The fewer materials available for manufacturers, the more we will tend to export our used materials rather than process them here. This would penalize us in two ways. First, we would lose the powerful lobbying force that scrap-based manufacturers would have on expanded recycling. Second, we would lose the value-added of the scrap. A ton of scrap paper may sell for $20 while a ton of pulp sells for $600 and printing paper for $1000. That additional value translates into higher paying jobs, a higher beneficial multiplier effect on other domestic businesses, and research and development budgets that can effect still further technological innovation. To enable re-use and recycling the state should also analyze packaging. Denmark requires uniform container sizes. Saint Paul and Minneapolis will ban squeezable ketchup bottles because they have multiple resins that make the product almost impossible to recycle. To create an internal market for the used materials, state and local governments, as well as major corporations, should develop procurement policies that demand products with a very high scrap content. When the demand is not within the direct procurement authority of government it may be encouraged through legislative action. In 1989 Connecticut, for example, required state newspapers to contain increasing levels of s^rap newsprint, starting with 30 percent in 1993 and rising to over 70 percent by 1997. With respect to ethanol, all state and local government cars should be required to use a 10 percent blend. Today that is the maximum blend permitted, but according to the Renewable Energy Association, current engines could use a 20 percent blend. Minnesota should gather the operating data that w ill allow federal approval for this increase. To comply with recent regulations in Los Angeles, vehicle manufacturers will have to produce millions of cars, trucks and busses fueled by electricity, methanol, ethanol or natural gas. Federal legislation has been introduced to require this nationwide. Minnesota should piggyback on these efforts and demand that a certain number of such cars be offered for sale in this state. The outcome of the competition between natural gas based methanol and plant matter based ethanol may be determined by the rigor of the air pollution regulations in the state. In 1987 the Denver metropolitan area required all fuel sold in the winter months to contain at least 1.5 percent oxygen to reduce pollution. The second year Denver raised the required oxygen content to 2 percent. If this were raised to 3 percent, ethanol, with a higher oxygen content than By living within a planetary materials budget we can become a model planetary citizen. methanol, would become the preferred additive. If the state were to take action to encourage CO2 reduction, this would also favor ethanol over methanol because methanol does not reduce CO2 emissions while ethanol reduces them by up to 30 percent per mile driven. With respect to wood, the state could immediately initiate a massive tree planting program, simply as a measure to reduce statewide carbon dioxide emissions. As the trees mature, we could phase in a s tiff carbon emissions tax. This would raise the demand for wood energy in all its forms (direct wood combustion, gasification, liquefaction) compared to fossil fuels as the supply to meet that demand comes on-line. 2. Developing non-traditional strategies that break out of existing bureaucratic divisions. In 1989 the PUC agreed with Commissioner David Moskovitz of the Maine Public Utility Commission that under present utility regulations, “ The sad fact is that even zero-cost conservation is strongly against a utility’s own financial interests.” It has begun to design new regulations that would encourage energy utilities to finance efficiency improvements by using the savings from avoiding the construction of new power plants and transmission lines. But utilities are not organizationally designed to promote efficiency. Their historical mandate was to plan for the worst demand situation. Their personnel is oriented toward thinking of supply and transm ission a lterna tives. Therefore, while the state should continue to develop regulations that integrate efficiency into u t ility planning it should also examine other financing mechanisms. A 15 year, $1 billion state bond, perhaps offered directly to its own citizenry, could finance a rapid upgrading of existing inefficient physical stock, from refrigerators to furnaces to cars to poorly insulated homes and be repaid from the energy savings. 3. Creating an export market. This can be done through the conventional channel of the World Trade Center and the Department of Trade and Economic Development. The materials revolution that affects Minnesota also affects, or will affect, much of the world. Thus businesses and technologies nurtured in Minnesota may find a ready market elsewhere. Techniques developed elsewhere could also be licensed by Minnesota manufacturers. 