North Dakota to sue Minnesota for even thinking about a carbon tax

James Hansen, left, is director of NASA"s Goddard Institute for Space. Image by AFP/Getty Images via Daylife

Not only can’t we pass a carbon tax in America, we can’t even think about one.

North Dakota Attorney General Wayne Stenehjem said Tuesday he expects to sue Minnesota for just that, and North Dakota’s legislature has set aside $2 million to fund the lawsuit. Now there’s a good cause.

What did Minnesota do wrong? Two years ago the Minnesota Public Utilities Commission passed a regulation requiring utilities to consider the potential cost of carbon emissions when they project the cost of energy to Minnesota consumers.

That’s all. They didn’t institute a carbon tax, or even a carbon fee (more on that distinction in a moment). They just required utilities to anticipate a future in which they’re no longer free to pollute.

A necessary future, some would say.

Coal-rich North Dakota considers the rule a de-facto tax because it causes energy from fossil fuels to appear more expensive, if only on paper. And because Minnesota acquires much of its energy from coal plants across state lines, North Dakota considers the rule an attempt by another state to regulate its energy policy. Stenehjem says that violates the interstate commerce clause of the Constitution (get all the back and forth from Minnesota Public Radio).

If nothing else, the lawsuit shows how the United States, faced with a global crisis it has largely caused, innovates obstacles better than solutions.

Congressional Democrats have ventured an industry-friendly cap and trade proposal that has been simultaneously criticized on the right as socialism, on the left as a giveaway to business.

Lefty critics typically prefer a carbon tax on fossil fuels to make renewables more competitive. Although a national carbon tax has an ice cap’s chance in hell, the idea remains on life support thanks largely to the pioneering global warming scientist James Hansen, whose skill at climate science may be offset by his political naiveté.

If cap and trade can’t squeak through Congress, one might ask, how could a carbon tax ever pass? Hansen’s answer: it’s not a tax; it’s a fee.

What you need to do—and many people call that a tax, but in fact the way that it should be done is to give all of the money that’s collected in a fee, that should be across the board on oil, gas and coal, collect that money at the mine or at the port of entry from the fossil fuel companies, and then distribute that to the public on a per capita basis to legal residents of the country.

via Democracy Now!

Hansen believes bribing the public will help sell the tax to the people, but that’s not how America works. In his 2009 budget, President Obama proposed a similar scheme for cap and trade–a uniform cap on emissions with all the revenue from emission permits going to the public in tax breaks. Congress stripped cap and trade from the president’s budget and crafted its own version, redirecting the revenue to industry. That helped secure industry’s support for the bill.

A carbon tax would be simpler than cap and trade, but how would America institute it? Bill Clinton attempted something like it in 1993 –the BTU Tax, it was called. He dropped it when it failed to gain any Republican support. Al Gore has supported a carbon tax to replace income taxes, but he favors cap and trade as a move in the right direction. U.S. Rep. Ed Markey, sponsor of the House cap and trade bill, supported the BTU tax, but now he says this:

“I am aware of the economic arguments for a carbon tax, but politics is the art of the possible, and I think cap-and-trade is possible.”

And as Minnesota’s example shows, it may not even be possible to think about a carbon tax.

An Obama Administration regulation–a tax imposed by the EPA–is just as likely to end up in the courts. That doesn’t mean it wouldn’t work eventually, but valuable time would be lost while lawyers argue and the planet warms. For that reason, EPA Administrator Lisa Jackson said in Copenhagen, cap and trade should come through Congress.

That leaves America’s slim hope for progress against global warming wrapped up in the lovelorn, socialistic, industry-porking cap and trade proposal.

Hansen’s criticism of cap and trade is based on the Kyoto Protocol, which instituted a cap and trade system among three dozen developed nations and the European Union: “Before the Kyoto Protocol, global emissions of carbon dioxide were going up one-and-a-half percent per year. After the accord, they went up three percent per year,” he told Democracy Now! “That approach simply won’t work.”

What Hansen doesn’t say is why that happened: most of the new pollution occurred in rapidly developing nations, like China, that weren’t covered by the Kyoto Protocol. Some of it occurred in the United States, which never ratified the Kyoto Protocol, and which indulged in a fossil fuels orgy under George Bush.

The Copenhagen Accord lays the groundwork for cap and trade among all nations, which would avoid the greatest of those faults. A worldwide carbon tax would be simpler and more effective, sure, but so would shutting down the coal mines, giving up oil, and many other virtuous thoughts that dwell beyond the art of the possible.