The nation's only operating cap-and-trade system survived a multi-state attack yesterday with legislative victories in New Hampshire, Delaware and Maine.
The triple action means that the Regional Greenhouse Gas Initiative, or RGGI, beat back its biggest challenge since carbon trading began three years ago, although the fate of New Jersey in the program remains a wild card.
The New Hampshire Senate voted 16-8 to keep the state in RGGI, which caps carbon dioxide emissions of utilities in 10 states in the Northeast and mid-Atlantic. The state House of Representatives had backed a measure earlier this year that would have pulled New Hampshire out of the regional initiative entirely (ClimateWire, Feb 9).
The state Senate took a different approach and supported an amendment from Sen. Jeb Bradley (R) that would "reform" RGGI by changing how the program's money is distributed. The revised text would send RGGI money to utilities for usage in their own efficiency programs and back to ratepayers, rather than distributing it to the state for clean-energy grants. It also contained text allowing the state to leave the program, but only if another New England state with at least 10 percent of the program's electricity load also departed.
On the floor, Senate lawmakers said they had no choice but to go for the reform approach, since they were short one vote to override an expected veto of any successful RGGI repeal bill from Democratic Gov. John Lynch.
While the House and Senate versions must be reconciled, few analysts said they expect a bill to emerge as the final product that would remove the state from the program. The House also has the option of simply concurring with the Senate's vote.
"Sixteen to eight is a strong vote against repeal," said Jim O'Brien, executive director of Conservation New Hampshire. Several Republicans crossed the aisle to vote against repeal. The House will be under pressure to accept the revised reform bill or risk losing the opportunity to change RGGI at all, he said.
Yesterday, a member of the House who is a key player in the negotiation process, House Science, Technology and Energy Committee Chairman Jim Garrity (R), said it was "too early" to make a decision about how the House would react to the revised legislation. That could take several days, he said.
Like New Hampshire, Maine's Legislature flipped solidly Republican in last November's elections. Backers of a bill there that would have removed the state from the initiative made similar arguments to GOP members in New Hampshire by saying that the initiative was a tax putting businesses in New England at a disadvantage and raising electricity prices.
But yesterday, a joint committee rejected that repeal bill. Instead, they passed an amendment stating that Maine will remain in RGGI as long as most other New England states, or those producing a total of 35 million tons of carbon dioxide annually, do. That essentially means that Massachusetts and several other states would have to leave for Maine to act. The amendment is expected to now move in similar form to the House and Senate floor, said one official on the committee.
Following a similar pattern to New Hampshire, RGGI supporters in Maine said it would disadvantage the state to exit the plan, considering that ratepayers would pay for the program via a regional electricity market no matter what.
The state benefits from RGGI by using money from carbon auctions for energy efficiency programs and creating jobs in the process, they said.
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"The RGGI program is a win-win for Maine's environment and economy. It's cutting pollution, reducing energy costs and creating jobs. Pulling Maine out of the program would have been shooting ourselves in the foot," said Environment Maine Director Emily Figdor after the vote.
Meanwhile, a House committee in Delaware, where a handful of lawmakers also had pushing an anti-RGGI bill, moved late yesterday to table legislation calling for that state to leave the initiative.
Simultaneously, seven state officials involved with RGGI sent a letter to Gina McCarthy, U.S. EPA's assistant administrator for the Office of Air and Radiation, requesting that RGGI emission reductions count toward meeting pending agency greenhouse gas regulations under Section 111 of the Clean Air Act. That would reduce the possibility of "redundant and overlapping federal and state programs directed at the same sources and same emissions," said the letter.
Repealing RGGI now would put a state in the position of "starting from scratch" when EPA issues its rules, or New Source Performance Standards, later this year, said Franz Litz of the World Resources Institute.
Yet RGGI still is facing pressure from other states. The Republican governor of New Jersey, Chris Christie, floated the idea of leaving the program in comments in March. He is expected to make a decision about New Jersey's role in the program in coming "weeks," according to Christie spokesman Kevin Roberts. Republican lawmakers in New Jersey simultaneously have introduced legislation to depart from the program.
The initiative has been criticized for setting a weak emissions cap that does little to change utility behavior, even as it raises money for efficiency programs. Climate advocates have been looking to a review of the regional program in 2012 as an opportunity to strengthen the cap and make other operational changes.
With some states having taken a serious look at leaving RGGI, even if those efforts failed, the upcoming review could face challenges and political pressure, according to Stacy VanDeveer, an associate professor of political science at the University of New Hampshire.
"The fact that there is a big debate in several state legislatures probably means things are more likely to go slow on new RGGI developments," he said.
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