RGGI cap reduction plan criticized
The Regional Greenhouse Gas Initiative involving New Hampshire and eight other states wants to reduce the cap for carbon emissions by 45 percent in 2014, the organization announced Thursday.
If approved by the nine states, allowable carbon-dioxide output for 2014 would drop from 165 million tons to 91 million tons, according to a news release issued by the New York-based Regional Greenhouse Gas Initiative. RGGI is also calling for subsequent reductions of 2.5 percent per year from 2015 to 2020.
"Today, we are taking another significant step forward in realizing our common goal of reducing carbon emissions, driving energy efficiency investments, accelerated clean energy deployment and providing economic benefits to the region's businesses and families," said Collin O'Mara, chairman of RGGI and the top environmental regulator in Delaware, a RGGI state.
The first of its kind in the country, RGGI is a nine-state market-based effort to reduce greenhouse gases. Polluters such as coal and natural gas plants must purchase allowances to emit carbon-dioxide. Money raised from the allowance auctions is funneled into energy efficiency, renewable energy projects and, in the case of New Hampshire, lower electricity rates.
RGGI has had a difficult go in New Hampshire. Two years ago, the Republican-dominated Legislature passed legislation to force new Hampshire out of RGGI. It was successfully vetoed by then-Gov. John Lynch.
Last year, Lynch let RGGI-related legislation become law without his signature. It calls for New Hampshire to withdraw from RGGI if two other New England states exit. It also earmarks some of RGGI funds to reductions in electricity bills.
Program 'a failure'
Thursday, the New Hampshire office of Americans for Prosperity said the program was a failure, noting that December permits sold for the minimum, $1.93 bid, and 48 percent were unsold.
"It's time to remove our state from this failed cap-and-trade program and take away this burden from New Hampshire individuals and small businesses," said Corey R. Lewandowski, state director of Americans for Prosperity-New Hampshire, in a statement.
"Today's proposal to significantly reduce the number of permits available demonstrates the failure of the RGGI program."
The latest recommendations must be approved by each state before they become effective. In New Hampshire, they must be passed by the Legislature and signed by the governor, said Mike Fitzgerald, a spokesman for the state Department of Environmental Services.
RGGI operates on the theory that reductions in the amount of available emission allowances increases the price of the allowances and makes carbon-emitting energy production more expensive. Average carbon emissions from 2009 to 2011 are 30 percent off the carbon emissions in 2005, RGGI said.
Grant Bosse, the editor of New Hampshire Watchdog, said the move by RGGI has little to do with lowering carbon emissions. He said the economic collapse and slow recovery meant fewer people purchased power from coal-burning plants. The fewer emissions meant fewer producers purchasing permits, which meant a loss of projected revenue for the nine states. This lost revenue, he said, is why RGGI wants to reduce the emissions cap.
"This has everything to do with revenues and nothing to do with the environment," Bosse said. "This is driven by a desire for more state revenue."
Higher electricity bills
If the recommendations are implemented, the average electricity bill should increase by less than 1 percent because of the reduced cap, RGGI said. Another $2.2 billion should be made available for investments in energy efficiency and renewable energy.
Such investments create jobs, save consumer money and enhance energy security, RGGI said.
Lewandowski said ratepayers will have to pay more to sustain the failed program.
"It just doesn't make sense," he said.
Two New Hampshire residents are on the RGGI board, PUC Chairman Robert Scott and Environmental Services Commissioner Thomas Burack. Fitzgerald said they endorsed the package of recommendations.
The proposed improvements package also calls for:
-- A Cost Containment Reserve, which allows for additional allowances if sale prices exceed certain levels.
-- A forestry protocol, which governs the use of forestry offsets for emission allowances.
-- A prohibition on re-offering unsold 2012 and 2013 allowances.
-- A commitment to identify and evaluate tracking tools for emissions associated with electricity imported from outside the RGGI region.