HF 3195

2nd Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to environment; establishing principles of a cap and trade program for
greenhouse gas emissions; requiring studies; appropriating money; 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] TITLE.
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new text begin This act may be cited as the "Green Solutions Act of 2008."
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Sec. 2.

new text begin [216H.11] CAP AND TRADE PROGRAM.
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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 Minnesota participate in
the midwest regional cap and trade program to help achieve the greenhouse gas emissions
reductions goals established in section 216H.02, subdivision 1.
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new text begin Subd. 2. new text end

new text begin Principles. new text end

new text begin The legislature recognizes that the atmosphere and climate are
common assets, and damage to them by greenhouse gas emissions are costs now borne by
the public. Capping greenhouse gas emissions places a market value on emissions, and
that market value should accrue to the public. It is the intent of the legislature that any cap
and trade program developed pursuant to section 216H.12 should take into account the
results of the studies required under section 216H.13, and should consider:
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new text begin (1) covering as many emitting sectors as is administratively feasible, but excluding
sectors from which emissions cannot be reliably quantified, giving particular scrutiny to
whether emissions from the transportation sector can be reliably quantified;
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new text begin (2) auctioning allowances to the extent economically feasible and directing all
proceeds from any auction toward the public benefit;
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new text begin (3) allowing auctions to be phased in if necessary to protect consumers and industries
from sudden price increases, provided that protections are in place to ensure that windfall
profits do not accrue to entities allocated allowances during the transition;
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new text begin (4) ensuring that the emissions reductions necessary to meet the cap come from the
capped sectors themselves rather than from sectors outside the cap;
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new text begin (5) not increasing the emissions cap by allowing the issuance of allowances beyond
the limits specified in section 216H.02; and
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new text begin (6) providing for equity to communities at risk of disproportionate economic and
environmental impacts.
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Sec. 3.

new text begin [216H.12] MIDWESTERN GREENHOUSE GAS ACCORD.
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new text begin (a) By December 1, 2008, the commissioner of commerce and the commissioner
of the Pollution Control Agency 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 supplement the regional agreement with
state policies, to join another regional cap and trade program, or to implement a cap and
trade program in Minnesota alone.
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new text begin (b) The senate and house of representatives, in accordance with the rules of
their respective bodies, must appoint a bipartisan team of six legislators to serve in an
advisory role to the governor's Midwestern Greenhouse Gas Accord stakeholder group.
The legislators must receive regular briefings from the stakeholder group and have an
opportunity to participate as observers in meetings of the regional negotiations and may
offer advice.
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new text begin (c) Any cap and trade agreements entered into are not effective in Minnesota until
enacted into law.
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Sec. 4.

new text begin [216H.13] STUDIES.
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new text begin Subdivision 1. new text end

new text begin Governance study. new text end

new text begin The University of Minnesota shall issue a
request for proposals for a study that describes and analyzes several options regarding
how decisions on expenditures of revenues captured by any cap and trade program may be
made. The study must examine:
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new text begin (1) the role that the legislature, citizens, technical experts, and state agencies may
play in decision making; and
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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.
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new text begin The report must be submitted to the University of Minnesota by January 1, 2009.
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new text begin Subd. 2. new text end

