Working for Smart Growth:
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Keep Commitment to Regional Greenhouse Gas Initiative

New Jersey Future Op-Ed ButtonAsbury Park Press, April 8, 2011
The Record, Bergen County, April 14, 2011
The Times, Trenton, April 24, 2011

By Peter Kasabach

“It is not enough to say that we wish to obtain more of our energy from renewable sources; we must also commit ourselves to leading the nation in the manufacture and sale of components of this new technology. New Jersey has the opportunity to become the supplier of offshore wind turbines and equipment as well as solar systems for the nation. By tapping into our natural resources, we have an opportunity to create quality-paying, sustainable jobs.”
— Candidate Chris Christie (2009)

As a candidate for governor, Chris Christie trumpeted the role New Jersey could — and should — play in the research and development of alternative, clean, sustainable sources of energy. As governor, he has confronted a fiscal situation that admittedly makes it difficult for the state to fulfill this role, as well as others he envisioned while on the campaign trail.

Recently, however, Gov. Christie hinted that New Jersey might withdraw from the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort by 10 states in the Northeast to reduce carbon dioxide emissions 10 percent by 2018. If the governor takes this action, it will no longer be difficult for New Jersey to be a national leader in the green economy. 

It will be virtually impossible.

Here’s why. RGGI, a market-based emissions reduction program, sets up a trading system that limits carbon dioxide emissions from electric power plants, issues allowances and then auctions these allowances, with the proceeds going to the participating states. The states then use this money to promote, among other things, energy efficiency programs, clean energy technologies and sustainable land-use planning and transportation projects that reduce greenhouse gas emissions or lessen demand for energy.

In New Jersey, under the state Global Warming Solutions Fund Act, 60 percent of the money raised through RGGI auctions is committed to providing financial assistance to promote energy efficiency, renewable energy and state-of-the-art electric generation facilities. Another 10 percent goes to support programs that help local governments reduce greenhouse gas emissions, including sustainable land-use planning and transportation projects that result in a measurable reduction in greenhouse gas emissions or energy demand.

These are precisely the kinds of investments that will allow New Jersey to do what candidate Christie envisioned — to produce the “quality-paying, sustainable jobs” that will reinvigorate New Jersey’s economy. Financed by a market-based trading system (rather than taxpayer dollars), these investments will spur the economic development New Jersey so desperately needs and the Christie administration so fervently desires.

Why, then, is Gov. Christie contemplating New Jersey’s withdrawal from the RGGI cooperative? Because, he told a town hall audience in Nutley, he is concerned that, in the short term, it may be “too much of a detriment on business.” He also questions the longer-term benefit of the RGGI program. “The value of these credits are getting less and less as we continue to go further and further out,” he said, “and so the value of the program is becoming less and less.”

It is true that New Jersey’s participation in RGGI carries a modest price tag. Because the cost of the emission credits purchased by energy producers in RGGI auctions is passed along to consumers, the end users of electricity — including businesses — pay slightly higher bills. How much higher? In 2010, according to estimates from the U.S. Department of Energy and PJM, the regional transmission organization that coordinates wholesale electricity in the region, the impact of the purchase of emission credits on the average monthly commercial electric bill in New Jersey was less than one-third of 1 percent.

In the meantime, there are many businesses in New Jersey that benefit financially from RGGI: companies that receive financial incentives to promote energy efficiency and renewable energy, businesses that research and develop state-of-the-art electric generation and create green jobs. Also benefiting are local governments that practice sustainable land-use planning and initiate transportation projects that reduce greenhouse gas emissions or energy demand.

In the longer term, RGGI is expected to actually reduce energy costs for businesses and residents. The money generated at auction not only subsidizes development of renewable sources that will increase the supply of electricity, but also promotes energy-efficiency measures that will reduce demand. The combination of increased supply and reduced demand will bring down the price of electricity for all users.

As a candidate, Chris Christie was right to call on New Jersey to be a national leader in the research and development of alternative, clean, sustainable sources of energy. As governor, he should be sending a strong and consistent signal to the private sector that New Jersey is making a long-term commitment to this end. Withdrawal from RGGI sends exactly the opposite message. It says that New Jersey will pursue the green economy at its convenience, but the market should not count on the state’s unwavering commitment. This message will destabilize the market and reverse the momentum that has propelled New Jersey to the forefront of renewable energy implementation.

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