Cap-and-trade, ‘Green Solutions’ (new law)

Minnesota could participate in a regional cap-and-trade system for greenhouse gas emissions, and a new law will ensure that state lawmakers are part of the process.

In a cap-and-trade program, a limit would be placed on overall greenhouse gas emissions. Power companies and other emitters would then be issued emission allowances that they could buy, sell or trade with one another. Members of Gov. Tim Pawlenty’s staff are currently in talks with other Midwestern states to develop a model rule for a regional cap-and-trade system.

Sponsored by Rep. Kate Knuth (DFL-New Brighton) and Sen. Ellen Anderson (DFL-St. Paul), the new law — titled the Green Solutions Act of 2008 — requires legislative approval of any such system before it can be implemented. It also calls for studies by the Commerce Department and the Pollution Control Agency on potential impacts — both positive and negative — of cap-and-trade.

The law establishes a six-member Legislative Greenhouse Gas Accord Advisory Group to advise members of the governor’s staff participating in the regional negotiations. Appointments to the group are due by June 1, 2008.

Additionally, the PCA and Commerce Department must conduct two studies and report back to the Legislature. One study is to examine the potential economic, environmental and public health impact of cap-and-trade; the other will analyze the potential state revenue that could be generated by such a system and how it could best be utilized. The law appropriates $500,000 for the studies.

A third study, to be conducted by the University of Minnesota, must explore possible governance models for expending cap-and-trade revenues. A $75,000 appropriation will fund the study.

All three studies are due to the Legislature by Jan. 15, 2009.

HF3195*/SF2818/CH340