A major global-warming agreement signed Thursday by Gov. Tim Pawlenty and eight other Midwest governors is expected to rev the region’s economy and make it a leader in greenhouse gas reductions. The compact boosts other states’ conservation and renewable energy goals in line with those set in Minnesota this year and lays the groundwork for a regional carbon cap-and-trade system by 2010.
“I think it’s a turning point not just for this region, but for the country, and hopefully eventually the entire world,” said Rolf Nordstrom, executive director of the Great Plains Institute in Minneapolis.
States signing parts of the agreement include Iowa, Ohio, Illinois, Indiana, Kansas, Michigan, Minnesota, South Dakota and Wisconsin. The Canadian province of Manitoba also signed on.
The agreement sets several specific goals for reducing carbon emissions, as well as capitalizing on the economic potential of trading foreign fossil fuels for renewable Midwest energy sources. They include:
–promoting commercial production of cellulosic ethanol from grasses and other plants by 2012
–increasing by five-fold the number of gas stations offering E85 ethanol-blend fuel
–planning for a regional pipeline to transport captured carbon dioxide to sites where it can be deposited underground, and
–generating 25 percent of electricity from renewable sources by 2025, similar to the law passed by Minnesota earlier this year.
The most important piece for Minnesota is the pledge by six governors to pursue a regional carbon cap-and-trade system.
Under a cap-and-trade program, utilities and industries would need a permit for every unit of carbon dioxide they released. The number of permits would be limited and reduced every year. Companies requiring more permits would need to buy them from companies that reduced their emissions.
“The thing that’s most important about this step is that it takes what we did in Minnesota this spring and really advances it to the next stage,” said Bill Grant, regional director of the Izaak Walton League in Minnesota. Grant is on a state-appointed committee that’s been meeting weekly since October to discuss logistics of a state carbon cap-and-trade program. He said joining forces with other states will make establishing the program easier and less expensive.
Two other groups of states are developing similar carbon cap-and-trade programs. Six western states and two Canadian provinces created the Western Climate Initiative, and 10 northeastern and Mid-Atlantic States are part of the Regional Greenhouse Gas Initiative. Both regions could potentially be tied in as trading partners with the Midwest states, Grant said.
“I think what we’re seeing here is a gradual broadening of the geographic footprint for cap and trade,” Grant said. “What we’re seeing here today is a movement toward a full national system.”
The Midwest is seen as a region with significant risk and opportunity when it comes to global warming regulations. It’s the most coal-dependent region in the country, generating 71 percent of its electricity from coal, compared to a national average of 49 percent. It’s responsible for about 5 percent of the world’s greenhouse gas emissions. That’s more than any other part of the country, and more than all of Canada combined.
But it’s also sitting on top of many of the potential solutions to global warming. It’s an agriculture-rich region that’s leading the country in bio-fuel production, supplying 94 percent of U.S. ethanol. It’s also home to some of the windiest territory in the country, as well as universities and technology centers already researching next generation power sources.
A 2002 study by the University of Illinois found a comprehensive plan to shift energy to non-carbon renewable fuels would generate more than 200,000 new jobs in the Midwest by 2020 and generate nearly $20 million in economic growth.
States participating in the cap-and-trade portion are scheduled to form committees within two months to start working out the details. And there are plenty.
Determining the winners and losers and the success or failure of a cap-and-trade system depends on several variables. For example, how are the permits distributed? Some think polluters should get the credits for free. Others believe they should be awarded based on an auction. Another question is how to spend revenue from permit sales. Should it be invested in carbon reduction projects, or given as rebates to taxpayers?
“It is terrific what the governors have done today, but our states are not monarchies, as we all know,” said Howard Learner, director of the Environmental Law and Policy Center in Chicago. “We need state legislation that adopts this. There’s going to be a lot of heavy lifting to get the legislatures to move forward and make this real.”
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