Minnesota Introduces World's First Carbon Tariff

hollywoodb writes "The first carbon tax to reduce the greenhouse gases from imports comes not between two nations, but between two states. Minnesota has passed a measure to stop carbon at its border with North Dakota. To encourage the switch to clean, renewable energy, Minnesota plans to add a carbon fee of between $4 and $34 per ton of carbon dioxide emissions to the cost of coal-fired electricity, to begin in 2012 ... Minnesota has been generally pushing for cleaner power within its borders, but the utility companies that operate in MN have, over the past decades, sited a lot of coal power plants on the relatively cheap and open land of North Dakota, which is preparing a legal battle against Minnesota over the tariff."

Comments

Minnesota Carbon Tariff is Illegal

[Anonymous Coward]

No state may regulate interstate commerce. One can find that written in the U.S. Constitution. The legislature in Minnesota needs an education in civics.

Its about time

[Jenming]

Not having a "tax" on environmental damage causes everyone who is effected by damage to the environment to subsidize industry that damages the environment.

While it is hard to put a monetary value on environmental damage, its obviously not $0. If an industry is making money damaging the environment, that may be fine, but some of the money really should go to everyone living in the damaged environment.

Its also nice to see individual states take the lead in issues like this.

Re:Its about time

[Totenglocke]

Its also nice to see individual states take the lead in issues like this.

Yes, it is nice to see individual states taking a lead in dramatically raising energy costs, especially in a recession. It only further proves how utterly incompetent our leaders. While taking energy is stupid in the first place, even if a country or state is dead set on doing it, only a moron would do it DURING A RECESSION when people don't have the money to pay the tax. Taxing energy raises all costs - do you really thing the people of Minnesota can afford to pay more for heat, fuel for cars, food, lighting, clothing, and everything else right now? That's what taxing energy does - it raises the price of everything. This is an epic fail for Minnesota.

Re:Its about time

[clone53421]

I prefer to just quote Obama: electricity rates will “skyrocket”. That’s “dramatic” enough for me.

Re:Its about time

[Totenglocke]

There is no good time to tax energy, because it's a stupid thing to do. All I said was that if you're going to insist on doing something economically damning, don't do it during the second worst economy in the history of the country.

But if we don't start doing it soon, when that source runs out, we won't have the technology or the infrastructure to replace it.

When we actually are in danger of running out, people will start to change over. Why? Well first, because there will be people wanting to make money by being one of the major non-fossil fuel energy sources. Secondly, there will be the natural self-preservation instinct. Thirdly, as basic economics would teach you, as fossil fuels start to become scarce, the prices will go through the roof making the relative cost of non-fossil fuel energy incredibly low.

Believe it or not, free markets actually work - it's been proven. Free markets with no regulation tend to have some issues, but I'm not arguing against regulation - just excessive government controls that actually hamper the very goal the government claims to want to achieve.

Re:Its about time

[BeanThere]

Incompetent? No, I think they know exactly what they're doing: Some bureaucrats smell a cash opportunity, and want to milk it. This is *especially* important during a recession, as they need to also justify their payrolls - now they can look like they're "doing something" while raising the cash to keep paying their salaries, whilst otherwise voters would send them to the streets.

Basically the economic climate naturally increases the pressure for smaller government, while those politicians who know they aren't doing much useful and thus could stand to lose their jobs from 'smaller government' have to try correspondingly harder to come up with some way to justify being paid by taxpayers and generate more tax income. It's like a huge network designed mainly to come up with ways to increase the amount of money flowing into it - basically by definition.

It's just gunna get pushed to the customers

[Anonymous Coward]

I live in the region and if Minnesota goes through with this then Minnesota customers are the one's that are going to be paying for the carbon tax.

Obvious, but...

[querist]

This will, of course, ultimately be passed on to the customers. Ultimately, this is a way to raise taxes to force a change in private industry. The government keeps the money, and we the people pay the taxes. It won't hurt the companies in this case because there is no choice in electricity providers. You can't switch electric companies like you can cell phone companies.
How, exactly, will this force "cleaner" electricity generation?
What will be done with the money from these tariffs? Will it only be used for environmental concerns, or will it just go into the general budget?

