New Jersey pulls out of multi-state greenhouse gas trading regime – signs of 2012 election? | Global CCS Institute

In what could prove to be an early signal of carbon policy dynamics in the 2012 presidential race, the Regional Greenhouse Gas Initiative, the sole multi-state, cap-and-trade program operating in the U.S., was dealt a setback when the governor of New Jersey announced plans to exit the program late last month.

Against a backdrop of record fiscal deficits, New Jersey’s Republican Gov. Chris Christie announced plans to end the state’s participation in the two-year old program, calling it a gimmicky and costly failure.  The move culminated months of political pressure from Republican state legislators as well as campaigns sponsored by conservative national groups to exit the program.

This is not a deathblow to the program but the withdrawal of the second largest state economy in RGGI—pronounced like Reggie—hurts momentum to build low-carbon energy technologies, from renewables to carbon capture and storage (CCS) pilots.  If the governor’s decision survives anticipated legal challenges, it could set a precedent for others. Earlier in May, legislators in three other states rejected bills to pull those states out of the 10-state program too.

RGGI’s ten members, prior to New Jersey’s exit, are shown in dark green. Observer states and provinces are in lime.

As a policy experiment, RGGI was heralded as a potential template for the development a nation-wide carbon cap and trade program, and as such has emerged as a key target for opponents of climate change policy. If the program derails, green energy funding would suffer, too. To date, RGGI has conducted 11 quarterly auctions that have raised nearly $861 million from sales of carbon allowances. According to RGGI data, almost two thirds of the proceeds have been steered to fund energy efficiency and alternative energy technologies.

In the national context, Gov. Christie’s move provides a snapshot of the paradoxical politics of climate change in the U.S. at the moment. While announcing plans to exit the carbon-trading program, the governor simultaneously reversed an earlier position doubting the science behind global warming.
At the RGGI news conference, Christie also pledged to maintain the state’s commitment to renewables, to support the build out of more solar and offshore wind energy, while also pledging to prevent the construction of any new coal-fired power plans in his state. In early June, however, Christie slashed the state’s goal to develop renewable sources of electric power. From a minimum of 30% of all supply by 2021 — one of the most ambitious in the nation — the governor wants to aim for 22.5%, calling the new target more “achievable”.

The governor also released a report saying the state’s emissions had already fallen below goals for 2020, but discounted RGGI’s role in the shift. Quoted by Christa Marshall of ClimateWireNews, Christie said:

“We remain completely committed to the idea that we have a responsibility to make the environment of our state and world better,” Christie said. “We’re not going to do it by participating in gimmicky programs that don’t work.” He said New Jersey would depart RGGI by the end of the year.

“Reduced emissions have been due to increased use of natural gas, and the decreased use of coal. We’re seeing that the market, and not RGGI, has created incentives to reduce the use of carbon-based fuels,” Christie added.

Christie’s decision highlights the dramatic shift in the politics of climate in the Republican Party over the past decade. Keep in mind that RGGI was first championed by George Pataki, top Republican governor of New York in the early 2000s. That was a time, barely a decade ago, when Senator and eventual Republican presidential nominee John McCain also backed climate policy.

A decade later Christie, who has repeatedly denied any intention to run for president, is a darling of the Republican punditry.  And of the few Republican candidates who have officially declared a bid to seek the presidency, Mitt Romney also withdrew from RGGI while he was governor of Massachusetts—although it was before trading had begun and the state later re-joined.

Gov. Christie’s move was not a surprise. An early sign that New Jersey may pull our of RGGI came last year when, like a handful of other governors of deficit-strapped RGGI member states, Gov. Christie redirected $65 million raised from auctions of carbon credits for use in the general ledger.

All that said, RGGI continues to operate, with its next quarterly auction dated June 8. Nine states remain active in the trading pool. These are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. Pennsylvania acts as an “observer”, along with three Canadian provinces along the U.S. north-eastern border: Québec, New Brunswick, and Ontario.

It’s worth noting there are two other multi-state climate initiatives in North America. Both are less evolved than RGGI and both face similarly rocky political prospects. They are:

  1. Western Climate Initiative, which includes 11 U.S. and Canadian regions, is larger than RGGI and is slated to come on line in 2015. Its goal: to lower greenhouse gas emissions by 15% by 2020, from a 2005 base.
  2. Midwestern Greenhouse Gas Accord includes six more heavily industrialized U.S. states and one Canadian province, but is the least evolved of the three.

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