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New Jersey to exit 'failing' US regional cap-and-trade scheme

State Governor Chris Christie will pull New Jersey from a regional cap-and-trade programme in the US Northeast by the year's end, claiming the scheme is not effective in reducing greenhouse gases and shows no signs of working in the future.

Christie, a Republican who took office in 2009, claims the 10-state Regional Greenhouse Gas Initiative (RGGI) “does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernable or measureable impact upon our environment.”

At the same time, Christie announced a construction ban for new coal power plants in the state and pledged to close older existing ones.

“We need to commit in New Jersey to making coal a part of our past,” he says, reaffirming the state's ambitions to be an offshore wind leader.

RGGI, implemented in 2008, is the first market-based regulatory programme in the US to reduce the heat-trapping gases. It auctions pollution allowances each quarter that have raised more than $860m since the programme began.

Each state invests its share of proceeds in areas such as energy efficiency, renewables and other clean-energy technologies. The goal is to cut power sector emissions in New England and the mid-Atlantic region by 10% by 2018.

Other participating states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Christie says an extensive review done by his administration concludes that RGGI allowances were never expensive enough to pressure electric utilities to adopt less carbon-intensive fuels and more efficient technologies.

He notes when RGGI began, its promoters estimated the cost of allowances would eventually be as high as $20 to $30 a ton compared to less than $2 now.

“Trends indicate the cost of the allowance will continue to be at the floor reserve price and there will be no significant secondary market for allowances. In other words, the whole system is not working [as intended]. It’s a failure,” he says.

Christie adds that New Jersey’s carbon emissions are already below the goals for 2020 set out in legislation that enabled it to participate in RGGI.

He attributes this to greater use of natural gas and less coal consumption. “We’re seeing that the market and not RGGI has created incentives to reduce the use of carbon-based fuels,” he says.

New Jersey remains committed to fighting climate change and will achieve its 22.5% renewable portfolio standard by 2021, according to Christie. He says the state has adopted 14 laws since2008 that will enable it to meet that goal while exiting RGGI in an orderly fashion.

Christie also vows: “We’re going to work to make New Jersey number one in offshore wind production.”

Private developers have proposed 3GW of wind projects in the shallow Atlantic Ocean along the New Jersey coast, according to his staff.

He also pledges to increase use of solar power in New Jersey, which is already in second place among US states after California. As of 30 April, New Jersey had 330MW of installed solar photovoltaic capacity, Christie says.