The governor outlined an ambitious proposal to make the state more energy independent. But many details remain to be worked out.
Laying out an ambitious vision in which Minnesota would lead reform of an "outdated" U.S. energy policy, Gov. Tim Pawlenty on Tuesday called for more home-grown energy, less use of fossil fuels and a new focus on countering global warming.
"Let's not wait for the future," he told a conference of farmer-energy producers in St. Paul. "Let's create our own future."
His plan would use regulations, incentives and penalties to make the state more energy-independent through big increases in ethanol-rich fuel stations and highly energy-efficient buildings, big advances in renewable energy technologies and big decreases in electricity consumption and greenhouse gas emissions.
All the moves are designed to reduce Minnesota's dependence on fossil fuels.
The state's and nation's prosperity and security both depend on moving away from "funding both sides of the war on terror" via military spending and oil imports from "countries that don't like us," Pawlenty said.
The Republican governor's "Next Generation Energy Initiative" was presented Tuesday largely in outline form, with none of the financial details spelled out. But DFLers who will control the 2007 Legislature hailed the proposal as a breakthrough while also saying it falls short of their goals for ramping up electricity generation from wind.
"The winds of change have made it to the governor's office," said Rep. Aaron Peterson, DFL-Appleton. "It seems like he's now on board with real numbers for renewable energy."
Ambitious numbers were plentiful in Pawlenty's plan. He called for Minnesotans to reduce their use of fossil fuels 15 percent by 2015. He said the state should require utilities to step up conservation efforts enough to reduce sales of electricity and natural gas by 1.5 percent each year.
He called for a more-than-tenfold increase to 1,000 Energy Star commercial buildings, and for a fivefold increase to 1,800 Minnesota outlets for the 85-percent ethanol motor fuel known as E85 -- both by 2010.
Carrots and sticks
Pawlenty said financial incentives should be offered to utilities and other businesses to spur them to reach those goals. Incentives and funding should also be offered to help develop ethanol from trees or grass as well as biomass gasification -- futuristic technologies that he said "will be Minnesota's next bio-energy home run."
In addition, Pawlenty repeated his proposed strategic goal that 25 percent of all of Minnesota's energy -- for electricity, transportation and heating -- come from renewable sources by 2025, backed by what he called "significant penalties" for failing to reach objectives.
The plan would represent a five-fold increase from the roughly 5 percent of state energy that is currently estimated to come from renewables -- although there are disagreements about that figure and what should be counted as a renewable resource.
Pawlenty's initiative, which would upgrade the state's current Renewable Energy Standard (RES) of 10 percent by 2015, has failed so far in the Legislature.
DFLers called Tuesday for a new target of 25 percent of electric generation from renewable sources, mainly wind, by 2020. A similar DFL proposal also has failed to pass the Legislature.
"Minnesota is already a leader in renewable fuels," Peterson said. "And while we support the governor's efforts to grow the renewable fuel market in Minnesota with next-generation ethanol, for example, there is a need to establish an RES for electricity."
Agree on independence
Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said his caucus shares the governor's desire to achieve energy independence and will eagerly await his detailed legislative proposals.
House Speaker-Designate Margaret Anderson Kelliher, DFL-Minneapolis, predicted House passage of significant energy legislation early in the 2007 session. Steps to spur manufacturing of wind turbines in Minnesota, already on track with a new factory in Pipestone, will probably be included, she said.
House Minority Leader Marty Seifert, R-Marshall, predicted bipartisan agreement on many of Pawlenty's initiatives. "You're going to be surprised that we're going to have a very common goal on all of this," Seifert said.
Meanwhile, Xcel Energy Corp. executive Dave Sparby said the state's largest utility is "supportive and at the same time very interested in learning more" about the governor's plan. Sparby, vice president of governmental and regulatory affairs, called the proposal "very aggressive" and expressed concern that mandatory reductions in sales of natural gas and electricity could cut into the company's profits unless rate adjustments are made.
Pawlenty acknowledged that his proposal could have financial effects "on utilities and possibly ratepayers if it's not managed well."
On global warming, Pawlenty noted that "Minnesotans did not create this problem, nor can we solve it by ourselves." But he said the state can take "reasonable and fair steps" to cut greenhouse gases, including a requirement that electric utilities offset carbon emissions from new fossil-fuel generation plants.
That could be done by shutting down other operations or by buying emissions credits from registries such as the Chicago Climate Exchange, he suggested. He also said he is inviting the Pennsylvania non-profit Center for Climate Strategies, which he described as "nationally recognized," to help develop a broad state plan for cutting carbon emissions.
"Taking these steps," Pawlenty concluded, "will be good for the environment, good for rural economies, good for national security and good for consumers."