New Jersey Governor Chris Christie is re-evaluating the state's participation in a regional carbon trading program and could opt to withdraw within a few weeks.
Observers say the move is expected in response to pressure from GOP legislators and campaigns mounted by groups funded by billionaires Charles G. and David H. Koch.
The anticipated policy reversal is in step with recent actions in Maine and New Hampshire, where Republican-dominated legislatures are trying to repeal their states' 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.
Christie said he was concerned that RGGI places a burden on New Jersey businesses by raising energy costs, and thus gives a competitive advantage to states like Pennsylvania that do not participate.
"Is there enough of a benefit to the state to keep it going or is it too much of a detriment on business?" he asked at a March 24 town hall meeting in Nutley, according to transcripts provided by the governor's office to SolveClimate News.
"The thing I'm most concerned about is that it doesn't seem to be working in the entire region. The value of these credits are getting less and less as we continue to go further and further out, and the value of the program is becoming less and less," he continued.
"So we are evaluating all that, and within the next two months I'll give you a definitive answer on whether we are going to continue it."
Christie is expected to announce his final decision in just a few weeks, before he unveils his state energy plan in May, said Luis Martinez, an energy attorney for the Natural Resources Defense Council (NRDC) in Washington, D.C.
RGGI Funds Used to Balance Budget
Martinez said that while the state legislature has remained solid in supporting RGGI, the Republican governor, who took office in 2010, is not as familiar with the program and its benefits as those who voted to join it. In his first term, Christie spent most of the RGGI funds on balancing the budget.
New Jersey joined RGGI under the 2007 Global Warming Response Act, which requires the state to reduce greenhouse gas emissions to 1990 levels by 2020, for a reduction of about 20 percent. By 2050, emissions must reach 80 percent below 2006 levels.
Senate President Stephen Sweeney co-sponsored the state's bid to join RGGI with Sen. Bob Smith in 2008. The Democratic senators have continued to show support for the program, as has Assembly Speaker Sheila Oliver, who voted for the joint resolution.
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 efficiency and clean energy technology efforts.
The program was launched in 2005 and held its first quarterly online auction for carbon credits in 2008.
Participating states so far have raised nearly $861 million in carbon allowances from 11 auctions. More than half of those funds went to improving energy efficiency, according to the latest auction results posted by RGGI.
New Jersey has raised $102 million in proceeds to date, the fourth highest amount behind New York, Maryland and Massachusetts.
Proceeds in New Jersey are distributed through the Clean Energy Solutions Capital Investment (CESCI) loan/grant program. About one-third of the state's proceeds so far have been spent on clean energy and customer assistance programs to cut electricity costs.
In 2010, the state allotted $29.6 million for 12 large-scale projects, but only six projects worth $12.3 million in loans actually closed after some funds were used to cover state budget gaps.
Koch Brothers Wielding Influence
Martinez noted that the governor's re-evaluation of RGGI may in part be a response to mounting pressure from outspoken RGGI opposition groups, namely Americans for Prosperity (AFP), founded by David Koch in 2004, and the American Legislative Executive Council (ALEC), which is funded partly by the Charles G. Koch Charitable Foundation.
"Unofficially, [Christie] is just responding to the pressure that both of these groups are putting on the state and on him," Martinez said, "which is basically this Koch Brothers-funded agenda to attack anything on climate."
Charles and David Koch, billionaire oil executives, are considered the country's most prominent financiers of efforts to unravel regulations on industrial greenhouse gas emissions.
In February, AFP launched a media blitz of radio spots and television advertisements in New Jersey to alert residents "to the fact that RGGI will cause their electricity rates to soar and cost our state jobs," according to the announcement.
"The governor goes around at these town hall meetings, and they have been showing up and challenging him on RGGI," Martinez said.