Minnesota Slaps North Dakota with World's First Carbon Tariff UPDATE: Not Really a Tax . . .


Photo via Reuters

There's been a lot of talk about carbon tariffs--taxing imported goods from polluting industries in nations or states that don't regulate CO2--over the last year or so. Many rust belt and coal state Democrats have called for federal climate legislation to include a such a carbon tariff. This would impose a tax on goods imported to the US from nations with no carbon controls on manufacturing (say, China). So it might come as a surprise to some that the first carbon tariff actually enacted isn't between nations at all--it's between Minnesota and North Dakota.From the Scientific American:

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, to discourage the use of coal power; the greatest source of greenhouse gas emissions.
Of course, North Dakota is none too happy about any of this--the state promptly decided to sue Minnesota, saying the tariff unfairly gives renewable energy an advantage over coal powered energy. Perhaps North Dakota missed the memo--that's precisely the point. The move will hopefully cause speculators in North Dakota to start seriously thinking about wind power projects--the state has been called 'the Saudi Arabia of wind' because of the vast potential it has there. Which is far more sustainable that coal power, which, of course, has numerous deleterious effects:
Coal has immediate health effects in addition to the well documented long term effects on climate. Coal has been implicated in asthma, diabetes, heart disease and even neurological damage, reducing intelligence levels. North Dakota ranks 8th in toxic metals contaminating its coal waste, with 3,419 tons of toxic metals.
Regardless, expect a fierce legal battle to ensue--Minnesota has set aside half a million dollars in anticipation for exactly that.

UPDATE: It has come to my attention that the law under dispute does not mandate a carbon tariff--it merely allows for the creation of one in the event that carbon pricing becomes necessary. It is instead a planning guidance number range, which utilities are to use in planning for likely rate increases in 2012. It is not a tax per se, but is being said to function like one.

More on Carbon Tariffs
As China Rejects Carbon Caps, Krugman Pushes Carbon Tariffs
US Chamber Of Commerce Opposes Possible Carbon Tariff

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