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New Jersey Sued for Illegally Leaving Regional Cap-and-Trade Initiative

Nathanael Baker's picture
EnergyBoom Media Inc.

Nathanael Baker is the Managing Editor of EnergyBoom. He has been immersed in the areas of renewable energy and climate change for two years. Before joining EnergyBoom, Nathanael was the Director...

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  • Jun 11, 2012 9:07 pm GMT

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In an effort to have New Jersey reinstated to the nation’s only cap-and-trade system, two environmental groups, the Natural Resources Defense Council and Environment New Jersey have filed a law suit against the state’s Department of Environmental Protection.

Filed in Trenton, the lawsuit claims New Jersey’s Governor, Chris Christie (R), decision to withdraw the state from participating in the Regional Greenhouse Gas Initiative (RGGI) was illegal because it was accomplished without adhering to the states’ administrative laws.  If it was done legally, the group argue, the public would have had an opportunity to comment on the decision.

Formed in 2007, RGGI represents the first United States’ market-based system to regulate emissions.  The regional cap-and-trade network, which now includes nine states along the east coast, requires heavy emitters to cap their emissions.  Those that have emissions lower than the cap are capable of selling their credits to utilities that will be over the cap through a public auction.  The proceeds from these auctions are then to be reinvested in technologies that will reduce emissions, such as renewable energy or energy efficiency.

To date, RGGI has held 16 auctions and generated $1.034 billion through those auctions. 

Christie inherited RGGI, when he assumed office in 2010 — the initiative was passed by Jon Corzine’s (D) administration.  During his tenure as Governor, Corzine helped develop New Jersey into a leader in renewable energy development.  His administration adopted an ambitious Renewable Portfolio Standard of 30% by 2021 and turned the state into the second largest generator of solar power in the nation.

In 2011, Governor Christie withdrew New Jersey from the Initiative because he said the cost of allowances was not high enough to change the behaviour of major emitters.  He insisted the price of the allowances would have to rise 10- to 15-fold to effect change.  Furthermore, the Governor said another regulatory body focused on reducing emissions was redundant, as his state was already cutting its emissions through his energy plan.

The conservative Governor’s energy plan actually reduces the state’s renewable energy mandates — downscaling them from a RPS of 30% by 2021 to 22.5%.  Instead, the Governor’s Master Plan, which he calls “realistic” and “achievable,” aims to reduce emissions by replacing coal-fired power by significantly increasing the state’s consumption of natural gas.

Governor Christie has blocked all attempts to have New Jersey return to RGGI.  In fact, last year he vetoed a bill that passed through state legislature calling for New Jersey to re-enter the multi-state initiative. A second bill passed through the legislature lsat month and is currently sitting on his desk.

RGGI Generates $40.4 million in Latest Auction

Holding its 16th quarterly auction on Wednesday, the Regional Greenhouse Gas Initiative generated $40.4 million through the sale of more than 20 million allowances.  95% of these allowances were purchased by electric utilities.  Bids for the credits, which are the equivalent of one short ton of carbon dioxide ranged from $1.93 to $6.14.

The nine states participating in RGGI are monitoring and analyzing electricity generation and emissions trends as part of a comprehensive 2012 program review.  So far, the findings show that emissions are 33% below the annual regional pollution cap of 188 million short tons during the initiative’s first control period.

Dan Esty, Commissioner of the Connecticut Department of Energy and Environmental Protection and Vice Chair of RGGI, said, “When you look at the facts, the RGGI region retained more jobs and sustained higher economic growth than any other region of the country through the recent economic downturn — at the same time, power sector CO2 emissions have dropped to their lowest levels since the early 1980s.”

Image Credit: Gemenacom/Shutterstock

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Rajat Sen's picture
Rajat Sen on Jun 11, 2012

I do not believe that the Courts are the ideal way to resolve issues like this. If what Dan Esty is quoted as saying is true, it would be more important to publicize that data and show skeptical states and the general public that RGGI is indeed doing what is was supposed to do. A targeted outreach program is what is required.

Governor Christie’s plan calls for fuel switching to natural gas. That is desirable as well and will reduce green house gas emissions. One needs to track and publicize how well the Governors plan is doing as well. It would be unfortunate if the Governor is all talk and no action.

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