Yesterday the Minnesota Free Market Institute, Minnesota Majority, The American Property Coalition held a press conference critical of the Minnesota Climate Change Advisory Group (MCCAG) recommendations. David Strom, president of the Minnesota Free Market Institute, says that analysis shows the climate change group’s report is seriously flawed. It doesn’t provide a cost-benefit analysis of proposed actions, and doesn’t back up estimates of costs and savings with real data.

“Essentially, their proposal is a fantasy. It has no correlation to the trends that we actually see,. They assume electricity consumption’s going to go down when it’s going up, 1.5 percent a year. They assume that our biofuel use will go up 35 percent. They did no study that indicated that we even have the capacity in terms of agricultural production to do that, and they don’t know whether that’s going to ruin the soil. Looking at this report, we came to the conclusion that it simply ignored reality.”

More press coverage –

* Critics say global warming panel recommendations could increase energy costs, job losses Pioneer Press
* Critics take aim at climate change recommendations MPR
* CO2 reduction plans take some flak Star Tribune

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Policy Memo

April, 2008

How Reasonable are the Recommendations of Minnesota’s Climate Change Advisory Group?

by David Strom, President Minnesota Free Market Institute

Download full report here.

Executive Summary

The report of the Minnesota Climate Change Advisory Group (MCCAG) recommends a wide range of policies to achieve the goals set out in the Next Generation Energy Act of 2007. Even the most cursory examination of the report reveals glaring weaknesses. The report overstates the costs of CO2 emissions, overstates the benefits of reduction measures, understates the costs and difficulties of remediation measures, and calls for actions that are directly at odds with Minnesota’s recently adopted transportation policies.

* The MCCAG report is based upon gross exaggerations of the social costs of carbon emissions. They recommend a carbon trading scheme that values carbon dioxide emissions at $48/ton, which is four times the $12/ton the UN Intergovernmental Panel on Climate Change states is the peer-reviewed estimate. The cost of carbon dioxide emissions for Minnesotans would thus be four times the UN estimated social cost, 30% higher than European costs, and as much as 40 times as high as costs in the Northeast United States, which has a similar carbon trading scheme.
* The MCCAG and the Next Generation Energy Act of 2007 both set goals that are impossible to meet in the times frames set. According to the MCCAG Minnesota’s greenhouse gas emissions are rising at twice the national rate, yet they expect to reverse this trend and achieve a 15% reduction in just seven years. Doing so would require dramatic changes that would be impossible to accomplish on a short time frame without severe economic consequences.
* The MCCAG recommends drastic changes in land use in very short time frames. These changes run counter to current market trends, and there is little to no empirical support that they can be achieved. In particular the report recommends doubling the amount of new housing development required in the urbanized area and choking off suburban development. A large fraction of the committee’s greenhouse gas reduction is based upon achieving this goal, yet there is no evidence that the housing market will support mass migration back to the cities.
* One of the primary policy goals of the MCCAG report is to drastically alter the transportation market, shifting citizens from automobiles to transit in large numbers. Their method of achieving that goal to increase both the cost and inconvenience of driving. Consequently they suggest a dramatic reduction of investment in roads (contrary to the policy adopted by the Legislature to increase taxes and spending for roads and bridges) and to shift the resources
* Minnesota Free Market Institute. 2048 Old Highway 8 NW, Suite 200A, New Brighton, MN 55112
* to transit development. Further, they argue that one of the best ways to reduce greenhouse gas emissions is to “increase the cost of driving.” These policies run counter to Minnesota’s recently updated policy goals.
* The MCCAG report recommends sweeping changes to agricultural practices to reduce greenhouse gas emissions from agriculture, but the report admits that there is little current research to indicate the best methods for doing so or that the reductions can or will actually happen. Calling for further research while booking the greenhouse gas reductions is pure fantasy.
* The MCCAG report calls for a massive increase in the use of biofuels, but completely sidesteps the feasibility or total benefits of making such a massive shift in fuel use. The report states “The economical and technical feasibility of replacing conventional energy with renewable energy was not considered as a part of this analysis; it was assumed that sufficient supply was available to meet the demand set by the policy. The cost and GHG impact of replacing plant nutrients lost to harvested cellulous materials were also not considered.” The report also completely sidesteps the question of whether biofuels create a “carbon debt” that in the medium-term would increase greenhouse gas emissions.
* In short, the MCCAG report does not provide a reasonable path to addressing the potential costs of climate change. Rather it is based upon unrealistic assumptions about the actual costs of carbon dioxide emissions, the time frame in which massive social changes can take place, and what the political and economic market will bear.