N.J.’s departure from RGGI emissions pact has minimal impact

Listen to this article

It’s been nearly two years since Gov. Chris Christie announced New Jersey would leave the Regional Greenhouse Gas Initiative, but in the months since the state’s departure, some say the impact has been purely symbolic.

RGGI amounted to a pact between 10 (now nine) states to lower greenhouse gas emissions by capping the amount of allowable pollution and selling a limited number of pollution permits on an open market.

But in announcing New Jersey’s pending departure, Christie said the market was failing to produce results. He said the permits were selling for such low prices that they wouldn’t realistically deter pollution, and he said the state was already lowering carbon emissions without RGGI, thanks to the rise of renewable energy and the falling price of natural gas, which is cleaner than coal. Therefore, he said, it amounted to a tax on business and residential users “with no discernible or measurable impact upon our environment.”

Since then, it seems little has changed, either from New Jersey’s perspective, or from RGGI’s.

Last week, Potomac Economics, which serves as the independent market monitor for RGGI, released its 2012 annual report, which found RGGI’s market was functioning well, finding “no material concerns regarding the auction process.” But it also showed the persistence of some of the same problems Christie cited. About 41 percent of permits offered in the auction were never sold, and the price of permits remained in the $2 range.

Frank Felder, director of the Center for Energy, Economic and Environmental Policy at Rutgers University, said such low prices won’t have the desired effect of changing pollution habits.

“Energy and electricity typically is very pricing in-elastic,” he said. “In other words, even large changes in prices have to occur over a sustained period of time before people meaningfully reduce demand.”

In fact, Felder said, the only reason permit prices were even $2 is because the auction has a floor price.

In February, RGGI announced a plan to lower its carbon cap over the next several years, beginning in 2015.

But Dan DeRosa, a field organizer with Environment New Jersey, said there are other reasons it makes sense for New Jersey to be in RGGI. While the Garden State was part of the program, it reaped $113 million in auction proceeds, according to RGGI. That money was intended to fund clean energy programs. Environment New Jersey said the program also created some 1,800 jobs.

“What we projected was that if New Jersey had been continuing to be part of the program over the next six years, starting in 2012, we would have seen … more than $170 million for clean-energy projects in New Jersey,” he said.