Christie Considers Pulling New Jersey Out of RGGI

Published April 11, 2011

In another sign of growing unease over the economic costs of carbon-dioxide cap-and-trade schemes, New Jersey Gov. Chris Christie (R) is considering withdrawing his state from the Regional Greenhouse Gas Initiative (RGGI).

Credits Have Minimal Value
Addressing a town hall meeting in Nutley, New Jersey in late March, Christie said he was reevaluating the state’s continued participation in RGGI and he would render a final decision within two months.

“Is there enough of a benefit to keep it going, or is it too much of a detriment on business? And the thing I’m most concerned about is that it doesn’t seem to be working in the entire region,” the Daily Caller quoted him as saying on March 29. “The value of these credits is getting less and less as we continue to go further and further out, and so the value of the program is becoming less and less.”

Funds Needed Elsewhere
Established in 2003, RGGI caps greenhouse-gas emissions, primarily carbon dioxide (CO2), from power plants and provides a mechanism for carbon credits to be sold on a regional market. Proceeds from the sale of emission credits are supposed to be used to promote energy conservation and renewable energy. Several states, however, have used the proceeds to help cover growing budget deficits.

The trading of emission credits got underway in 2009, but as Christie indicated in his remarks, the proceeds have not met expectations.

RGGI member states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. In addition, Pennsylvania and the Canadian provinces of Ontario, Quebec, and New Brunswick have observer status.

Momentum Against RGGI
If Christie leads New Jersey out of RGGI, it will be the second severe setback for the organization this year. In early March the New Hampshire House of Representatives voted to repeal the state’s membership in RGGI.

Now that it is clear the U.S. Congress will not impose a nationwide cap-and-trade system, the value of regional schemes has come into doubt. States committed to regional cap-and-trade programs could find themselves at a competitive disadvantage with states that are free from such restraints. According to press reports, in the current stagnant economy Christie is particularly concerned about competing with neighboring Pennsylvania, which does not participate in RGGI.

RGGI vs. State Economies
“The Regional Greenhouse Gas Initiative is nothing but a new tax on electricity that will force electricity rates to, per President Obama’s statement, ‘necessarily skyrocket’,” said Steve Lonegan, state director of the New Jersey chapter of Americans for Prosperity. “New Jersey cannot afford this assault on our prosperity and competitiveness.

“It is essential that this program be repealed before it does permanent damage,” Lonegan added. “Americans for Prosperity is happy to see Gov. Christie is reviewing this program, and we are hopeful he will do the right thing and take a leadership role in repealing this job-destroying new tax.”

Bonner R. Cohen, Ph. D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.