Business Organizations Oppose Cap-and-Trade System in Minnesota

Industry study: Cap on greenhouse gas emissions would cost state 21,000 jobs

By Bob Geiger

Warning that Minnesota could lose 21,000 jobs and pay higher electricity costs by 2015, a group of business organizations and utilities announced Thursday that it will oppose a cap-and-trade system designed to reduce greenhouse-gas emissions.The warning, issued by Partners for Affordable Energy (PAE), comes just eight months after the Minnesota Climate Change Advisory Group (MCCAG) recommended using such a system to reduce emissions of carbon dioxide and other greenhouse gases. The PAE-commissioned study is significant because it was issued less than one month before the Minnesota lawmakers convene in January to start plugging a projected state budget deficit of nearly $5.3 billion through mid-2011.

PAE’s website, www.poweringourlives.com, encourages visitors to e-mail pre-written “talking points” to state lawmakers reflecting concern about the effects of higher energy costs contained in a survey by Washington, D.C., consultancy CRA International.

Members of PAE include the Minnesota Chamber of Commerce, Iron Mining Association of Minnesota, Minnesota Agri-Growth Council, Minnesota Forest Industry, North Dakota lignite coal industry and 50 utilities, including Great River Energy, Minnesota Power and Otter Tail Power.

“Any of these parties have a vested interest in old technology. It’s not surprising that an economist would come out with startling numbers,” said Kevin Reuther, legal director for the nonprofit MCEA.“I really hope that they’re not going to take the tack of the tobacco industry,” Reuther continued.At the heart of the debate is a cap-and-trade system, with government-set caps on carbon dioxide and other greenhouse-gas emissions, and auctions at which utilities can purchase credits for emissions.Designed to guarantee that emission-reduction mandates are met, the system would give utilities and other greenhouse-gas emitters a financial incentive to convert to environmentally friendly technology over time.

“We support all types of energy: Coal, nuclear, wind, solar and biomass. But we feel like Minnesota has a ban on nuclear and coal,” said Christina Pierson, executive director of PAE.

“You have to have three kinds of power so that you can continue to have a consistent energy supply,” she said. “Base, peak and intermittent.”

Base and peak power supply comes largely from coal-burning, nuclear-fueled and natural gas-fired energy plants, which environmentalists increasingly oppose in favor of energy generation from such renewable sources as wind, solar, hydro and biomass.

Coal represents the largest percentage of electricity generation in Minnesota, followed by nuclear, hydro power and small but growing wind, solar and other renewable energy sources.

CRA International’s study, which warns of job losses even if so-called “green jobs” are added to the economy, also predicts rising energy costs for Minnesota residences and businesses if a cap-and-trade system is put in place.

The study forecasts business and residential electricity increases of 33 percent and 17 percent, respectively, by 2015 under a cap-and-trade policy, while consumer household spending in the state would fall $2 billion.

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