Round two for cap-and-trade

A less aggressive version of a bill that would lay the groundwork for implementing a cap-and-trade system for greenhouse gas emissions in Minnesota was approved March 4 by a House committee.

HF3195, sponsored by Rep. Kate Knuth (DFL-New Brighton), is also known as the Green Solutions Act of 2008. Its goal is to help reduce the state’s contribution to global climate change by establishing a system in which total greenhouse gas emissions are capped and major emitters could purchase and sell emission allowances to one another.

The House Environment and Natural Resources Committee took testimony on a previous version of the bill Feb. 26. That version drew heavy criticism both from power companies — who said a statewide cap-and-trade system would put Minnesota at a competitive disadvantage — as well as Commerce Department officials, who claimed it would hamper negotiations for a regional system.

The latest version of the bill, as amended by Knuth, focuses on Minnesota’s role in the Midwestern Greenhouse Gas Reduction Accord, an agreement signed last year by Gov. Tim Pawlenty that seeks to establish a regional cap-and-trade system in conjunction with several other states and one Canadian province. In addition to pushing the state to participate in the proposed regional system — an approach favored by the power companies — the bill provides for a pair of studies to help figure out how best to implement a cap-and-trade program.

The bill also seeks to stake out a role for the Legislature in regional system negotiations by appointing a six-member, bipartisan team of legislators to advise the governor’s stakeholder group and participate as observers in the negotiations.

Knuth said the bill represented a “very significant compromise,” and noted that a particularly controversial requirement for power companies to buy their emission allowances by way of an auction has been changed to read, “to the extent economically feasible.”

The bill now goes to the House Commerce and Labor Committee. A companion bill, SF2818, sponsored by Sen. Ellen Anderson (DFL-St. Paul), awaits action by the Senate State and Local Government Operations and Oversight Committee.