On May 25, 2007, Minnesota enacted the Next Generation Energy Act of 2007 (the Act), which aims to decrease greenhouse gas (GHG) emissions, increase energy efficiency, and expand community-based energy development. The Act establishes statewide GHG emissions reduction goals of 15 percent by 2015, 30 percent by 2025, and 80 percent by 2050, based on 2005 baseline levels. The Governor’s Climate Change Advisory Group has the responsibility of developing a comprehensive GHG emissions reduction plan to meet these goals.

Key Provisions

Article 2-5-1e allows the commissioner of the Department of Commerce to approve and award up to $3.6 million in grants annually for applied research and development projects that identify new energy conservation technologies and strategies.

Article 5-2 requires that, before February 1, 2008, the commissioners of the Pollution Control Agency and the Department of Commerce submit a plan to the chairs of the energy and transportation committees in the house and senate with recommendations about how to best meet the GHG emissions reduction goals.

The plan must estimate emissions in 2005 and project emissions in 2015, 2025, and 2050; estimate emissions reductions expected from current state policies; recommend a reporting system for emissions; assess the feasibility (and costs and benefits) of a cap-and-trade system; recommend the parameters of a cap-and-trade system; and consider whether utilities should be exempted from the prohibition against construction or importing energy from a new large energy facility prior to the implementation of a cap-and-trade system, if a fee is paid per ton of CO2 emitted.

Until a cap-and-trade system is fully implemented, Article 5-3-3 prohibits persons from (1) constructing a new large energy facility11 that would contribute to statewide power sector CO2 emissions; (2) importing or committing to import electricity from a new large energy facility that would contribute to statewide power sector emissions; and (3) entering into a new power-purchase agreement12 that would contribute to statewide power sector emissions.

Article 5-3-4 establishes exceptions from the above prohibitions for facilities that offset emissions. The offset must be at least as large as the new contribution to emissions. Additionally, the portion of a new large energy facility or long-term power purchase agreement that provides electricity to the proposed Minnesota Steel production plant is also exempted from the above prohibitions, provided that the PUC determines the plan is designed to meet the highest efficiency standards in its industry.