I happen to favor this

[ihuntrocks]

At the risk of getting flamed and shot down, I have to admit that I actually favor actions like this. Will it hold up in a legal sense? Like the Queen's ass, that remains to be seen. However, I have long though that those things which are blatantly harmful to human beings, and the planet in general, should have enough economic disincentives as to make them all but beyond the ability of anyone to procure. Oh, I think you should be free to buy whatever you wish, but I think that freedom should include the freedom to have to spend all of your money on the stupid, inefficient, and harmful things if you so desire them. I'm frankly tired of seeing the economic incentives of "cheap" and "profitable" driving harmful things. It's time the tables turned, in my opinion.

Re:I happen to favor this

[CannonballHead]

However, I have long though that those things which are blatantly harmful to human beings, and the planet in general, should have enough economic disincentives as to make them all but beyond the ability of anyone to procure.

This is, of course, predicated on you believing AGW. Which appears to be up for debate. Significantly.

Re:I happen to favor this

[s73v3r]

It doesn't even have to be about AGW. Go look at your average coal mining site. Go look at your average coal plant. There's a lot of crap that gets spewed out, and that crap can't be good for the environment or for you and I. There should be disincentive to doing those things, as the people who reap the benefits of causing pollution often aren't the ones who have to live with it, or pay the costs of it.

Re:I happen to favor this

[tsm_sf]

This is, of course, predicated on you believing AGW. Which appears to be up for debate. Significantly.

Only if you're a conservative American. Curiously enough that's about the same demographic that still believes the earth is 6000 years old.

Seriously, guys. You were all saying that GW didn't exist a few years ago. Now it exists but isn't manmade. In 10 years you'll be saying that it exists, is manmade, but we can't do anything about it. Do you ever have a thought glennn beck doesn't think first?

Re:I happen to favor this

[BCoates]

We're not going to run out of iron. Ever. And the steel in a car is a tiny fraction of the environmental impact of the car over it's lifetime, so it's not like re-using enough wire hangers to equal the weight of steel in a car offsets the vehicle.

If you're going to look at the environmental impact of dry-cleaning, the washing process itself and the car trip to deliver a few shirts and the employees of the store dwarf a few coat-hangers. And the form the better part of the expenses of the company, and are where they try to seek savings, rather than a few hangers (aside from putting out a recycling box to make people like you feel better).

The market is creating incentives to conserve scarce goods. It's not infallible, but neither are the people who would substitute their judgement for that of people with skin in the game.

This qwill fail;

[geekoid]

you can't tariff another state..you can TAX the hell out of electricity from that state. tariff and tax is not the same thing.

Re:UNCONSTITUTIONAL

[osu-neko]

This isn''t a tax on trade between states. It's a tax on carbon. It's perfectly neutral in theory -- no matter where your carbon-based energy comes from, it gets hit with the tax. Now, it's true that much of MN's coal-based energy comes from ND, so the law will impact imported power more than local power, but a luxury tax on high-priced wines is not unconstitutional because more wine is grown in California and imported to Minnesota rather than grown in Minnesota. This is no different. There's nothing unconsitutional going on here, it's a spurious argument being raised by people who oppose a carbon tax in principle.

I guess the State of Minnesota...

[ScientiaPotentiaEst]

... has such a surplus that it can afford to introduce yet another incentive to leave.

Why do governments so often fail to consider the effects of disincentives? For example, when raising taxes, they calculate expected increases in revenue while underestimating changes in the behavior of the taxed. They always act surprised when the expected additional revenues don't materialize, or indeed revenues fall.

Perhaps it has something to do with most elected officials being lawyers and not businessmen, engineers, etc.

Re:UNCONSTITUTIONAL

[Anonymous Coward]

The tax is a Tariff, which by definition, is a tax on imports. Minnesota can tax consumers directly for the carbon they use if they so choose, but they may not tax imports of coal into their state. They can tax the use of coal by utilities in their state, but not the importation of coal into their state. If indeed this is a tax on imports of anything (except alcoholic beverages) from North Dakota, then the courts would strike that down in a preliminary hearing.

