Regional Greenhouse Gas Initiative

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The Regional Greenhouse Gas Initiative (RGGI) "is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions." It is a "cap and trade" agreement among ten Northeastern and Mid-Atlantic states to "reduce CO2 emissions from the power sector 10% by 2018." The participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.

"RGGI is composed of individual CO2 Budget Trading Programs in each of the ten participating states," according to the program's website. "These ten programs are implemented through state regulations, based on a RGGI Model Rule, and are linked through CO2 allowance reciprocity. Regulated power plants will be able to use a CO2 allowance issued by any of the ten participating states to demonstrate compliance with the state program governing their facility. Taken together, the ten individual state programs will function as a single regional compliance market for carbon emissions."

Critiques

"RGGI currently allows the 225 power plants whose emissions are capped to emit some 188 million tons of carbon a year. Critics are quick to point out that the cap vastly exceeds current polluting levels, undermining the very notion of their being a 'cap' at all," noted John Wihbey in May 2009. For RGGI states to adjust their carbon "caps" to better reflect -- and impact -- power production, they must go through "an extensive legislative process."

"The emission levels in 2008 for RGGI were only 156 million tons of carbon, a roughly 9 percent decline from 2007. ... The reasons for the yawning gap between the cap limit and the real emissions are complex: a political process that set the original cap to accommodate industry concerns; the recession; milder weather; a move toward cleaner natural gas; and increased energy efficiency in the 10 states. It won't be until 2015 that the cap begins being reduced, with the goal of reducing emissions 10 percent by 2018."

"The other questionable result so far for RGGI is the price for a ton of carbon. It remains in the $3 range, nowhere near the kind of price that might spur utilities to seek alternatives. The price in RGGI’s first auction was $3.05; it was $3.51 in the third auction in March 2009." According to Harvard University environmental economics professor Robert Stavins, "The [RGGI carbon] price is equal to the market's judgment of the expected value of RGGI allowances as options to be exchanged in the future for a federal cap-and-trade system in 2012-2015, when RGGI program is inevitably pre-empted." In other words, the only reason why power companies see value in RGGI's carbon credits is because they believe the federal government will establish a cap-and-trade system.

Influence of ALEC and Americans for Prosperity

Koch Industries and ExxonMobil are part of the American Legislative Exchange Council (ALEC), which created legislation that was literally copied-and-pasted and then introduced in the states of Michigan, Montana, New Mexico, Oregon, Washington, and New Hampshire to pull the states from the RGGI, the Western Climate Initiative, and the Midwestern Greenhouse Gas Accord. Koch and Exxon helped write the legislation at a meeting organized by ALEC, taking a seat at the legislative drafting table beside elected officials and policy analysts by paying a fee between $3,000 and $10,000, according to documents obtained by Bloomberg News.

NJ pulls out of RGGI

David Koch Praises Chris Christie's Withdrawl from RGGI

In April 2011, New Jersey Governor Chris Christie said he was re-evaluating the state's participation in RGGI and could opt to withdraw the state. The anticipated policy reversal is in step with recent actions in Maine and New Hampshire, where Republican-dominated legislatures are trying to repeal their states' participation in the RGGI.

Some point out the governor's re-evaluation of RGGI may in part be a response to mounting pressure from outspoken RGGI opposition groups, namely Americans for Prosperity (AFP), founded by David Koch in 2004, and the American Legislative Exchange Council (ALEC), which is funded partly by the Charles G. Koch Charitable Foundation. In February 2011, AFP launched a media blitz of radio spots and television advertisements in New Jersey to alert residents "to the fact that RGGI will cause their electricity rates to soar and cost our state jobs," according to the announcement.

In May 2011, NJ Governor Christie pulled the state from RGGI, saying it was a "failure," Christie said he would withdraw from the program “in an orderly fashion” by the end of 2011, coinciding with the end of RGGI’s first compliance period. The nine remaining states will need to provide guidance to explain how they will deal with power plants that currently hold carbon allowances from New Jersey.

In July 2011, tape of a secret meeting between Christie and Charles Koch was released. In it, David Koch said of Christie: "Another example of Governor Christie’s commitment to the free enterprise system is that only a few weeks ago he announced that New Jersey would be withdrawing from the [Regional] Greenhouse Gas Initiative which is a [cheers and applause], which would have raised energy costs, reduced economic growth and led to very little, if any, benefit for the environment." The audio was taken outside the political retreat, where static was reportedly being played in order to block anyone from recording the event. The tape was the first time that Christie’s participation in the Koch-funded retreat had been publicly reported. The trip, which was paid for by the New Jersey GOP, was never written in the governor’s public schedule.

Americans for Prosperity sue NY over RGGI

In June 2011, the Koch brothers’ corporate front group, Americans for Prosperity (AFP) filed a lawsuit in New York’s State Supreme Court seeking to reverse the state's participation in the RGGI. New York joined the RGGI in 2005 when former governor George Pataki (R) approved the state’s participation in the program. The suit alleges that New York is "illegally" taxing residents by taking part in RGGI. The AFP complaint also asserts that carbon emissions trading is unconstitutional because it infringes on federal authority to set rules on air pollution and electrical power transmission across states. New York Governor Andrew Cuomo (D), along with the state Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority, are all named as defendants in the suit.

Report finds widespread economic benefits from RGGI

The 2011 report, "The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States" by the Analysis Group quantified the economic benefits from the investments made by 10 states that participated in the RGGI in its first three years of existence. The report found that the regional economy gained more than $1.6 billion in economic value added (reflecting the difference between total revenues in the overall economy, less the cost to produce goods and services); customers saved nearly $1.1 billion on electricity bills, and an additional $174 million on natural gas and heating oil bills, for a total of $1.3 billion in savings over the next decade through installation of energy efficiency measures using funding from RGGI auction proceeds; and 16,000 jobs were created regionwide due to RGGI policies and effects.

The Analysis Group describes itself as providing "economic, financial, and business strategy consulting to law firms, corporations, and government agencies."

Personnel

As of May 2009:

• Jonathan E. Schrag - Executive Director
• Laura Thomas - Business Director
• Nicole Singh - Auction Program Manager
• Emilee Pierce - Communications Manager

Contact information

Regional Greenhouse Gas Initiative, Inc.
90 Church Street, 4th Floor
New York, NY 10007

Telephone: (212) 417-3179
Fax: (212) 417-4034
Website: http://www.rggi.org

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