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GOP Bill to Remove New Hampshire from Carbon Trading Pact Moves Forward

Environmentalists and business leaders say the bill would forfeit more than $60 million in energy savings and millions more in funding for clean energy

Feb 21, 2011
New Hampshire state house

Republicans in New Hampshire's legislature took their first step toward withdrawing the state from a regional carbon trading program this month, passing a bill out of committee that advocates say may have enough support to override a potential veto by Gov. John Lynch.

The move is representative of a nationwide trend by newly GOP-dominated state legislatures and governors' seats to repeal climate change and renewable energy policies.

The House Science, Technology and Energy Committee on Feb. 16 voted 13 to 5 along party lines to end New Hampshire's participation in the Regional Greenhouse Gas Initiative (RGGI), a carbon market between 10 Northeast and Mid-Atlantic states and the first mandatory emissions trading plan in the country.

Supporters say the GOP-backed bill, HB 519, would help loosen the pinch on ratepayers' wallets. But opponents, including Republican leaders of clean energy firms, sharply disagree, saying it could end up forfeiting more than $60 million in energy savings and dry up millions more in funding for alternative energy and efficiency programs.

The legislation would lift the requirement that New Hampshire cap carbon dioxide emissions. However, amendments would give the state until the end of the year to exit RGGI and keep the Energy Efficiency and Sustainable Energy Board, which was created in 2008 to run the state's green enery programs, from disbanding.

Any money left over in the state Greenhouse Gas Emissions Reduction Fund that was set up to dispense RGGI revenues would be shifted to a more general energy efficiency programs fund. 

In 2010, the legislature diverted $3.1 million from the RGGI fund to help balance the state's budget. The bill's sponsors have latched onto that as evidence that the scheme isn't helping to reduce greenhouse gas emissions. Instead, they claim it is a "stealth tax" that silently charges ratepayers for higher electricity costs incurred by the program.

"The regional greenhouse gas initiative has simply not impacted the overall reduction of emissions, yet it has had — and will continue to have — a significant negative impact on the economy," said State Rep. Andrew Manuse, the bill's co-sponsor, at the House committee hearing.

Study: RGGI Saved Ratepayers $1.5 Million

RGGI requires power plants in participating states to cap CO2 emissions at 188 million short tons per year through 2014, with additional annual reductions of 2.5 percent from 2015 to 2018. States can sell carbon allowances through auctions and invest the earnings in energy reduction and efficiency programs in businesses, schools and homes, as well in clean energy technologies.

The program was launched in 2005 and held its first quarterly online auction for carbon credits in 2008. New Hampshire, which joined RGGI in June 2008, raised $80.5 million last June in an auction of around 40 million emissions allowances.

2011 evaluation by the University of New Hampshire studied the impact of 30 grants from $17.7 million used for energy programs from June to October 2009, out of a total $28 million in RGGI grants awarded in the state since in 2008. During the first reporting period from July 2009 to June 2010, those grants saved residents and businesses $1.5 million in energy costs and reduced CO2 emissions by 4,600 metric tons.

Lifetime savings from the initial grants could reach $60.6 million in energy costs and curb carbon emissions by nearly 200,000 metric tons over the next 20 years, the report says. Job-wise, the funding has helped create 70 to 85 full-time equivalent jobs, and low-interest loans have allowed two manufacturers to employ a total of more than 400 workers.

Nevertheless, the House floor is expected to approve what opponents consider a largely ideological bill at its hearing on Feb. 23. A third hearing is scheduled for the House finance committee on March 16, although the state financial office said it did not have time to prepare a key "fiscal note" the committee intends to review.

The note would have illustrated the economic impact of withdrawing New Hampshire from RGGI — namely, the loss of funding the state would incur by not participating in RGGI emissions auctions — said Catherine Corkery, director of the state's Sierra Club chapter.

Following the hearing, the bill will then head back to the House floor on March 24.

Legislators Could Override Gov.'s Veto

Business leaders, environmental groups and politicians who oppose repealing RGGI are not confident the bill can be stopped in the Senate. They also fear legislators will have the numbers to override Democratic Gov. Lynch — who is urging the House to toss out the bill — if it reaches his desk.

Opponents contend that New Hampshire residents would end up paying more in electricity costs, while losing funding for energy-saving programs.

New Hampshire spends around $3 billion each year to import about 90 percent of its energy, most of which comes from a regional electricity system whose rates include taxes from other RGGI participants. 

"Electric rates would not fall to prior levels if New Hampshire unilaterally withdraws from the initiative," Lynch said in a written letter to legislators. "Our ratepayers would continue to pay as much as $6 million in additional electricity rates. However, while we would still be assessed those costs, we would lose more than $12 million of funding annually."

Withdrawing from the emissions trading plan would also set back the a renewable portfolio standard signed by Lynch in 2007 that mandates 25 percent of the state's electricity come from renewable sources by 2025.

"The green companies and green jobs that have been created to meet the demand for energy efficiency projects are a vital part of our economy, and I urge you to vote this bill 'Inexpedient to Legislate' so that we can continue the progress we have made," Lynch said.

House Democratic Leader Teri Norelli, who opposes the bill, told SolveClimate News that outspoken climate change deniers and agenda-driven committee members should instead focus on RGGI's economic sensibility.

"In the past year alone, we saved over 7 million kilowatt-hours of electricity, or enough [to power] about 11,000 homes in New Hampshire for the year," she said. "It seems counterproductive to be repealing this program, especially at a time when the economy is still struggling. All of a sudden, plumbers, auditors, solar panel installers will have fewer jobs because we won’t have the auction money."

The Bill is 'Product of The Toxic Political Times'

Jim Cavan, of the 94-member Green Alliance business group, said: "[The bill] is more of a product of the toxic political times and furthering the knee-jerk reaction to watch our wallets."

He said that exiting RGGI would eliminate opportunities like the $400,000 in funding secured by Sustainable Development and Energy Systems (SDES), a small technology firm that used the grant to provide energy audits and inventories in municipalities in more than 40 New Hampshire cities.

"Repealing RGGI really eliminates opportunities for alternative energy companies to help bolster green energy initiatives and wean us off of fossil fuels, which is really the thing that’s driving money out of this state," Cavan said.

Jim Grady, president and CEO of energy-efficiency firm LighTec, Inc, asked his fellow Republicans to consider the example of the town of Hollis.

In a letter he handed out at the hearing, he said that a project to reduce operating costs and improve lighting quality for Hollis schools and town buildings had stalled for three years before RGGI money helped cover 12 percent of the costs. The project has since afforded the city $63,000 in energy savings, or the equivalent to removing the electricity load from 30 homes, and has curbed greenhouse gas emissions by 200 tons per year.

"The [RGGI] bill is about making the region less sensitive to energy and lowering our energy costs," Grady told SolveClimate News. "We win by increasing our energy efficiency."

RGGI Gives NH Cleantech Chance to Compete

Steven Walker, CEO of New England Wood Pellet and a Republican, said that RGGI gives clean energy firms like his own a chance to compete with oil and gas companies that receive about $4 billion a year in tax breaks from the federal government, while funding to wind, solar and geothermal energies combined was less than $500 million last year.

"Some people look at [cap-and-trade] as, 'We can't afford to reduce greenhouse gas emissions right now.' Well, we can't afford to not have some kind of energy policy that is getting our portfolio diversified" and creates more competition, he said.

"We're trying to make an upfront investment to realize lower costs down the road."

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