The futility of restricting fossil fuel use in MN

Yesterday American Experiment released my policy brief on Minnesota’s ban on new coal-fired electricity.  Yes, Minnesota bans new coal-fired electricity.  This is hard to understand when coal is the chief reason for Minnesota’s historically low electricity rates.  It’s even harder to understand when you consider these key points from the report.

• Among states that rely on coal for electricity generation, Minnesota is the only state that bans new coal additions. 
• The ban on new coal-fired power will burden Minnesota will higher and more volatile electricity prices.
• The ban on new coal-fired power makes the U.S. more dependent on foreign energy sources.
• The ban on new coal-fired power risks increasing air pollution in Minnesota by discouraging efficiency upgrades and the decommissioning of existing coal plants.
• The ban on new coal-fired power will likely result in higher global carbon-dioxide emissions because coal that would be burned in Minnesota absent the ban will be exported for use in less efficient power plants in developing countries.
• The ban likely violates federal law and the Constitution.  As such, it is inviting an expensive lawsuit that the state will likely lose.

These points are, of course, made more fully in the actual report.  However, I’d like to highlight the fact that banning new coal-fired power in Minnesota will almost certainly raise global carbon dioxide emissions.  This is beyond ironic as the whole point of the ban is to support the state’s greenhouse gas emissions-reduction goal.

It’s incredibly naïve to think that Minnesota can reduce global greenhouse gas emissions by restricting the use of fossil fuels inside its borders.  Coal not burned for use in Minnesota will be burned elsewhere.  Minnesota lawmakers cannot stop world trade.  Coal mining companies aren’t going to leave coal in the ground just because Minnesota stops buying it; companies will sell the coal to someone else.   And as I explain in my report, the new buyers will most likely be from developing countries in Asia for use in less efficient coal plants.  Diverting coal from use in Minnesota to use in less efficient coal plants across the globe will without question increase carbon dioxide emissions.  The figure below shows that U.S. coal exports to Asia are expected to vault next year and then continue to consistently rise until 2035.  These exports are being made possible, in part, by a new coal shipping terminal being built in Washington.

Source: U.S. Energy Information Agency, Annual Energy Outlook 2011, Table 96. World Steam Coal Flows By Importing Regions and Exporting Countries (April 26, 2011).

The faulty logic undergirding Minnesota’s ban on new coal-fired emissions pervades a number of other popular ideas for reducing global greenhouse gas emissions.  Low-carbon fuel standard proposals and Minnesota’s Renewable Energy Standard both hope to reduce greenhouse gas emissions by reducing Minnesota’s intake of certain fossil fuels.  But fossil fuels are a commodity that will continue to be traded on world markets regardless of any attempts to stop their trade at Minnesota’s borders.  Barricading Minnesota’s borders against fossil fuels only works to divert the fuel to less efficient locales and increase energy prices on Minnesota families and businesses.