With Governor Chris Christie of New Jersey now officially entering the presidential fray, his decision to withdraw from a multi-state “cap and trade” coalition, is expected to come under increased scrutiny and criticism. Christie announced his decision during a May 2011 press conference much to the consternation of environmental activists who hold considerable power and influence in the state.
The Regional Greenhouse Gas Initiative, widely known as RGGI, calls for participating states to cut their emissions by 10 percent. During his press conference, the Republican governor described RGGI as an ineffective, counterproductive program that would result in higher costs for state residents without producing any tangible environmental benefits.
“RGGI does nothing more than tax electricity, tax our citizens, tax our businesses, with no discernable or measurable impact upon our environment. Because states such as Pennsylvania are not RGGI members it’s just possible that by making the cap too stringent clean New Jersey plants would be forced to close only to be replaced by power from dirty Pennsylvania coal plants,” Christie said. “It doesn’t make any sense environmentally or economically and the continuation of this tax makes no sense for my efforts and the lieutenant governor’s continued efforts to make New Jersey a more business-friendly environment and a place where private sector jobs can continue to be created.”
But now, there is a movement afoot at the state level that could force New Jersey back into a “cap and trade” arrangement in anticipation of federal regulations built around President Obama’s Clean Power Plan proposal. Team Obama is aiming for a 30 percent reduction in carbon emissions by 2030. The Environmental Protection Agency is expected to release a new rule later this year, perhaps as early as August, setting state-by-state goals for reducing carbon emissions. Legal analysts familiar with the EPA proposal have expressed concern that state officials could be persuaded to embrace a “back door cap and trade” strategy as a way to preempt federal regulations. This approach would avoid straight up and down votes in state legislatures where opposition to cap and trade policies could gather strength, they warn.
“The politics of carbon trading has generally been pretty toxic whenever it comes up at the federal level,” Gregory Sopkin, a partner at Wilkinson, Barker Knauer, LLP, said in an interview. “Even during the Obama Administration when it had Democrats in control of both houses of Congress, cap and trade didn’t pass because the public generally opposed. So now, with about 30 state legislatures controlled by Republicans, you can imagine that a lot of environmental groups are not going to like this sort of political accountability we could have if a proposal needed to pass both chambers.”
But in those states where political opposition would most likely scuttle cap and trade proposals, a “Common Elements Approach” could be presented as a “middle ground” where states craft their own individual, as opposed to multi-state, plans to achieve certain emissions targets, according to a white paper Sopkin co-authored on behalf of his firm.
“The state adopting this approach with select common elements in its state plan could, after approval by EPA of the individual state plan, partner with states with similar state plans and effectively back in to multi-state CO2 trading markets,” the paper explains. “These markets would not necessarily share common regions or electrical interconnections, but would share ‘common elements.’ ”
At the state level, there is growing concern over the impact a “federal implementation plan” or FIP, could have on the coal industry, Sopkin noted. For this reason, state officials are willing to entertain alternative carbon trading plans folded within the “Common Elements Approach” that would supposedly provide them with greater flexibility, he said.
Environmental organizations such as the Center for New Energy Economy, which is part of Colorado State University, The Great Plains Institute based in Minneapolis, Minn., the Southern Alliance for Clean Energy based in Knoxville, Tenn. and RGGI have been organizing meetings with state officials across the country.
“Not all of the meetings are publicized, and they take many forms, but we do know these groups support the EPA plan and that they are pushing the states in a certain direction,” Matthew Larson, an associate with the firm and a co-author of the paper, said. Michael Bloomberg, the former mayor of New York, has been a particularly active player in the northeast while Jay Nixon, the governor of Missouri, has been holding court with environmentalists in his state, Larson added.
Where Christie is concerned, RGGI was never enforceable between states. He was able to take advantage of the fact that any state could leave the coalition at any time. However, this would not be an option under the EPA proposal.
“RGGI is different from the Common Elements Approach in which each state would have its own plan, which involves trading with other states,” Sopkin said. “Ultimately, we don’t believe RGGI is an adequate model for what the EPA would require.”
If new regional agreements are implemented, it is possible N.J. could be forced back into the cap and trade plan similar to what Christie unraveled back in 2011.
So what happens if a state presses ahead with carbon trading without any new legislation under the Clean Power Plan?
“I would expect, parties within that state will bring suit saying you do not have the authority to do this,” Sopkin said. “But you could also see litigation from the other side if they don’t believe the plan is sufficient enough to comply with the EPA requirements. You could have citizen suits involving Sierra Club and other environmental groups. There could be a lot of pressure on both sides.”
But just prior to Christie’s official announcement on Tuesday, the U.S. Supreme Court added a new wrinkle that could solidify state opposition to green regulatory schemes. In Michigan v. EPA, the justices overturned an EPA rule for reducing emissions of mercury and other substances from coal-fired power plants. As this decision could set a strong precedent for cases that involve EPA overreach, states and utilities may want to stay their hand and avoid preemptively complying with the agency’s climate rule before legalities are settled. That’s what the language of the ruling strongly suggests.
Christie’s decision to withdraw from cap and trade has been opposed by New Jersey environmental groups and Democratic lawmakers. He has vetoed bills that called for the state to rejoin RGGI.
Even so, the governor has sent out mixed signals on environmental policies that he will need to clarify on the campaign trail. Back in November 2010, he expressed skepticism toward the idea that human activity drove climate change during a town hall meeting in Toms River, N.J. But during the press conference announcing his decision to withdraw from RGGI, he moved decisively in the opposite direction while also embracing wind and solar power initiatives.
Recall that Christie was endorsed by the New Jersey Environmental Federation during his first run for governor. Since then, he has lost support from the greenies, but hasn't exactly convinced conservatives across the country of his free-market credentials. He has arrived at the point where it is necessary to clarify his position on the "science" underpinning global warming alarmism.
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