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Otto proposes Minnesota fee on carbon, push to renewables

Minnesota State Auditor Rebecca Otto

ST. PAUL — State Auditor Rebecca Otto on Wednesday, Sept. 20, became the first and maybe only candidate for Minnesota governor to propose a state "price on carbon," part of a proposed multi-point energy independence plan that's heavy on renewable energy.

Her "RenewMN" carbon tax aims to reduce carbon dioxide, the pollutant that the vast majority of scientists who study the issue say is causing global warming, but also aims to create Minnesota-based jobs in renewable energy and energy conservation industries.

Otto called her plan a modified version of "fee and dividend" proposals favored by groups ranging from the Citizens' Climate Lobby to the conservative Climate Leadership Council. The plan would charge fossil fuel companies a price for the carbon their products put into the atmosphere.

All of the revenue from the tax would be returned to residents, both in direct payments and rebates, the campaign noted, so there's no net cost to residents or the state's economy.

Otto said her plans allows residents to make their own free market decisions about whether they want to pay for a product that pollutes the atmosphere or if they want to switch to clean energy. The plan calls for "quarterly clean energy cash dividends," direct payments to residents of about $600 per year for each Minnesota resident. Some 25 percent of the revenue would fund "clean energy tax credits" offering 30 percent back on the costs of electric cars, solar panels, heat pumps, home weatherization and other energy-saving devices.

Those purchases also would spur economic growth and jobs within the state, Otto said, and cut back on the $18 billion in fossil fuels the state imports each year.

The plan "will revitalize main streets and improve equality of opportunity across Greater Minnesota and the Metro alike," Otto said in a statement announcing the plan. "These are very good-paying jobs, and somebody's going to get them. I want them here in Minnesota."

While many groups support a carbon tax or similar plans to stem climate change using market-based incentives, other groups — including the oil, gas and coal industries — say the tax would stifle economic growth. According to a 2013 report paid for by the National Association of Manufacturers, a Minnesota carbon tax would force state residents to pay up to 40 percent more for natural gas, 5 percent more for electricity and 20 cents more per gallon of gas. "The increased costs of these critical fuels will impact every person and business in Minnesota. This is bad news for manufacturers ... and for families," the association said. "Many Minnesota companies that compete internationally will be placed at a disadvantage as their foreign competitors operate without similar costs."

Otto appears to be the first candidate for Minnesota governor to offer a carbon plan. She is running in a crowded field for the DFL nomination to replace Gov. Mark Dayton, who has said he will not seek a third term in 2018. Other DFLers running include U.S. Rep. Tim Walz of Mankato, state Rep. Erin Murphy of St. Paul, St. Paul Mayor Chris Coleman, Rochester state Rep. Tina Liebling and former House Speaker Paul Thissen of Minneapolis. A dozen Republicans also are said to be considering a run for governor.

The auditor already has separated herself from some other candidates by questioning some aspects of the state's move toward copper mining in Northeastern Minnesota, including questioning some long-term leases to mining companies for exploration on land where the state owns the mineral rights.

Otto's campaign called the plan "a strong pushback against the Trump administration's climate change denial and provides a model that other states and other political leaders can follow to turn the tide on clean energy at the state level."

Otto found quick praise from both state and national supporters of climate change action.

"The states that go on the offensive against climate change will not just help the planet — they will own a significant chunk of the future," said Bill McKibben, cofounder of the international climate movement, which is active in 181 countries. Otto "realizes the demands of the century we live in, both environmental and economic, and she's figured out how to build a smart path forward," he said.

On Tuesday South Carolina Sen. Lindsey Graham endorsed a "price on carbon" to fight climate change, breaking with much of the Republican establishment in Washington and nationally.