CO2 Wars Begin With World's First Carbon Tariff

CO2

Countries and states that plan on ignoring renewable energy technology and focusing on coal power now have a new hurdle to deal with: carbon tariffs for goods produced using CO2-heavy power. Originally intended to be applied to coal-spewing countries like China, the carbon tariff has become something of an inter-state battle in the U.S. Minnesota recently enacted a plan to tax electricity generated by carbon-intensive methods in North Dakota—specifically, a carbon fee of $4 to $34 per ton of CO2 emissions in addition to the normal cost of coal power.

Naturally, North Dakota's utilities are none too happy about this development. The state rightly claims that the tariff will discourage Minnesota from buying power from North Dakota, which produces the majority of its energy from coal. State officials say that the state is working on carbon capture technology as well. And the state isn't taking Minnesota's tariff lying down—North Dakota is suing Minnesota since it believes the tariff, scheduled to go into effect in 2012, is an illegal attempt to regulate out-of-state utilities.

Fair enough, but North Dakota might just want to suck it up and focus on its wind power resources. The ultra-windy state recently became the home of a 149 MW, 71 turbine wind farm, courtesy of Iberdrola. And wind energy capacity nearly doubled in the state in 2009.

Regardless of the outcome of the Minnesota vs. North Dakota skirmish, carbon tariffs might have better luck overseas. China argues that tariffs could lead to trade battles between poor countries, but the country is also the world's biggest emitter of greenhouse gases as well as a major exporter. U.S. Energy Secretary Steven Chu believes, on the other hand, that tariffs could level the playing field for U.S. manufacturers that are bound by emissions laws. We'll find out what havoc the tariffs can wreak soon enough—if the US doesn't pass one soon, the E.U. probably will.

[Via Cleantechnica]

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1 Comments

  • Bill Furlong

    Encouraging news! The best solutions to big problems are 1) the simplest and 2) those leveraging market forces. The best way to reduce the emission of greenhouse gasses is to tax carbon consumption and remit the tax receipts to people -- probably via a payroll tax credit. The system can be tax neutral in aggregate (but certainly not tax neutral to those who consume a lot of dirty energy). If the federal government can't get a carbon tax passed, it is great news that selected states are willing to take the lead. What would be super helpful is for a state both impose the tax and then establish the rebate that makes it a tax-neutral action. Without that a carbon tax will always be (validly) criticized as just another tax imposed by "tax and spend liberals". This issue is too important to fall victim to that criticism.