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Cap And Trade

Published on December 31st, 2013 | by Silvio Marcacci


Can Climate Hawks Beat Chris Christie To Let New Jersey Rejoin RGGI?

December 31st, 2013 by  

New Jersey became an outlier in American carbon markets when Governor Chris Christie unilaterally pulled out of the Regional Greenhouse Gas Initiative (RGGI) in 2011, but that doesn’t mean climate hawks have given up the fight to circumvent Christie’s backward actions.

Two developments this month, one in the state legislature and the other in the state court system, have re-opened the debate on New Jersey’s participation in RGGI’s cap-and-trade program and raise the possibility it can continue decarbonizing power generation while earning millions in clean energy investment.

New Jersey signpost

New Jersey signpost photo via Shutterstock

New Jersey’s State Senate Stands Up For RGGI

The RGGI resurgence began in New Jersey’s state legislature in mid-December, when State Senator Bob Smith passed a resolution through the Senate Environment and Solid Waste Committee that would allow voters to decide in November 2014 if the state should rejoin the regional cap-and-trade system.

State legislators had previously passed bills in 2011 and 2012 that would have reversed Christie’s withdrawal and mandated New Jersey rejoin RGGI, but both measures were subsequently vetoed when they hit the governor’s desk.

While this end-around faces an uphill climb to reach the ballot – the initiative must either pass both houses of the state legislature with a 60% majority once, or a simple majority in consecutive years – it highlights the second challenge Christie faces: residents never got a chance to weigh in on New Jersey’s withdrawal.

Courts Could Rule Withdrawal Was Illegal

And that’s where the courts come into the picture. On January 8th, a three-judge state appellate court will consider a lawsuit alleging Christie’s unilateral move should be reversed.

The lawsuit, filed in January 2012 by Environment New Jersey and the Natural Resources Defense Council, argues withdrawing from RGGI violated state law because the public wasn’t allowed to comment on the move. “We want to hold Governor Christie accountable to the public,” said Doug O’Malley of Environment New Jersey. “His decision to pull us out of RGGI was wrong, but it also iced the public out of the process.”

If allowing public comment on a policy decision sounds like solid logic, Christie’s position on the withdrawal is anything but. Even though he has said climate change is real, the governor said RGGI was a “gimmicky” failure that spiked electricity bills with no benefit. “Governor Christie maintains it’s a tax on business,” said Larry Ragonese of the state’s Department of Environmental Protection.

New Jersey Could Miss Billions In Economic Benefits

But RGGI’s results show just how flawed Christie’s reasoning looks, and underscore the economic benefits New Jersey misses by remaining out of the system: dedicated funds to invest in energy efficiency, renewables, and emissions reduction.

RGGI’s most recent carbon allowance auction sold 100% of available allowances – more than 38 million overall at $3 per ton of carbon – generating $114.9 million for reinvestment across member states. After 22 auctions, RGGI has raised $1.5 billion for investment in clean energy and consumer benefit programs while emissions in member states have fallen 40% since 2005.

In turn, those investments have rippled across the regional economy. An independent analysis of auction proceeds from the first three years of RGGI’s existence (2009-2011) showed system revenue created $1.6 billion in net economic benefits, $1.3 billion in direct savings on electricity bills for consumers, and created 16,000 job years’ worth of new economic activity.

Indeed, just last week RGGI revenue made up a quarter of the New York State Green Bank’s $210 million start-up funding. Now compare those results to estimates New Jersey could lose nearly $700 million in dedicated revenue as a result of withdrawing from RGGI.

Allowance prices may be low compared to those in California, but they’re set to rise in 2014. RGGI member states updated the system’s carbon “cap” earlier this year, reducing allowable emissions 45% in 2014 and scheduling additional 2.5% annual reductions from 2015 to 2020. “With these reductions to the cap, economic models predict that regional gross state product will increase more than $8 billion, real personal income will increase more than $7 billion, and employment will grow by more than 125,000 job-years,” opined Commissioner David Littell of the Maine Public Utilities Commission.

RGGI carbon emissions and cap

RGGI carbon emissions and cap graph via Pace Energy and Climate Center

It All Adds Up To A Simple Question 

So while the path back to rejoining RGGI is blocked by Christie’s wide opposition, the question for New Jersey’s policymakers and residents shouldn’t be “why should we rejoin RGGI?”

No, after billions in positive economic impacts, the climate change-fueled destruction Hurricane Sandy wrought on the Jersey Shore, analysis showing carbon markets cut emissions 17x faster than subsidies, and the looming carbon budget, the true question for New Jersey is clearly “why shouldn’t we rejoin RGGI?”



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About the Author

Silvio is Principal at Marcacci Communications, a full-service clean energy and climate policy public relations company based in Oakland, CA.

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