This has nothing to do with your political leanings; it's pure constitutional law as I (I'm not a lawyer) understand it.

Re:It's even worse

[Montezumaa]

Is it just me, or did the government claim in Raich that consuming your own marijuana affects the interstate marijuana trade and that causes your marijuana or personal consumption to become interstate commerce? Is the government really trying to say that if I use marijuana I grow myself that I am hurting people who are importing marijuana? I know I must have read that wrong.

The Commerce Clause, while overused, is very clear. It does not talking about the possible effects on current interstate trade, but actual trade. Just because to build or grow something for myself, the courts cannot hold onto the possibility of adjustments to interstate trade. A person must be able to avoid taxation and control, if they wish, by making or growing a product for themselves. It is the foundation of the United States Constitution.

I am a strong conservative, but the Supreme Court violated the Constitution in Raich and Stewart.

No action here folks, move along

[vik]

So in 2012 someone might think about taxing CO2 emissions. Not cutting them, taxing them. Too late.

What we need is action now. Action like massive taxes on the construction of fossil fuel-powered power plants, so that the CO2 absorbtion systems (i.e. trees) can be ready at approximately the same time as new emissions start, and alternatives can be financed before new power plant starts emitting.

Vik :v)

Re:UNCONSTITUTIONAL

[Attila Dimedici]

This isn''t a tax on trade between states. It's a tax on carbon. It's perfectly neutral in theory -- no matter where your carbon-based energy comes from, it gets hit with the tax. Now, it's true that much of MN's coal-based energy comes from ND, so the law will impact imported power more than local power, but a luxury tax on high-priced wines is not unconstitutional because more wine is grown in California and imported to Minnesota rather than grown in Minnesota. This is no different. There's nothing unconsitutional going on here, it's a spurious argument being raised by people who oppose a carbon tax in principle.

Except that this isn't a tax on carbon, it is a tax on electricity based on how that electricity is generated. If that electricity is not generated in Minnesota, Minnesota is not constitutionally allowed to regulate how it is generated. Electricity generated using coal is indistinguishable from electricity generated by any other means.
Minnesota cannot legally tax carbon that is released in another state.

Re:UNCONSTITUTIONAL

[Teancum]

To ditto the anonymous coward who responded here, this is indeed a tariff and unconstitutional authority grab. There is indeed a good reason why the constitution explicitly prohibits states from imposing a tariff against each other. At the very least, read up on the tariff wars between New York and New Jersey if you want to get a history lesson to find out why the constitutional prohibition was put in against tariffs in the first place on the state level. The only taxes of this nature can be done by the Federal government, and even then only on goods imported into the USA, not on stuff manufactured for export.

For many, many years the import duties were about the only substantial form of revenue for the Federal government as well, so it will be a power jealously guarded by the feds as well.

As to if this particular "fee" or "tax" applies as a tariff, that is certainly up to debate on this issue. It is also a state sovereignty issue, where Minnesota doesn't have any sort of constitutional authority to regulate utilities in another state. If that is how North Dakota decides to generate income and revenue for its citizens, Minnesota can't impose any sort of regulations on that generation.

It will be interesting to see how this plays out, and in terms of the electricity coming into Minnesota via "importation", it will be very difficult to actually regulate how that electricity is generated in the first place for a place that is outside of its own borders. If they want to impose a fee for coal plants within their own state, they certainly could do that... but it isn't the same thing.

Too bad that far too few people have actually read the U.S. Constitution any more.

Re:It's even worse

[FiloEleven]

Is it just me, or did the government claim in Raich that consuming your own marijuana affects the interstate marijuana trade and that causes your marijuana or personal consumption to become interstate commerce? Is the government really trying to say that if I use marijuana I grow myself that I am hurting people who are importing marijuana? I know I must have read that wrong.

Nope, you read it right. It's the court that is wrong, and absurdly so. I recommend a read of Justice Thomas' dissenting opinion--it's pretty scathing and spot-on.

Re:Constitutional?

[scot4875]

I'll bet it will be overturned just like all those state cigarette taxes have been overturned.

--Jeremy