new text begin Subdivision 1. new text end

new text begin Scope. new text end

new text begin For the purposes of this chapter, the terms defined in this
section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Allowance. new text end

new text begin "Allowance" means an authorization from a state regulatory
agency to emit up to one ton of carbon dioxide equivalent during a specified year.
new text end

new text begin Subd. 3. new text end

new text begin Cap and trade system. new text end

new text begin "Cap and trade system" means a regulatory system
that imposes a limit on the aggregate air pollutant emissions of a group of sources, requires
those subject to the cap to own an allowance for each ton of the air pollutant emitted, and
allows for market-based trading of those allowances.
new text end

new text begin Subd. 4. new text end

new text begin Carbon dioxide equivalent. new text end

new text begin "Carbon dioxide equivalent" means the
amount of carbon dioxide by weight that would produce the same global warming impact
as a given weight of another greenhouse gas, based on the best available science, including
from the Intergovernmental Panel on Climate Change.
new text end

new text begin Subd. 5. new text end

new text begin Greenhouse gas emissions source. new text end

new text begin "Greenhouse gas emissions source"
means any anthropogenic physical unit or process that releases greenhouse gases into
the atmosphere.
new text end

new text begin Subd. 6. new text end

new text begin Greenhouse gases. new text end

new text begin "Greenhouse gases" include carbon dioxide, methane,
nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride or any other
chemical that is determined by the Pollution Control Agency to contribute comparably to
global climate change and that is emitted by anthropogenic sources.
new text end

new text begin Subd. 7. new text end

new text begin New large energy facility. new text end

new text begin "New large energy facility" means a large
energy facility as defined in section 216B.2421 that is not in operation as of January
1, 2007.
new text end

new text begin Subd. 8. new text end

new text begin Person. new text end

new text begin "Person" has the meaning given in section 216E.01.
new text end

new text begin Subd. 9. new text end

new text begin Statewide greenhouse gas emissions. new text end

new text begin "Statewide greenhouse gas
emissions" means the total annual emissions of greenhouse gases in the state, and all
emissions of greenhouse gases from the generation of electricity consumed in Minnesota,
whether the electricity is generated in state or imported. Emissions associated with
transmission and distribution line losses are included in this definition. Statewide
emissions are expressed in tons of carbon dioxide equivalent.
new text end

new text begin Subd. 10. new text end

new text begin Statewide power sector carbon dioxide emissions. new text end

new text begin "Statewide power
sector carbon dioxide emissions" means the total annual emissions of carbon dioxide gases
resulting from the generation of electricity consumed in Minnesota, whether the electricity
is generated in state or imported. Emissions associated with transmission and distribution
line losses are included in this definition. Carbon dioxide that is injected in geological
formations so as to prevent releases into the atmosphere in compliance with applicable
laws are not counted as contributing to statewide power sector carbon dioxide emissions.
new text end

new text begin Subdivision 1. new text end

new text begin Rules to establish or join system. new text end

new text begin By January 1, 2008, the
commissioner of the Pollution Control Agency shall adopt rules that either establish a new
system for the reporting of statewide greenhouse gas emissions or join an existing system
that will meet the requirements of this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Emissions and sources covered. new text end

new text begin (a) The rules adopted by the
commissioner shall require the reporting and verification of statewide greenhouse gas
emissions from greenhouse gas emission sources, including:
new text end

new text begin (1) any source for which a permit to emit any air pollutant is required from the
Pollution Control Agency;
new text end

new text begin (2) any source associated with the generation, transmission, and distribution of
electricity consumed in the state, including electricity imported from out of state;
new text end

new text begin (3) any source that emits greenhouse gases with a carbon dioxide equivalent of 500
or more; and
new text end

new text begin (4) any other source of greenhouse gas emissions determined by the commissioner
to contribute significantly to statewide greenhouse gas emissions.
new text end

new text begin (b) For purposes of reporting emissions under paragraph (a), clause (3), that are
associated with the use of consumer or other products, the commissioner may impose the
reporting requirements on those selling the products. The commissioner may exclude
from the reporting requirements sources and persons listed in paragraph (a), clauses (1)
to (3), if the commissioner finds that the sources make an insignificant contribution to
statewide greenhouse gas emissions based on the likely quantity of emissions from such
sources, their relative contribution to global warming, the regulatory burden on the source
or person, and the ability of the Pollution Control Agency to reliably estimate those
emissions by other means. The commissioner shall estimate the emissions of categories
of sources excluded under the previous sentence or determined to be not individually
significant under paragraph (a), clause (4).
new text end

