Statewide View: Skyrocketing electricity prices threaten Minnesota mining
DFL Gov. Tim Walz recently announced a plan that would require 100 percent of Minnesota's electricity to come from "clean energy" by 2050. But a new study by the Center of the American Experiment, where I work, found even a 50 percent renewable-e...
DFL Gov. Tim Walz recently announced a plan that would require 100 percent of Minnesota's electricity to come from "clean energy" by 2050. But a new study by the Center of the American Experiment, where I work, found even a 50 percent renewable-energy mandate would cost $80.2 billion through 2050 and cause electricity prices to increase an average of 4.18 cents per kilowatt hour, or 40.2 percent compared to 2018 prices.
Doubling Minnesota's renewable-energy mandate would be expensive for all Minnesota families and businesses, but it would be devastating for mining and logging communities because iron mines and paper mills use enormous quantities of electricity. In fact, these two industries alone used 4.77 billion kilowatt hours of electricity in 2016, which was 8 percent of the electricity used in the entire state. This number could reach 6.1 billion kilowatt hours, or 10 percent of Minnesota's total electricity use, if the iron mines operate at a higher capacity.
Doing the math, this means a 50 percent renewable-energy mandate would increase the cost of electricity for the mining and paper-mill industries between $199.2 million and $254.8 million every year. This is the equivalent of 2,490 to 3,185 high-paying mining jobs with annual wages of $80,000, which is nearly twice the annual average wages paid in St. Louis County.
Rising electricity prices are especially problematic for the taconite industry, because electricity already accounts for roughly 25 percent of the cost of iron ore produced in Minnesota. Furthermore, the cost of electricity for iron mines already has increased over 60 percent on average since 2007, when Minnesota enacted its 25 percent renewable-energy mandate.
Unfortunately, higher electricity prices don't just jeopardize Minnesota's mining present but also its mining future. Last summer, American Experiment released a study that found developing Minnesota's copper, nickel, platinum, and titanium deposits would boost our economy by $3.7 billion every year and support a total of 8,500 jobs throughout the state. However, these projects and the jobs that accompany them may never come to fruition if lawmakers enact policies that cause electricity prices to increase at such a drastic degree.
So what will doubling down on Minnesota's renewable-energy mandate accomplish in terms of improving the environment? Not much, unfortunately. If Minnesota was to reduce its carbon-dioxide emissions under this mandate, it would only reduce, by .06 percent, the global total. This microscopic reduction in global carbon-dioxide emissions would only reduce potential future warming by 0.0006 degrees celsius by 2100, an amount far too small to be measured accurately with even the most sophisticated scientific equipment.
Most Minnesotans want lawmakers to weigh the costs and benefits of legislation and ultimately do what is best for their families. Enacting a 50 percent renewable-energy mandate is all pain and no gain.
And this pain would be especially severe in northern Minnesota, where mining and logging are a way of life. Policymakers must understand that making it more expensive to do business in Minnesota will result in a net environmental harm to the planet, because if we cannot afford to mine in Minnesota, where environmental protections are strong, mining is likely to occur in other areas where they aren't.
Renewable-energy advocates often cite increasing demand for steel, copper, nickel, and cobalt as a reason why Minnesotans on the Iron Range should support more renewable-energy mandates. There is no doubt that doubling the renewable-energy mandate would increase Minnesota's demand for these metals, but we won't be able to afford to mine them here.
Isaac Orr is a policy fellow specializing in energy and environmental issues at the Center of the American Experiment, a think tank in Golden Valley, Minn. He can be reached at email@example.com or followed on Twitter @thefrackingguy.