4. Advocating changes in federal policy that reinforce the same policy objectives pursued by Minnesota. The rules that Washington sets can undermine MinneMinnesota lacks a comprehensive materials policy commensurate with the level o f worldwide concern about planetary pollution. sota’s actions or they can vastly multiply the markets available. Clean air regulations, utility regulations, appliance efficiency standards, federal procurement standards with respect to recycling, as well as tax incentives and even transportation policies, will greatly impact. For example, in late 1988, the EPA told the Wisconsin Electric Power Corporation its proposed Port Washington power plant renovation was subject to the strict air pollution standards of new plants. Wisconsin Electric planned to spend about $71 million to replace cracked steam drums and for routine maintenance but meeting the tougher standards could cost $800 million. If required to meet the tough new standards, massive conversions to wood might take place. Of the 821 coal burning plants, 360 are smaller than 200 megawatts and most of those are over 35 years old. Similarly, if a carbon tax were imposed on power plants, wood would become extremely attractive. By one estimate, a 400 MW(e) coal fired power plant would add about 22 million tons of carbon to the atmosphere over its 30 year life. A plant that was fueled from existing forests would add only 7 million tons and a plant fueled from fast growing tree plantations would actually remove a million tons of carbon from the atmosphere over its life. Some federal agencies and independent organizations are calling for a carbon emissions tax to slow global warming. Worldwatch Institute recommends a $50 tax per ton of carbon emissions. EPA suggests a $29 a ton tax on coal. Either one would make wood extremely competitive with coal. One recent calculation by a Minnesota company concluded that a 400 megawatt coal fired plant would generate over its life some 20 million tons of carbon while a wood fired plant fueled from fast growing tree p lan ta t ions would ac tua lly remove a million tons of carbon from the atmosphere over its life. Ethanol is presently competitive only because of a combined federal and state tax exemption equivalent to over 60 cents per gallon. However, according to one Department of Agriculture study, a fourfold increase in ethanol consumption, to 3.4 billion gallons, would raise prices sufficiently to reduce farm support payments by $5.9 billion. This translates into more than 80 cents per additional gallon of ethanol, more than offsetting the 60 cents federal excise tax exemption. Thus promoting ethanol through federal environmental policies would save the nation’s taxpayers 20 cents a gallon. Conclusion Despite a strong environmental sensitivity, Minnesota lacks a comprehensive materials policy commensurate with the level of worldwide concern about planetary pollution. The state projects an increase in the per capita consumption of energy and generation of solid waste. More than 90 percent of the fuels used in the state are imported; more than one third of the grains grown in the state are exported in raw form. As public policy internalizes the true costs of environmental pollution on garbage disposal, electric generation and vehicle transportation, it changes the comparative economics of various materials and material processes. A comprehensive materials policy is an effective economic development strategy. It strengthens the state economy many ways. It nurtures a domestic engineering, scientific and business capacity that can export new technologies to other states and c o u n t r ie s a f fe c te d by s im i la r changes in the external regulatory environment. In the long term, it will reduce our overall cost of handling materials. In the short term it can be the basis for new export industries, w he the r in f in a l p ro d u c ts (e.g.,degradable plastics or industrial particleboard) or production processes (e.g., wood p la n ta t io n harvesting equ ipmen t or sweet sorghum storage techniques). Finally, such a policy has a psychological reward. By living within a planetary materials budget we can become a model planetary citizen. The knowledge we create by doing so can become an export that strengthens the state economy. The pride we feel by doing so may be just as important and rewarding. The potential is extraordinary. The philosophy of recycling, efficiency and increasing our use of plant matter have recently achieved legal status in Minnesota. In some cases what is necessary is simply a manyfold expansion of existing activities. In other areas policy changes would be needed. It is a huge undertaking. It would be so much more effective if we were not to tackle it in reactive and piecemeal fashion but could instead develop a statewide consensus on its need, and design an aggressive, comprehensive program to move ahead. COMMENTS By John Velin, Director Legislative Commission on Minnesota Resources The paper by David Morris provides thoughtful insights and challenges conventional thinking about the way we live and work. This commentary will attempt to place some of the suggested ideas into context and suggest some of the practical limitations for the initiatives. The intent is to further the dialogue, not to debunk the ideas. Leadership requires planning with a vision. Someone has said that planning is the process of inventing the future, then designing the steps to implement that vision. Mr. Morris addresses a wide range of government and private sector activities. He suggests a coherent and comprehensive materials policy. The first practical observation is that few if any programs in America have ever been truly comprehensive, even with subjects of a smaller range. The tradition of an autonomous private sector mitigates against a truly coordinated effort at comprehensive action. The private sector, through marketplace action presently determines materials policy through the exchange of goods and services. The role of government is and has been, to steer action. Government does not mandate action until or unless a clear and present danger is perceived by policy makers. Changing the structure of government organization, by reorganizing the Utilities Commission or other so called fragmented organizations, would only accomplish a cosClinton St. Quarterly—Winter, 1989-90 13
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