap, or outside the geographical boundaries of a regional cap
and trade program of which Minnesota is a part, must not be recognized for compliance
purposes. Allowances issued by other jurisdictions with which the state has established
a formal trading relationship under a regional cap and trade program may be used for
compliance purposes.
new text end

new text begin Subd. 5. new text end

new text begin Issuing additional allowances prohibited. new text end

new text begin The cap and trade program
must prohibit the issuance of additional allowances beyond the limit of the cap. The state
may not enter into a trading relationship with any jurisdiction that issues such additional
allowances.
new text end

Sec. 4.

new text begin [216H.13] MIDWESTERN GREENHOUSE GAS ACCORD.
new text end

new text begin (a) The governor is strongly encouraged to work with other signatories to the
Midwest Greenhouse Gas Accord to develop a regional cap and trade program that
incorporates the principles specified in section 216H.12, and that enables Minnesota to
achieve the greenhouse gas emissions reductions goals established in section 216H.02,
subdivision 1.
new text end

new text begin (b) The legislature must approve, in all particulars, any regional cap and trade
program agreed to by the governor, before the cap and trade program becomes effective in
this state.
new text end

new text begin (c) By December 1, 2008, the commissioner of commerce and the commissioner
of pollution control shall submit a report to the chairs and ranking minority members
of the senate and house of representatives committees with primary jurisdiction over
energy policy, environmental policy, and transportation policy describing the status of the
development of a model rule establishing a regional cap and trade program under the
Midwestern Greenhouse Gas Accord. The report must address the degree to which any
model rule being developed under the Midwestern Greenhouse Gas Accord incorporates
the principles set forth in section 216H.11, and will operate in a time frame that will allow
Minnesota to meet its greenhouse gas emissions reduction goals under section 216H.02,
subdivision 1. If a model rule incorporating those principles and in accord with the state's
emissions-reduction goals is not yet ready for adoption, or is unlikely to be adopted, the
report must identify options for Minnesota to join another regional cap and trade program
or to implement a cap and trade program in Minnesota alone.
new text end

Sec. 5.

new text begin [216H.14] CLIMATE TRUST FUND; ESTABLISHMENT.
new text end

new text begin The climate trust fund is established in the state treasury. Revenues from the auction
of allowances authorized under section 216H.12, subdivision 3, interest, dividends, other
contributions, and any other earnings arising from fund assets must be credited to the
fund. Money remaining in the fund after all obligations are met do not cancel and must be
carried forward to subsequent years.
new text end

Sec. 6.

new text begin [216H.15] CLIMATE TRUST FUND; GOALS AND USES.
new text end

new text begin Subdivision 1. new text end

new text begin Goals. new text end

new text begin Expenditures from the climate trust fund must be used to
assist Minnesota in its transition to a low greenhouse gas-emitting economy, and to
increase the economic gains and reduce the dislocating impacts of the transition. Money
in the fund must support actions that:
new text end

new text begin (1) produce cost-effective emission reductions;
new text end

new text begin (2) increase sustainable economic development, job creation, and job growth;
new text end

new text begin (3) reduce greenhouse gas emission reductions in facilities that do not participate in
the cap and trade program;
new text end

new text begin (4) reduce disruptive economic impacts of the transition on workers, businesses,
and consumers;
new text end

new text begin (5) equitably distribute the costs and benefits (i) among state residents, communities,
and economic sectors, and (ii) in particular, among low-income residents to reduce their
costs associated with greenhouse gas emissions; and
new text end

new text begin (6) protect and enhance public health, environmental quality, wildlife habitat, and
the state's natural resources.
new text end

new text begin Subd. 2. new text end

new text begin Expenditures. new text end

new text begin Expenditures from the climate trust fund must be consistent
with the goals in subdivision 1. Expenditures from the fund may include:
new text end

new text begin (1) direct dividends to consumers to defray increased costs of using energy sources
that emit high levels of greenhouse gases;
new text end

new text begin (2) grants and incentives to consumers to invest in energy efficiency and utilize
renewable energy sources;
new text end

new text begin (3) financial assistance to businesses that install technologies that reduce their
facilities' greenhouse gas emissions, targeting energy-intensive industries facing
competitors not subject to comparable regulation including, but not limited to, steel,
pulp, and paper;
new text end

new text begin (4) investments in public infrastructure that reduce greenhouse gas emissions;
new text end

new text begin (5) investments in worker training and retraining programs; and
new text end

new text begin (6) financial support to study and implement terrestrial carbon sequestration
practices, including incentives for Minnesota landowners to implement terrestrial carbon
sequestration practices.
new text end

new text begin A majority of expenditures from the fund must be directed to uses under clauses (1)
and (2).
new text end

new text begin Subd. 3. new text end

new text begin Fund governance; study. new text end

new text begin The Legislative Coordinating Commission
shall issue a request for proposals for a study that describes and analyzes several options
regarding how decisions on expenditures from the climate trust fund may be made. The
study must examine:
new text end

new text begin (1) the role that the legislature, citizens, technical experts, and state agencies may
play in decision making; and
new text end

new text begin (2) innovative decision-making structures and processes, including the
Legislative-Citizens Commission on Minnesota Resources, and other examples in
Minnesota and other states and countries that may offer useful models to consider.
new text end

new text begin The report must be submitted to the Legislative Coordinating Commission by January
1, 2009.
new text end

new text begin Subd. 4. new text end

new text begin Economic and emissions study. new text end

new text begin The commissioner of commerce shall
issue a request for proposals for a study of the economic impact of the implementation
of a cap and trade program incorporating the principles established in section 216H.12
on individual industrial sectors subject to the cap and trade program and on the state
economy and consumers, and how expenditures under the fund can reduce these economic
impacts. The study must include:
new text end

new text begin (1) estimates of allowance prices and rates of investment by facilities subject to the
cap and trade program in infrastructure and equipment to reduce emissions of greenhouse
gases over time;
new text end

new text begin (2) estimates of increases in energy prices for fuels whose consumption produces
greenhouse gas emissions, the impact of price increases on businesses and family income,
and the degree of regressivity of the price increases;
new text end

new text begin (3) measures of the degree to which different levels of expenditures from the fund
under subdivision 2, clauses (1) to (6), reduce economic impacts on industry and families
and achieve greenhouse gas emissions reductions;
new text end

new text begin (4) an estimate, using the data on the cost-effectiveness of various greenhouse gas
emissions reduction actions developed by the Minnesota Climate Change Advisory
Group, and developing measures for additional reduction actions, of the marginal impact
on reducing greenhouse gas emissions for each action;
new text end

new text begin (5) analysis of ways to avoid putting Minnesota industries subject to the cap and
trade program at a competitive disadvantage with competitors not subject to comparable
regulation. By January 1, 2009, the study must be submitted to the chairs and ranking
minority members of the senate and house of representatives committees with primary
jurisdiction over energy policy and environmental policy; and
new text end

new text begin (6) options for criteria that decision makers can use to determine how to allocate
expenditures among the goals listed under subdivision 1 and the spending options
listed under subdivision 2, balancing the goals of emission reductions and reducing the
economic impact of increased energy costs.
new text end

Sec. 7. new text beginAPPROPRIATION.
new text end

new text begin (a) $....... is appropriated from the general fund for the purposes of completing the
study under Minnesota Statutes, section 216H.14, subdivision 3.
new text end

new text begin (b) $....... is appropriated from the general fund for the purposes of completing the
study under Minnesota Statutes, section 216H.14, subdivision 4.
new text end

Sec. 8. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 7 are effective the day following final enactment.
new text end