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Climate change action plan: Utilities worried about future

Unless Minnesota adopts a climate change action plan this session, state law bans construction of any new coal-fired power plants as of Aug. 1, and that scares utilities.

At that point, "there would be a coal moratorium for any new growth in Minnesota," says Christina Pierson, executive director of Partners for Affordable Energy. "That concerns us."

Pierson, who spoke Monday to the Bemidji Rotary Club, said Partners for Affordable Energy is comprised by a number of groups, including utility and power associations and co-ops, Minnesota Forest Industries, Minnesota Chamber of Commerce, Minnesota Agri-Growth Council and Printing Industry of Minnesota.

Minnesota, as well as the nation, needs to move to next-generation power such as wind or solar, but the technology isn't there yet to provide the baseload energy capacity needed for uninterrupted power through those sources, Pierson said Monday in an interview.

The Next Generation Energy Act of 2007 calls for strict standards to control carbon emissions by utilities but also dictates that the state adopt a climate change action plan to control greenhouse gas emissions from all sources.

The 2007 Legislature first passed renewable energy standards that found the state could integrate 25 percent of electrical generation from renewable sources without affecting baseline power or greatly increasing costs, she said.

It then passed the Next Generation Act, "which includes very aggressive greenhouse gas reduction goals," Pierson said. "And they did that without knowing whether that solution and the timeline and the amounts was affordable, or if it would effectively reduce emissions for the costs being asked of Minnesota energy users."

The Legislature, however, hasn't gone very far down the road to put together the climate change action plan, which must passed by the 2009 Legislature to avoid the ban on new coal plants.

"The only solution offered to date for a climate change action plan is a regional cap-and-trade program or a state-only cap-and-trade program," Pierson said. "There was no study, there was nothing to know if this would even work."

Lacking a state report and wanting some answers before the Aug. 1 deadline, PAE commissioned its own study with an independent firm, CRA International, which found that a regional cap-and-trade program would adversely affect Minnesota.

Cap and trade provides economic incentives for achieving reductions in emissions of pollutants by setting a cap on the amount of pollutants that can be emitted, and then allowing companies that exceed that cap to purchase allowances or credits from those who under-emit.

Simply put, the buyer pays a charge for polluting, while the seller is rewarded for having reducing emissions below the cap.

A five-state regional cap-and-trade program is now being organized, Pierson said, involving Minnesota, Wisconsin, Illinois, Iowa and Kansas. If either the state or the accord puts in place a cap-and-trade program that isn't national, the CRA study found:

- National emissions will increase at least 49 percent by 2050 even with a successful state or regional program.

- Minnesota households will see a projected 17 percent increase in electrical prices, which is inflation-adjusted, by 2015 and prices to continue to increase faster until they are 40 percent higher in 2035.

- A net loss of 21,000 jobs by 2015, and 30,000 by 2025, which includes "green jobs" increases, because of higher energy costs. Most affected will be mining, paper manufacturing and agriculture.

- Minnesota households would collectively decrease discretionary spending by $2 billion a year if a regional cap-and-trade program is in place because of higher energy costs.

Technologies are improving, but until they are developed and commercially available, the United States must depend on coal-fired plants to provide baseline power, Pierson said.

There is a cap-and-trade program in the Northeast, but it works there because 70 percent of power generation is hydroelectric. In the Midwest, 70 percent is from coal-fired plants, where a cap-and-trade program would be expensive to consumers.

New coal technology is also at work, she said, citing a small North Dakota power plant that is sending carbon to dry oil fields in Canada, with the carbon filling in underground gaps and pushing more oil up. It now wants to move to larger power plant.

"These things take time to prove and do all the paperwork and get all the capital lined up," she said. "They don't think it will be widely commercially deployable until 2025. Meanwhile, Minnesota's greenhouse gas reduction goals start in 2015.

"Part of the reason it takes until 2025 is that we have a limited financial resources and human resources until that date," Pierson added. "To accomplish that, it would take a lot more financial resources and more engineers and scientists."

As is everyone else with a project, the prospect of President-elect Barack Obama's economic stimulus package holds promise.

"President-elect Barack Obama has said that we do need to continue clean coal research," Pierson said. "He understands that coal is to this day more than half of the electrical resources in this country come from coal. He understands we need to have clean-coal technologies moving into the future."

Pierson said clean-coal technologies "is on the horizon and it is real and we are demonstrating it."

Still, Minnesota needs to adopt a climate change action plan and there seems to be little political will to simply delay the Aug. 1 deadline, she said. "The Legislature hasn't been very open to listening to our industry and our suggestions."

There are other methods to reduce carbon emissions, especially with conservation. While seemingly a small reduction, conservation cumulatively can add up. For instance, she said curbing "phantom power" could save 10 percent of electric generation.

Phantom power is electricity used by appliances that are not on but still plugged into an outlet. She suggests connecting at TV or computer to a power surge unit, and turning that off when done watching TV or computing.

Another solution would be to lift Minnesota's moratorium on new nuclear energy plants, which don't emit any carbon.

"We don't have the magic bullet," Pierson said. "There's still this margin of time -- 10 to 20 years -- before the next best thing comes about. ... It's tough and it's a challenge when the state of Minnesota decides to ban things. How do you operate that to make sure you have the baseload of uninterruptible power that people are used to?"

She hopes it doesn't take brownouts and blackouts before people realize how important it is to provide stable and uninterrupted baseload power.

A balanced approach is needed, she said. "We can get to a clean environment and have a low environmental impact through electric generation, we just need a bit more time to get there," Pierson said.