Business Leaders Request a Stronger Regional Greenhouse Gas Initiative

Tom Johnson | July 26, 2011 | Energy & Environment
More than 200 business executives call on participating states to put more muscle in RGGI's cap-and-trade program

Nearly two months after New Jersey said it would pull out of a regional initiative to curb greenhouse gas emissions, a few hundred business executives called on the 10 states participating in the program to strengthen and overhaul the effort.

In a letter issued yesterday, the business leaders urged New England and Mid-Atlantic governors to support and improve the Regional Greenhouse Gas Initiative (RGGI), a program designed to help deal with global climate change while supporting clean energy and energy efficiency programs.

“We believe strong clean energy and clean-aid policies create jobs and stimulate economic growth,” the letter by more than 225 businesspeople said. “By reducing spending on out-of-region fossil fuels, RGGI improves energy security and economic competitiveness and frees up energy dollars for spending in other parts of our economies.”

An Ineffective Initiative?

Calling the program ineffective and merely a tax on consumers, New Jersey Gov. Chris Christie said he would pull out of the program by the end of the year. In doing so, the Republican governor noted that the state already had achieved its goals for reducing greenhouse gas emissions through other programs.

The decision has been criticized by environmentalists and lawmakers, who passed a bill before the legislature’s summer recess that would require the state to remain in the program. New Jersey is the first of the 10 states participating in the program to pull out of the initiative, which was originally designed to serve as a model for a national “cap-and-trade” program to deal with global climate change.

Christie is expected to veto the bill, but has yet to do so. The regional initiative has been targeted by conservative organizations, including Americans for Prosperity, which spent hundreds of thousands of dollars lobbying New Jersey to pull out of the initiative.

Capping Greenhouse Gas

The regional initiative, begun in 2005, established a regional cap on greenhouse gas emissions from power plants. Utilities that exceeded the cap paid into a fund that financed clean energy and energy efficiency projects in the states, with the cost ultimately passed onto ratepayers.

Backers say it has helped reduce emissions contributing to global climate change as much as 15 percent, but whether that reduction occurred because of the regional program or the recession and a big drop in natural gas prices is uncertain.

In the business leaders’ letter, they argue the 10 states should to update the program to create more effective price signals, a recurring criticism of the current initiative. Opponents argued that RGGI never achieved its goals because the surcharges, about $2 per ton, were not high enough to get companies to modify their plants or switch to cleaner fuels, a point made by Christie.

Rather than abandon the program, however, environmental groups and lawmakers had argued that the administration should work to strengthen it, as the business leaders are advocating in their letter.

“Updating the RGGI emissions cap to create effective pricing signals will accelerate in-region economic growth while reducing actual emissions,” the letter argued.