new text begin Economic and emissions study. new text end

new text begin (a) The commissioner of commerce
shall conduct a study of the economic, environmental, and public health costs and
benefits of a cap and trade program incorporating the principles established in section
216H.11. The study must consider the impact of the cap and trade program on individual
industrial sectors subject to the program and on the state economy and consumers, and
how expenditures of any auction revenues on the measures identified in subdivision 3 can
reduce the economic costs and increase the economic, environmental, and public health
benefits.
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new text begin (b) The study must include:
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new text begin (1) estimates of the costs to entities covered by the cap to buy allowances or reduce
greenhouse gas emissions;
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new text begin (2) estimates of the impact of the program on energy costs, the impact of energy
cost changes on businesses and households, and recommendations on how to avoid
regressive impacts;
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new text begin (3) projections of likely revenues if allowances are auctioned;
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new text begin (4) a detailed estimate of the degree to which different levels of expenditures of
auction proceeds on the options listed under subdivision 3, clauses (1) to (6), would:
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new text begin (i) reduce greenhouse gas emissions;
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new text begin (ii) reduce economic costs to industry and households;
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new text begin (iii) yield jobs and other economic benefits by stimulating economic activity,
promoting the growth of new businesses, reducing the amount of money leaving the state
to purchase fossil fuels, or other means;
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new text begin (iv) result in environmental and public health co-benefits by reducing pollutants
other than greenhouse gases, improving habitat, or other means; and
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new text begin (v) otherwise meet the goals identified in subdivision 4;
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new text begin (5) discussion of the potential for any allowances allocated under the program to
result in windfall profits rather than be used to reduce consumer prices;
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new text begin (6) 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;
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new text begin (7) options for criteria that decision makers can use to determine how to allocate
expenditures among the spending options listed under subdivision 3, balancing the goals
set forth in subdivision 4;
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new text begin (8) analysis of various mechanisms for protecting job loss in energy-intensive
industries subject to competition from outside the Midwestern Greenhouse Gas Accord
region, including steel, cement, paper, pulp, aluminum, and chemicals, including an
analysis of possible mechanisms to account for the greenhouse gas emissions associated
with the production and transportation of imported goods;
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new text begin (9) analysis of various mechanisms to provide for equity to communities at risk of
disproportionate economic or environmental impacts; and
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new text begin (10) analysis of the effect of adopting a cap and trade program on the level of
foreign investment in Minnesota.
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new text begin (c) The study must consider the data and policy recommendations developed through
the Minnesota Climate Change Advisory Group as well as the growing literature related to
reducing greenhouse gas emissions.
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new text begin (d) 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.
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new text begin Subd. 3. new text end

new text begin Expenditures to be studied. new text end

new text begin (a) The study required under subdivision 2
must consider the impacts of the following types of expenditures:
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new text begin (1) direct per capita rebates to Minnesotans;
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new text begin (2) grants and incentives to consumers to invest in energy efficiency and utilize
renewable energy sources, or in other technologies, products or practices that reduce
energy costs, energy consumption, and greenhouse gas emissions;
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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,
paper, cement, chemicals, and aluminum;
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new text begin (4) investments in public infrastructure that reduce greenhouse gas emissions;
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new text begin (5) investments in worker training and retraining programs; and
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new text begin (6) incentives for carbon sequestration on forest land and farmland.
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new text begin (b) A majority of expenditures must be directed to uses under paragraph (a), clauses
(1) and (2).
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new text begin Subd. 4. new text end

new text begin Study criteria. new text end

new text begin The study required under subdivision 2 must determine the
extent to which expenditures on the measures identified in subdivision 3 assist Minnesota's
transition to a low greenhouse gas-emitting economy and increase the economic gains
and reduce the dislocating impacts of the transition. Specifically, the study must discuss
the extent to which expenditures meet the following goals:
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new text begin (1) produce cost-effective emissions reductions;
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new text begin (2) increase sustainable economic development, job creation, and job growth;
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new text begin (3) reduce greenhouse gas emissions in sectors that do not participate in the cap
and trade program;
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new text begin (4) reduce disruptive economic impacts of the transition on workers, businesses,
and consumers;
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new text begin (5) equitably distribute the costs and benefits among state residents, communities,
and economic sectors;
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new text begin (6) assist low-income and other consumers to reduce their costs associated with
greenhouse gas emissions; and
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new text begin (7) protect and enhance public health, environmental quality, wildlife habitat, and
the state's natural resources.
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Sec. 5. new text begin APPROPRIATION.
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new text begin (a) $....... is appropriated from the general fund to the Board of Regents of the
University of Minnesota to be used for the purposes of completing the study under
Minnesota Statutes, section 216H.13, subdivision 1.
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new text begin (b) $....... is appropriated from the general fund to the commissioner of commerce
for the purposes of completing the study under Minnesota Statutes, section 216H.13,
subdivision 2.
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Sec. 6. new text begin EFFECTIVE DATE.
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new text begin Sections 1 to 5 are effective the day following final enactment.
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