new text begin Subd. 3. new text end

new text begin Additional requirements. new text end

new text begin Rules adopted by the commissioner must
identify persons required to report, must set forth regular reporting schedules, and may
require third-party verification of emissions from sources where emissions are difficult to
verify. The rules must allow persons to volunteer to report their greenhouse gas emissions
even if not required.
new text end

new text begin Subd. 4. new text end

new text begin Enforcement. new text end

new text begin Sections 115.071 and 115.075 apply to rules adopted
under this section.
new text end

new text begin Subdivision 1. new text end

new text begin Plan for achieving reductions. new text end

new text begin (a) By January 1, 2008, the
commissioners of the Pollution Control Agency and the Department of Commerce shall
provide a recommended plan to the legislature on how best to achieve the statewide
greenhouse gas emissions-reduction goals under section 216H.02. The recommended plan
must also identify how best to reduce statewide greenhouse gas emissions to a level at
least 45 percent below 2005 levels by 2025. The plan must:
new text end

new text begin (1) estimate statewide greenhouse gas emissions for 2005 and subsequent years;
new text end

new text begin (2) estimate the statewide greenhouse gas emissions reductions anticipated from
implementation of existing state policies;
new text end

new text begin (3) include a cap and trade system regulating, at a minimum, statewide power sector
carbon dioxide emissions;
new text end

new text begin (4) recommend additional policies to achieve the remaining emissions reductions
needed to reach the statewide greenhouse gas emissions-reduction goals;
new text end

new text begin (5) recommend ways to best use and administer the money in the fossil fuel use
reduction fund established in subdivision 4 to reduce statewide consumption of fossil fuels
and reach statewide greenhouse gas emissions-reduction goals; and
new text end

new text begin (6) include provisions that will ensure greenhouse gas emissions levels are
consistently recorded, that existing policies are evaluated, and that at least every five years
any policy changes needed to achieve the statewide greenhouse gas emissions-reduction
goals are developed and recommended for legislative action.
new text end

new text begin (b) In formulating the plan, the commissioner shall consider the broadest possible
set of mechanisms to reduce emissions, including, but not limited to, expanding the
electric sector cap and trade system established under subdivision 3 to include emissions
sources other than electricity generation and greenhouse gases other than carbon dioxide;
scheduling reductions of the emissions cap; imposing greenhouse gas taxes, fines, and
other penalties; adopting emissions-reduction performance standards for sources of
greenhouse gases; establishing financial or other incentives to promote activities that will
reduce greenhouse gases; and enhancing existing policies that have the effect of lowering
greenhouse gas emissions.
new text end

new text begin Subd. 2. new text end

new text begin Planning process. new text end

new text begin In formulating the greenhouse gas emissions-reduction
plan, the commissioners of the Pollution Control Agency and the Department of
Commerce shall consult with other state agencies, as needed. The commissioners shall
ensure that the planning process affords opportunities for public input.
new text end

new text begin Subd. 3. new text end

new text begin Cap and trade system. new text end

new text begin (a) The cap and trade system required by
subdivision 1, paragraph (a), clause (3), must be implemented no later than January 2009.
new text end

new text begin (b) The commissioner of the Pollution Control Agency shall work jointly with
the commissioner of commerce to consult with other states that have established or are
establishing a cap and trade system regulating carbon dioxide emissions associated with
electricity generation and to the maximum extent practicable take steps necessary to enter
into a carbon dioxide allowance trading relationship with those states.
new text end

new text begin (c) The cap and trade system required under this section must, at a minimum,
include all statewide power sector carbon dioxide emissions and may, at the discretion of
the commissioner of the Pollution Control Agency, include other greenhouse gases and
greenhouse gas emissions sources other than the generation of electricity.
new text end

new text begin (d) The commissioner of the Pollution Control Agency shall adopt rules necessary to
effectuate and implement a cap and trade system. The rules must, at a minimum:
new text end

new text begin (1) impose a cap on the level of statewide power sector carbon dioxide emissions
that is no higher than 2005 statewide power sector carbon dioxide emissions;
new text end

new text begin (2) include a system for issuing allowances for each ton of statewide power sector
carbon dioxide emissions allowed under the cap and recognizing for compliance purposes
allowances issued by other authorities with which Minnesota has established an allowance
trading relationship. The commissioner shall not issue allowances for any emissions for
which allowances recognized for compliance purposes in Minnesota would be issued by
another regulatory authority, such as for emissions associated with generation in another
state where a cap and trade system is in place;
new text end

