Cap and trade conundrum

When the Legislature enacted a law last year committing Minnesota to an 80 percent reduction in its greenhouse gas emissions by 2050, it sealed the debate on global warming — sort of.

Many Republican lawmakers still voice skepticism about whether manmade climate change is real, but with Gov. Tim Pawlenty calling for aggressive climate change mitigation policies, and with the DFL-controlled Legislature more than happy to oblige him, the state is rapidly moving down the path of a greener energy economy.

Well, sort of.

Although steady progress is being made on a variety of legislation to address climate change, the one that would make the biggest impact remains elusive: a cap-and-trade system for greenhouse gasses.

In a cap-and-trade system, a strict limit is placed on the emission of certain pollutants. Emitters are then issued pollution “allowances” that they can buy, sell and trade with one another. The idea is to create a clear financial incentive to reduce pollution while still providing polluters with a degree of economic flexibility. Such a system was successfully used by the federal government to reduce acid rain in the 1990s, and many believe it’s the ideal solution to global warming as well.

The problem is that if Minnesota goes it alone, it could put the state at an economic disadvantage with the rest of the country. That being the case, Pawlenty has committed the state to negotiations for a regional cap-and-trade system; however, there’s no guarantee the talks will bear out a viable solution, and some lawmakers think the Legislature should have a larger role in the process.

HF3195, sponsored by Rep. Kate Knuth (DFL-New Brighton), is intended to achieve that purpose. Also known as the “Green Solutions Act,” it would initiate a pair of studies and lay out some general principles that any cap-and-trade system should include. The bill awaits action by the House Finance Committee.

In its original form, the bill would have established a statewide cap-and-trade program, but Knuth has since pared it down so that it only lays the groundwork for the regional system.

“I think that people pretty much get that a statewide cap-and-trade system is too small,” Knuth said.

The results of the regional negotiations are expected later this fall. Edward Garvey, director of the Office of Energy Security and the self-described “point person” for the governor on climate change issues, has asked the Legislature not to take any action on cap-and-trade this year, arguing that it could adversely impact the negotiations. Knuth dismisses that claim.

“I actually think it could strengthen (the governor’s) hand in terms of, ‘This is a statement of my Legislature,’” Knuth said.

Many still skeptical

Regardless what happens to Knuth’s bill, it’s clear that, for now, progress on cap-and-trade is largely beyond the Legislature’s control.

That’s just fine with Rep. Mike Beard (R-Shakopee), to whom the argument over whether a regional cap-and-trade system is better than a statewide one misses the point entirely.

“My truck isn’t with the concept of cap and trade. It’s ‘why are we doing it?’” Beard said.

Beard and many of his Republican colleagues remain skeptical of the science behind climate change. To a large extent, they see the issue as a red herring — an excuse to experiment with Soviet-style massive government intervention.

“I always wondered where did all those state central planners go that used to do all these marvelous five year plans and great leaps forward that I always used to hear about when I was in high school,” Beard said half-jokingly. “I think those people have all gone into the environmental movement.”

The partisan divide over global warming is well-known; however, this year a new element has been injected into the debate. In a series of information hearings, members of the House Energy Finance and Policy Division heard testimony from analysts who said that global oil production is peaking, and that reserves of petroleum, coal and even natural gas should begin to dwindle over the next few decades.

This phenomenon, known as peak oil, presents an entirely different set of challenges to policymakers. But it also begs the question: if we’re running out of fossil fuels, do we really need to worry about reducing our emissions? Beard says no.

“If we continue on the pace we’re on, we’re going to outstrip our supply … so the problem — if you think CO2 is a problem — is going to fix itself anyhow in the next 20 years,” he said.

Knuth sees it differently. She said many of the solutions to peak oil — like planning communities that don’t depend so heavily on gas-powered transportation and producing more food and products locally — are also solutions to global warming.

“I think it’s a distraction to say, ‘Peak oil will solve global warming.’ I think we need to be planning for both,” she said.

A companion to Knuth’s bill, SF2818, sponsored by Sen. Ellen Anderson (DFL-St. Paul), awaits action by the Senate Environment, Energy and Natural Resources Budget Division.