Carbon auction may be in trouble

The goal of the Regional Greenhouse Gas Initiative is to make polluters pay while raising millions of dollars for energy efficiency and renewable energy projects. It requires power plants to buy one pollution credit at auction for every ton of greenhouse gases they release. So far those auctions have netted more than 860 million dollars. But now, some lawmakers in three states – New Hampshire, Maine, and New Jersey – want to get out of RGGI.

“We should have never joined in the first place.”

That’s New Hampshire Republican Representative Jim Garrity speaking on the house floor.

“RGGI should be repealed now because it rests on shaky economic science, namely that the government should collect some money from all of us, to redistribute that wealth to a few of us.”

Garrity says not everyone gets RGGI money to pay for energy efficiency projects. He and other Republicans have referred to RGGI as a hidden carbon tax that’s passed on to electric ratepayers. Legislation to repeal New Hampshire’s participation in RGGI recently passed the house, but has yet to pass the Senate.

Dan Soslund, with the group Environment Northeast, says the move in New Hampshire is discouraging.

“I think the public deserves to hear their elected officials talk about policy direction based on facts and the facts are that RGGI has had almost no quantifiable bill impact”

But electric bills for residential customers in the Northeast have increased slightly because of RGGI.
In 2010, it cost an extra 28 to 68 cents a month according to RGGI Inc.

Ross Gittell is an economist with the University of New Hampshire. Speaking from the House floor, he told legislators that electric bills won’t decrease if the state withdraws from RGGI, because New Hampshire is part of a regional power grid.

“If we don’t participate in RGGI, we will pay some of its costs, and we will not get the benefits in the form of carbon allowance revenue that we receive which is quite significant.”

New Hampshire is not only state attacking RGGI. In Maine, Republican Senator Tom Saviello is sponsoring a bill that would withdraw his state from RGGI.

“We need to ask this question, number one do we want to put the extra cost on our electricity, and number two if these energy efficient projects are that good, which everybody says they are, well then a business should be willing to put their own money into it, why should we be subsidizing that.”

If Maine and New Hampshire withdraw from RGGI, analysts say the program is still likely to continue. That may be because Maine and New Hampshire don’t release a lot of greenhouse gases. So the number of pollution credits they sell at auction is small.

But New Jersey’s Governor is also talking about withdrawing from RGGI. That state makes up 12 percent of the carbon market. Anthony Leiserowitz, with the Yale University Project on Climate Change, says if New Jersey steps out it could deal a death blow to RGGI.

“How it plays nationally however is that it just seems to accelerate this sense that the country as a whole and in particular Republicans and Conservatives in this country are really climbing out on a limb farther and farther away from climate science.”

Leiserowitz says RGGI does more than reduce carbon emissions in the Northeast. He says if RGGI stays intact, it could be a model for the rest of the country.