Earlier today, Minnesota Gubernatorial candidate Rebecca Otto released her energy transition plan. It an ambitious plan that puts together several elements widely considered necessary to make any such plan work, then puts them on steroids to make it work faster. To my knowledge, this is the first major plan to be proposed since the recent dual revelations that a) the world is going to have to act faster than we had previously assumed* and b) the US Federal government will not be helping.

Here’s the elevator speech version: Minnesota residents get around five thousand dollars cash (over several years), monetary incentives to upgrade all their energy using devices from furnaces to cars, some 80,000 new, high paying jobs, and in the end, the state is essentially fossil fuel free.

About half of that fossil fuel free goal comes directly from the plan itself, the other half from the economy and markets passing various tipping points that this plan will hasten. The time scale for the plan is roughly 10 years, but giving the plan a careful reading I suspect some goals will be reached much more quickly. This means that once the plan takes off, Minnesotans will have an incentive to hold their elected officials accountable for holding the course for at least a decade.

The central theme of the plan is to use a revenue-neutral carbon price, which is widely seen by experts as the best approach for cleaning up our energy supply. The simple version of the carbon price works like this: Releasing carbon is saddled with a cost, way up (or early) in the supply chain. So you don’t pay a gas tax or any kind of energy tax, but somewhere up the line the big players are being charged for producing energy reliant on the release of fossil carbon. They, of course, have the option of producing electricity from wind and solar.

The campaign notes, “Rebecca’s Minnesota-Powered Plan doesn’t raise taxes a single penny. It levies a carbon price on fossil fuel companies, and pays 100% of the revenue back to Minnesota residents, so we can take charge of our own energy.”

That money is then distributed to any citizen who wants it (of course they will all want it), evenly, across the board. So, in theory, your cost of living is a little higher if dirty energy producers are in your own personal supply chain, but lower if they are not, and in any event, you are paid off to not care. The point is, if you personally eschew fossil carbon releasing products or energy sources, you get the payoff and someone else is paying for it. That would apply to both individuals and companies, because companies can often make those choices. For example, a school bus company would be more likely to replace an old dirty bus with an electric bus rather than a propane bus. (Just yesterday, an electric bus set a record, going over 1,000 miles on a single charge! Electricity is some pretty powerful magic.)

The Otto plan has a twist. While 75% of the carbon price is distributed evenly and directly to all citizens, 25% is distributed as refundable tax credits intended to cover 30% of the cost of clean energy improvements that use Minnesota companies. This may include solar panels, heat pumps for heating and cooling, insulation, new lighting, etc. New or used electric cars count. So it all goes back to the people, but some of it is directed to support the energy transition for individuals and families.

(A “refundable credit” is a tax credit that you still get even if you did not pay enough taxes to use it, so people of any income will be able to access the clean energy benefits.)

The conservatively estimated potential cash gain for a typical Minnesota family is laid out in this table from the Otto campaign:

That is for one year. As the plan matures, a decade down the line, we can assume the carbon price component will diminish, but the household payback for being off fossil fuels will increase, and, guess what? The plant gets to live and your children don’t have to live in as much of a dystopian future!

The clean energy technologies that will need to be deployed mostly already exist, and most of them can be processed and supplied right here in Minnesota. Indeed installing PV panels and car chargers, or efficient heat pump based furnaces, etc. is the kind of job that can not be outsourced to some other country, because your house is here so the work gets done here! It is estimated that some 80,000 long term high paying jobs will be generated from this infrastructure redo. That will in turn increase revenues to the state and quite likely, will spell surpluses, some of which are likely to be tax rebates or other sorts of payoffs to the citizens of the state.

A quick word about the Coal-Car Myth. Some will read about this plan and say, “yeah, but … if I drive an electric car and stuff, that electricity is even worser because it is made with dirty coal and stuff.” (Yes, I make the Coal-Car Mythers sound a bit dull because, at this point, you’d have to be a bit dull to still be thinking this). First, know this: There are circumstances under which burning coal to make electricity to charge a car will be more efficient than running a gasoline car. To conceptualize this, imagine two engineering teams in a competition. One is to make an energy plant using coal, the other is to use an energy plant using only 6 cylinder Ford motors. The winner builds the plant that is more efficient. The team using the thousands of internal combustion engines will lose. Second, know this: It is simply not the case that all of our electricity comes from coal, and every week there is less and less of it coming from coal. Electric cars have the promise, by the way, of outlasting internal combustion cars on average. So, over perhaps half the lifespan of a given electric car, what might have been a tiny increase in efficiency for a small number of electric cars (the rest start out way more than tiny) will become a great efficiency. It is time to switch to electric cars in Minnesota.

You can expect opposition to this plan from the likes of the Koch brothers, who are currently spending just shy of a billion dollars a year, that we know of, to keep fossil fuel systems on line and stop the clean energy transition. I asked Rebecca Otto what she expected in terms of push back. She told me, “Investing in clean energy means investing in our communities and taking charge of our own energy, instead of subsidizing big oil. Hence, big oil will be the stumbling block, as this will affect their bottom line over time.”

I asked Rebecca why this is something that needs to be handled by the states, rather than at the national level. She told me, “The crippling dysfunction in Washington is persistent and we need to act now. Oil companies are spending billions of dollars to rig the system against clean energy solutions. We need to break their stranglehold on our democracy and put people, not oil companies back in charge.”

She also noted that “we also have a moral imperative to do something and the federal government has become paralyzed by big oil propaganda and political spending. The states could become laboratories to begin to tackle climate change. And whoever does is going to reap the economic benefits from the job creation. These jobs pay 42% higher than the state’s average wage.”

Economists say the carbon price is the best way to make the energy transition happen. Regular Minnesotans benefit the most, the Minnesota economy benefits, and the environment benefits. This is a good plan. I endorse it.

This plan, which you should read all about here, has also been endorsed by the famous and widely respected meteorologist Paul Douglas, by Bill McKibben of 350.org, St Thomas scientist and energy expert John Abraham, and by climate scientist Michael Mann.

I’ve got more to say about this plan and related topics, so stay tuned.

Here’s a video of Rebecca Otto discussing energy from the roof of her solar paneled home, with her windmill generating electricity in the background. Apparently, she walks the walk!

Other posts on the plan:

Powering Minnesota to prosperity through energy leadership
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*You may have seen recent research suggesting that we have more time than previously estimated to get our duck in a row with clean energy. That research was misrepresented in the press. A statement made by one of the authors clarifies: “..to likely meet the Paris goal, emission reductions would need to begin immediately and reach zero in less than 40 years’ time.”

Comments

  1. #1 MikeN
    September 27, 2017

    A revenue neutral tax plan, that the average household will end up gaining money. Where are the losers?