Who’s Running Down RGGI?
Air Date: Week of June 10, 2011
New Jersey has pulled out and other states are considering quitting the Regional Greenhouse Gas Initiative, or RGGI, the nation’s first cap and trade program to combat climate change. Living on Earth’s Jeff Young reports on what’s behind the effort to run RGGI down.
GELLERMAN: It’s Living on Earth, I'm Bruce Gellerman. In the absence of a federal policy, it's states that are fighting climate change. Leading the effort are 10 northeastern states stretching from Maine to Delaware. In 2008, they banded together to form RGGI: the Regional Greenhouse Gas Initiative. It's a carbon-trading program for power plants --- a market mechanism that enables utilities to buy and sell emission credits so they can meet caps on the amount of carbon they're allowed to put into the air.
But soon RGGI will be down to nine states. New Jersey is pulling out of the regional pact and lawmakers in at least three other states are squaring off to do the same. Living on Earth’s Jeff Young reports on why RGGI is on the ropes, and who’s really throwing the punches.
[SOUND OF APPLAUSE AT RALLY]
YOUNG: Republican Presidential hopeful Herman Cain made a stop in New York recently, right in front of the offices of the Regional Greenhouse Gas Initiative.
[HERMAN CAIN AT RALLY “It should have been RGGR- regional greenhouse gas rip-off!”]
YOUNG: Cain and other organizers called the gathering the “RGGI on the Run Rally.” Conservative opponents of climate change action are hoping to capitalize on their victory in New Jersey, where Republican Governor Chris Christie announced his state will drop the program by year’s end.
CHRISTIE: RGGI does nothing more than tax our citizens, tax our businesses, with no discernible or measurable impact upon our environment. In other words, the whole system is not working as it was intended to work - it’s a failure.
YOUNG: David Littell disagrees. He’s chair of RGGI Inc.
LITTELL: It absolutely is working.
YOUNG: Littell says the program has invested $700 million in clean energy and energy efficiency projects and achieved its other major goals.
LITTELL: We set a cap, we’ve now reduced carbon emissions below the cap. We also have set a price on carbon, which was one of our goals, and we’ve done that through the most effective market mechanisms.
YOUNG: Sorting out these conflicting claims is Emilie Mazzacurati’s job. She’s a carbon markets analyst for a company called Point Carbon. Mazzacurati says it’s true, northeastern states have reduced emissions. They’ve already done better than the 10 percent cut RGGI aimed to achieve by the year 2018. But Mazzacurati says that has more to do with the drop in the price of natural gas than the greenhouse gas initiative.
MAZZACURATI: I don’t think RGGI can take credit for the fact that emissions fell. But RGGI can take credit for having put carbon on the radar of those companies and RGGI has raised money and helped fund a number of significant programs in terms of energy efficiency and renewable energy.
YOUNG: Mazzacurati says the regional initiative set too weak a cap on carbon. That meant the cost of emissions, as reflected in the carbon credits that companies bought, was too low to really change behavior.
Of course that also means RGGI’s cost to consumers is very low— fuel costs in the region are actually lower now than before RGGI started. Mazzacurati says that makes Gov. Christie’s criticism a bit incoherent.
MAZZACURATI: He said well, ‘Prices are too low, it’s not doing anything, but it’s a horrible burden on our economy.’ And that’s not really consistent. So that’s why in my sense the moves that we see in those states is really driven by politics and not really by economics because the reality is that the economic impact of RGGI is very small.
YOUNG: With the failure of national cap and trade proposals, the regional system has become the political punching bag. Voters in northeastern states are hearing more ads like this:
[RADIO AD: Female voice: “It means higher taxes, lost jobs and less freedom.”/ Male: “It’s got to stop.”/Female: “It’s time to pull the plug on RGGI.”]
YOUNG: The New Jersey state chapter of the conservative, pro-business group Americans for Prosperity, has spent about 200 thousand dollars for those ads and other efforts to fight RGGI. Chapter director Steve Lonegan also organized the rally where Herman Cain spoke in New York in hopes that other states will follow New Jersey’s lead.
LONEGAN: It’s a small victory, but it’s only a step in the right direction of putting an end to the regional greenhouse gas initiative cap and trade program in its entirety.
YOUNG: Americans for Prosperity is closely associated with Koch Industries, an oil refining and chemicals giant that’s among the country’s largest privately held companies. Lonegan says his state chapter does not get support from Koch industries, but the national AFP does. David Koch has served on the AFP board. And it’s not the only group affiliated with Koch industries that’s going after RGGI. In New Hampshire, freelance writer and activist Dave Anderson found another example during an internet search of language in the state’s bill to pull out of the regional initiative.
ANDERSON: And what popped up was a reference to this legislative template produced by the American legislative exchange council.
YOUNG: The American Legislative Exchange Council, or ALEC, offers conservative legislators "model bills" on key issues. ALEC’s exact language against cap and trade programs showed up in legislation in 6 states, including the section in the New Hampshire bill that Anderson spotted.
ANDERSON: It says ‘whereas there has been no credible economic analysis of the increasing cost of doing business in the state of,’ and then there’s a blank, so, in this case, they inserted the words, New Hampshire.
YOUNG: Some of ALEC’s major funding sources are tied to Koch Industries. A spokesperson for ALEC declined to be interviewed. Carbon market analyst Emilie Mazzacurati says RGGI is still going strong despite New Jersey’s departure. The bill to pull New Hampshire out passed the state House but was rejected by the Senate. Repeal efforts in Maine and Delaware were beaten back in committee. And Mazzacurati says RGGI is a pioneering model for other regional initiatives.
MAZZACURATI: It is a successful experiment in the sense that also the sky hasn’t collapsed. You know, the end of world hasn’t happened. There’s a cap-and-trade running in the U.S. and it’s okay.
YOUNG: RGGI’s most lasting contribution could be the efficiency investments it makes possible.
[VENTILLATION SYSTEM SOUNDS]
YOUNG: The ventilation system of this new cancer research center on the MIT campus in Cambridge, Massachusetts, is a prime example. Project manager Jim May and sustainability coordinator Julia Ledewitz explain how they saved energy by having the massive intake and exhaust fans together.
MAY: We can run a glycol loop from the exhaust side to the supply side so that in the winter we can transfer the heat that would otherwise be sending out to the outdoors to the air, the cold air, that we are bringing in from the outdoors.
LEDEWITZ: …And that exchange is about 55% efficient and it saves us $450 thousand a year compared to just wasting that heat.
YOUNG: The Regional Greenhouse Gas Initiative enabled the utility to give MIT valuable incentives to engineer the building’s efficient design. All of which is a bit odd, given the building’s name: the David H. Koch Institute. For Living on Earth, I’m Jeff Young.
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