new text begin (3) establish whether and under what circumstances a party subject to the cap
may receive credit for sponsoring projects that reduce greenhouse gas emissions that
would otherwise be emitted from sources not subject to the carbon dioxide cap. The
commissioner shall ensure that any of these projects for which credit is allowed under the
rules represent reductions that are permanent, quantifiable, verifiable, enforceable, and
would not have otherwise occurred. The rules may not allow a party subject to the cap
to rely on these projects to cover more than five percent of its reported emissions for the
compliance period;
new text end

new text begin (4) exclude from the carbon dioxide cap established under clause (1) those carbon
dioxide emissions associated with electricity that is generated in Minnesota and exported
out of state if the commissioner finds that the emissions will be subject to an emission's
cap in the jurisdiction receiving the electricity and inclusion under Minnesota's cap would
result in an undue regulatory burden;
new text end

new text begin (5) provide that allowances issued by the commissioner are sold by auction, and
the auction proceeds deposited into the fossil fuel use reduction fund established under
subdivision 4;
new text end

new text begin (6) maximize compliance flexibility;
new text end

new text begin (7) ensure that emissions reductions achieved are real, permanent, quantifiable,
verifiable, and enforceable;
new text end

new text begin (8) encourage early action to reduce statewide carbon dioxide emissions;
new text end

new text begin (9) strive to give appropriate credit to entities that have voluntarily reduced their
carbon dioxide emissions prior to implementation of the rules;
new text end

new text begin (10) minimize the likelihood that emissions reductions made in the state cause
emissions increases outside the state; and
new text end

new text begin (11) encourage the development of technologies and industries likely to thrive in a
carbon-constrained future.
new text end

new text begin (e) Sections 115.071 and 115.075 apply to rules adopted under this section.
new text end

new text begin Subd. 4. new text end

new text begin Fossil fuel use reduction fund. new text end

new text begin A fossil fuel use reduction fund is created
in the state treasury. The fund consists of proceeds from allowance auctions under this
section and interest accruing through investment of the fund. Money in the fund may be
used for projects, incentives, or programs designed to reduce statewide consumption of
fossil fuels and reach statewide greenhouse gas emissions-reduction goals.
new text end

new text begin Subdivision 1. new text end

new text begin Increased emissions from new power plants prohibited. new text end

new text begin Until
the cap and trade system required under section 216H.04, subdivision 3, has been
implemented, and except as allowed in subdivision 2, no person shall:
new text end

new text begin (1) construct within the state a new large energy facility that would contribute to
statewide power sector carbon dioxide emissions; nor
new text end

new text begin (2) import or commit to import from outside the state power from a new large energy
facility that would contribute to statewide power sector carbon dioxide emissions.
new text end

new text begin Subd. 2. new text end

new text begin Exception for facilities that offset emissions. new text end

new text begin (a) The prohibitions in
subdivision 1 do not apply if the project proponent has demonstrated to the Public Utilities
Commission's satisfaction that the new large energy facility will not cause a net increase
in statewide power sector carbon dioxide emissions because the project proponent will
offset the emissions from the new large energy facility with a carbon dioxide reduction
project identified in paragraph (b) and in compliance with paragraph (c).
new text end

new text begin (b) A project proponent may offset the new large energy facility's contribution
to statewide power sector carbon dioxide emissions in one of, or a combination of, the
following ways:
new text end

new text begin (1) by reducing carbon dioxide emissions from an existing facility in an amount
equal to or greater than the proposed new contribution to statewide power sector carbon
dioxide emissions; or
new text end

new text begin (2) by purchasing carbon dioxide allowances from a state or group of states that
has a mandatory carbon dioxide cap and trade system in place that produces verifiable
emissions reductions.
new text end

new text begin (c) The Public Utilities Commission shall not find that a carbon dioxide reduction
project identified in paragraph (b) acceptably offsets a facility's emissions unless
the emissions reductions used to offset the new large energy facility's emissions are
permanent, quantifiable, verifiable, enforceable, and would not have otherwise occurred.
new text end

new text begin Subd. 3. new text end

new text begin Enforcement. new text end

new text begin Whenever the commission or department determines that
any person is violating or about to violate this section, it shall refer the matter to the
attorney general who shall take appropriate legal action, including seeking injunctive
relief if necessary.
new text end