Minnesota judge urges higher carbon price to guide utility system planning

Dive Brief:

An administrative law judge in Minnesota last week filed a report recommending the state overhaul the values it uses for the cost of carbon emissions, which are included whenever the state plans how it will generate electricity.
The proposal would move the cost of a ton of carbon dioxide emissions from less than $5 to between $11 and $57, reflecting social costs determined by the federal government in 2009.
MPR News reports on the possible change, noting it could make wind and solar look substantially cheaper than coal.

Dive Insight:

A lot has changed since 1997 – that's the year Titanic came out, rapper Notorious B.I.G. a.k.a. Biggie got shot and the Dow Jones cracked 7,000.

It's also the year Minnesota last determined the cost of carbon, pegging it, depending on factors, between $0.30/ton and $3.10/ton of carbon dioxide. Since then it's been raised to track inflation, but according to Minnesota advocacy group Fresh Energy, the cost still caps at less than $5/ton. But an ALJ recommendation to use the federal social cost, determined more than a decade later, could help better value the impacts and incentivize renewable energy, they say.

"The ability to estimate the social cost of carbon has increased dramatically," the group said in a statement.

Along with the Minnesota Pollution Control Agency and Minnesota Department of Commerce, several groups have recommended that the Public Utilities Commission use the 2009 federal values, and the PUC subsequently held a contested case that wrapped up in last year. The recommendation by the administrative law judge, filed last week, will be considered at a later date, they said.

“Fossil fuel power plant pollution costs Minnesotans more than $2.1 billion annually in health and environmental impacts, including emergency room visits and medical bills," said Stephen Polasky, regents professor of economics at the University of Minnesota, and an expert who testified in favor of the change.

The potential health impacts are " actually quite enormous," a retired physician supporting the proposal told the news outlet.

Business interests, however, see it differently.

"There isn't a business in Minnesota that doesn't want our economy to operate in a more environmentally sustainable manner," Minnesota Chamber of Commerce's Bill Blazar told MPR News. "The challenge, though, is to figure out a way to implement the policy in a way that keeps Minnesota companies competitive and employing Minnesotans."