SF 2818

3rd 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 gives a market value to the ability to
emit, and that market value should accrue to the public. It is the intent of the legislature
that any cap and trade program:
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new text begin (1) should cover as many emitting sectors as is administratively feasible, but
excluding sectors from which emissions cannot be reliably quantified;
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new text begin (2) should provide that the allowances created under a cap and trade system should
accrue to the benefit of the public. To the extent that allowances are distributed through
an auction, the revenue would help consumers and energy-intensive industries pay their
energy costs and reduce their energy costs more quickly. Business concerns about paying
the cost of allowances must be balanced with benefit to the public;
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new text begin (3) should allow 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) should be designed to obtain the emission reductions necessary to meet the cap
from the capped sectors themselves rather than from sectors outside the cap;
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new text begin (5) should not increase 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) should provide 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 January 15, 2009, 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 regarding:
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new text begin (1) the status of the development of a model rule establishing a regional cap and
trade program under the Midwestern Greenhouse Gas Accord;
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new text begin (2) implementation mechanisms in the model rule, including required legislation;
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new text begin (3) whether the regional cap and trade program will operate in a time frame that will
allow Minnesota to meet the greenhouse gas reductions goals under section 216H.02,
subdivision 1; and
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new text begin (4) an evaluation of legislation enacted or pending in congress to implement a
federal cap and trade program and whether implementation of a regional program is
consistent with a federal program.
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new text begin 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 legislative greenhouse gas accord advisory group is composed of six
members of the legislature, appointed as follows:
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new text begin (1) two members of the majority party in the senate, appointed by the majority
leader, and one member of the minority party, appointed by the minority leader; and
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new text begin (2) two members of the majority party in the house of representatives, appointed by
the speaker of the house of representatives, and one member of the minority party in the
house of representatives, appointed by the minority leader.
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new text begin The legislative advisory group serves in an advisory capacity to the governor's Midwestern
Greenhouse Gas Accord stakeholder group, and may request regular briefings from
that group, in addition to participating and offering advice in meetings where regional
negotiations take place. The appointing authorities under this paragraph must complete
their appointments by June 1, 2008. The advisory group expires when the governor
dissolves the Midwestern Greenhouse Gas Accord stakeholder group.
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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 commissioner of commerce may contract
with the University of Minnesota or other state public institutions of higher education or
may 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. The
results of the study must be reported to the chairs and ranking minority members of the
senate and house committees with primary jurisdiction over energy and environmental
policy by January 15, 2009. The commissioner may combine the study under this
subdivision with the study described in subdivision 2.
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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 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 shall 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. The study must include:
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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;
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new text begin (2) estimates of increases in energy prices for fuels that produce greenhouse gas
emissions, the impact of price increases on businesses and family income, and the degree
of regressivity of the price increases and 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 how much money leaves the state to
buy 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 by the program to lead to
windfall profits rather than be used to reduce consumer prices;
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new text begin (6) an analysis of options to mitigate adverse competitive impacts on state businesses
and methods to reduce disruptive impacts on workers, businesses, and consumers;
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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; and
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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.
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new text begin The study shall 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. By January 15, 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 The study required under subdivision 2 shall
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 help
Minnesotans 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 and farmland.
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new text begin A majority of expenditures from the fund must be directed to uses under 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 by subdivision 2 shall determine the
extent to which expenditures on the measures identified in subdivision 3 assist Minnesota
in its transition to a low greenhouse gas-emitting economy, and increase the economic
gains and reduce the dislocating impacts of the transition. Specifically, the study shall
discuss the extent to which expenditures meet the following goals:
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new text begin (1) produce cost-effective emission 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 ASSESSMENT; APPROPRIATION.
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new text begin The commissioner of commerce may assess up to $500,000 under Minnesota
Statutes, section 216B.62. The sum assessed is appropriated to the commissioner for the
purpose of section 4. The assessment is not subject to the cap on assessments provided
by Minnesota Statutes, section 216B.62, or any other law.
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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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