In the cap and trade legislation, any entity that emits large amounts of greenhouse gases would have to have a permit for each ton of gas it emits. That's got energy-intensive industries worried. But many of them have already been reducing their energy use.
The pie that represents Minnesota's greenhouse gas output has a lot of slices, but there are three big ones. Generating electricity produces just over a third of emissions, our cars and trucks put out one-quarter, and burning fossil fuels to heat our homes and offices and to produce things -- that's about one-fifth.
3M has been working on it since the oil price shocks of the 1970s.
Click here to see a map of Minnesota's top 10 greenhouse gas emitters.
At the Hutchinson plant just west of the Twin Cities, they make a lot of the classic 3M products -- Scotch tape, Post-it Notes; more than 4,000 products all together.
Brian Guggisberg, a plant engineering team advisor, said it's expensive just to keep the lights on in the huge complex.
"Over the last year, we changed the light bulbs in most of our fixtures to a 25-watt bulb, which could be anywhere between seven and 10 watts less than in the old fixture," Guggisberg said. "It doesn't sound like a lot, but we changed over 25,000 bulbs, and we looked at a financial payback of under a year."
The plant installed local exhaust systems for each production area, minimizing the amount of outside air that needed to be brought in and warmed to room temperature. The plant has also reduced its water use by more than 80 million gallons since 2000.
3M sets tough goals for energy reduction. The Hutchinson plant has reduced the oil and natural gas it burns by two-and-a-half million gallons a year. Guggisberg said that saves money for 3M, but it also helps with the bigger picture.
"We're reducing 450 trailers that delivered oil to our site; the refinery does not need to produce 2.5 million gallons," he said. "So the total environmental impact is just tremendous if you really think of what the end user can produce for energy savings."
3M is so determined to save energy, the company cut its greenhouse gas emissions in half over five years.
3M also plans to make quite a bit of money selling products in a world that burns less fossil fuel. It makes components for solar panels and windmills, and things like coatings to make computer screens brighter with less electricity.
Heavy industry uses lots of energy
Other Minnesota industries use far more energy than they use at 3M's Hutchinson plant.
At the taconite processing plants in northern Minnesota, energy costs are huge. The crushers that grind hard rock into powder don't run themselves; they use electricity. And the furnaces that harden the pellets burn mostly coal.
So it's not surprising the mining companies are hoping to get some of those carbon allowances for free. The House bill passed in June provides some allowances for the steel and taconite industries.
Craig Pagel, president of the Iron Mining Association of Minnesota, said the industry is always looking for new ways to become more efficient. That can mean installing more efficient motors when old ones need to be replaced, and keeping all equipment in top working order.
Some taconite plants are using wood byproducts to replace some of the coal they burn, and they're planning to use old mine dumps to make more energy.
"A lot of the area that they're reclaiming, they can plant forests in," Pagel said, "and then they can turn around and use that very same thing that grows on the taconite tailings ponds and the mined-out areas, to produce fuels they need for the energy in the future." Trees can provide a nearly carbon-neutral fuel when they're burned; they can also store carbon while they're growing. But to make them into other useful products requires energy.
Lumber mills, paper mills, plywood mills -- they all use a lot of electricity to run the machines, and a lot of heat to dry the products.
The good news is, they can produce a lot of the energy they need using their own waste. Mills in Minnesota produce more than a quarter of the electricity they use.
In fact, some in the forestry business are looking to expand their energy production as society shifts away from fossil fuels. Wayne Brandt is executive vice president of Minnesota Forest Industries. He said paper companies are in a good position to ramp up the next generation of biofuels for ethanol or biodiesel.
"We've got staffs of chemical engineers, paper science engineers; these are the kinds of things they do," Brandt said. "Companies are all looking at these things."
Brandt said commercial production of transportation fuels from wood fiber is still probably 10 years away.
"But it also makes more sense to target programs to do it towards those existing facilities instead of developing entirely new facilities," he said.
Electricity for homes and industry
Electric companies could also burn more wood and farm wastes to produce electricity. They're doing it in St. Paul, where the District Energy plant creates heat and power. It's called co-generation, and it's far more efficient to produce both heat and power at the same time.
That brings us to the electricity sector, the biggest emitter of greenhouse gases in the state.
At the headquarters of Great River Energy in Maple Grove, there's a big windmill that can power the equivalent of 40 homes, and it's symbolic of what's coming from energy companies.
Minnesota already has some of the strongest requirements in the country for utilities to become more efficient and produce more power with renewables.
Great River Energy supplies power to rural co-ops around Minnesota. The company is adding wind power, and they're even getting some electricity from methane generated by manure.
But most of the electricity still comes from coal-fired power plants, and Great River Energy is worried about the costs of cap and trade. Bob Ambrose is director of Governmental Affairs for the company, and said the way the rules are written so far; he only expects to get enough permits to cover half the company's emissions.
He said the House bill allocates allowances based partly on emissions, and partly on retail sales. That means utilities with nuclear power plants would get a windfall, because nuclear plants don't directly emit greenhouse gases and Great River Energy doesn't have any nuclear plants.
Ambrose also worries that the cap and trade system will be wide open to manipulation by the financial industry, which could distort progress toward carbon-reduction goals.
Still, the company is hoping to make money from a process it developed to make its own operation more efficient. The lignite coal the power plants burn is very moist, and now the company uses waste heat from the generators to dry the coal to make it burn better.
"Some of our engineers invented the process," Ambrose said. "It's now patented, and we hope to sell this technology worldwide."
Probably the best way for utilities to reduce their greenhouse gases is through conservation. In fact, Minnesota requires utilities to try to sell one-and-a-half percent less electricity every year.
But Bob Ambrose said that's not easy.
"We can't make a decision solely on our own, or flip a switch solely on our own, that accomplishes that," he said. "It requires the active involvement of all of our end-use customers. So a lot of persuasion is required."
Higher electricity prices might provide some persuasive power of their own. And a cap and trade system will make electricity generated by fossil fuels more expensive. So Minnesotans will either have to use less or pay more.