NJ Legislators Working to Block Christie's Carbon Market Exit

Fri Jun 24, 2011 2:00pm EDT

State lawmakers have moved five bills in an attempt to stop Gov. Christie's planned year-end RGGI withdrawal

By Maria Gallucci, SolveClimate News

New Jersey Democrats are pushing a series of bills that would sideline Republican Gov. Chris Christie's plans to withdraw the state from the U.S. Northeast's carbon market.

Legislators admit that the governor would likely veto the measures if they land on his desk. But the sponsors remain hopeful that their bills, which try to limit Christie's power on the issue, could at least influence future lawsuits or other enforcement actions over the state's participation in the Regional Greenhouse Gas Initiative (RGGI).

The legislation "absolutely clears up any ambiguity of [Christie] being able to pull us out unilaterally," John McKeon, chairman of the Assembly Environment and Solid Waste Committee, told SolveClimate News.

Christie vowed at a May 26 press conference to pull New Jersey out of RGGI by year's end. The initiative of 10 Northeast and Mid-Atlantic states caps CO2 emissions from power plants and auctions off carbon allowances to fund statewide clean energy efforts.

"RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernible or measurable impact upon our environment," Christie said in transcripts provided to SolveClimate News by the governor's office.

Local media reported that Christie administration officials did not think the new bills would keep New Jersey from exiting the program. A spokesperson for Christie did not respond to requests for comments by deadline.

Question of Legislative Permission

New Jersey passed its RGGI law in 2007 to help meet the goals of its Global Warming Response Act (GWRA), which requires the state to reduce greenhouse gas emissions by about 20 percent from 1990 levels by 2020. By 2050, emissions must fall 80 percent below 2006 levels.

Last week, the Assembly Environment and Solid Waste Committee and the Senate Environment and Energy Committee approved two sets of identical bills that invoke the state's warming law in an attempt to keep Christie from unilaterally withdrawing from RGGI.

The Assembly bills' primary sponsors are McKeon and Utilities Committee Chairman Upendra Chivukula, along with Linda Stender, Peter Barnes III, Reed Gusciora and Valerie Vainieri Huttle.

Senate President Stephen Sweeney and Environment and Energy Committee Chairman Bob Smith are primary sponsors of the first Senate bill, while Smith and Linda Greenstein are primary sponsors of the second bill.

The first piece of legislation (A-4108, S-2946) clarifies the intent of the 2007 RGGI law, which the bill's authors say mandates New Jersey's participation in the multistate scheme.

It notes that the RGGI law partially implements the GWRA by reducing levels of greenhouse gas emissions, and says that Christie cannot pull out of the pact without first getting legislative permission.

"We are a country of laws. By disregarding the intent of the legislature, which required New Jersey to be a member of RGGI, Gov. Christie is ignoring the will of the people," McKeon said in a news release by the Assembly panel.

McKeon said the panel recently received testimony showing that more than 10,000 New Jerseyans signed petitions or sent emails in the past two weeks calling on Christie to stay in RGGI.

Stender added: "Pulling out of RGGI would lead to the dismantling of a series of well-coordinated initiatives like the GWRA that have helped our state reduce global warming pollution and advance towards a clean energy future.

"We are determined not to let that happen through the measures we have sponsored," she said in the release.

If Permission Is Not Needed...

The second bill (ACR-195, SCR-164) is somewhat of a safeguard measure in the event that lawmakers reject the first bill's claim that Christie must get legislative approval in order to back out of RGGI.

The measure says that New Jersey's withdrawal is inconsistent with the intention of the state's global warming act, and makes it known to Christie and future governors that the legislature wants the state to remain a member of the carbon market.

"We want to make sure that ... we are explicitly saying that we want to be a member of the RGGI compact," Chivukula told SolveClimate News.

The chairman said he was confident that both measures would fair well in the Assembly, though votes would most likely fall along party lines. The Assembly has 47 Democrats and 33 Republicans, while the Senate has 24 Democrats and 16 Republicans. To override a governor's veto, both houses need a two-thirds majority.

The Assembly panel also approved a third measure, which urges the passage of an amendment to the state constitution that would require money placed into the Clean Energy Fund to be used solely for clean energy programs.

Last year, Christie diverted an estimated $65 million from RGGI revenues to help balance a $10.7 billion budget.

New Jersey so far has raised more than $105 million in carbon allowances from the 12 quarterly online auctions that have been held since 2008. The overall program has raised $886.4 million in that time.

Is RGGI at Risk?

The auctioned allowances represent greenhouse gas emissions that power plants generated during the current 2009-2011 compliance period. At the most recent auction held on June 8 — the twelfth in the scheme's four years — every state but New Jersey offered a small number of carbon credits for the upcoming 2012-2014 period.

Only 30 percent of carbon credits offered were actually sold in the auction, which some RGGI opposition groups said was a sign the market had crashed.

Emilie Mazzacurati, head of carbon research for North America at Point Carbon, a Thomson Reuters research firm, attributed the drop in auction sales to emitters having already met their targets for the 2009-2011 compliance period.

She explained that because emitters had amassed enough allowances for this period, they can now bank the excess credits without having to purchase again this year — though she stressed that a better option may be possible. 

Lowering the emissions cap for power plants, which is set at 188 million short tons per year through 2014, would require emitters to purchase more credits and not use old allowances to offset new emissions, Mazzacurati told SolveClimate News.

"I think it would be a good thing to incentivize further emission reductions, and it would probably bring prices up and bring the market activity up," she said.

She added that New Jersey's potential withdrawal would not have an impact on upcoming auctions, as the cap will be adjusted to reflect the loss of the state's emissions.

'Litmus Test' for Christie

Assemblyman Chivukula said that given the RGGI fund's contributions to New Jersey's clean energy economy, the three Assembly bills and two Senate measures could serve as a "litmus test" for Christie's commitment to developing more renewables and energy efficiency programs in the state.

"It will show how green he is," he said.

RGGI has led to more than $35 million in clean energy investments in New Jersey alone since the first auction, which contributed to nearly $90 million in energy savings and $209 million in economic activity in the state, according to a Thursday report from the 29-state advocacy group Environment America.

Overall, RGGI has led to nearly $450 million in clean energy investments that resulted in more than $1 billion in energy savings and $2.6 billion in economic growth in the region, the report said. These results have so far helped the market survive GOP-led attacks in other states.

Last month, Delaware and Maine lawmakers reaffirmed their states' participation in RGGI after attempts by some Republicans to leave the scheme.

In New Hampshire, the Senate has sent a bill to Democratic Gov. John Lynch that would remove the state from RGGI. Catherine Corkery, director of the state's Sierra Club chapter, said that while the governor is ready to veto the bill, it could be in limbo until August or beyond due to the summer recess.

See Also:  Call for NJ Governor to Repay $65 Million to Carbon Fund Jobs and Savings Help Regional Carbon Market Survive GOP Attacks GOP Bill to Remove New Hampshire from Carbon Trading Pact Moves Forward State Renewable Energy Standards Under Attack from GOP Legislators Maine Governor Proposes 63 Clean Energy and Environment Reversals