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This Week in Clean Economy: NJ Governor Seeks to Divert $210M from Clean Energy Fund

Christie's budget would empty the clean energy fund and take all that's left of RGGI revenues. Meanwhile, in the EU, green jobs pass the million mark.

Feb 24, 2012
Chris Christie delivers FY2013 budget address at the Statehouse in Trenton, N.J.

In his new budget blueprint, New Jersey Gov. Chris Christie is proposing to divert $210 million from the state's clean energy fund to use for general spending. The proposal would also take all that is left of the state's Regional Greenhouse Gas Initiative (RGGI) revenues: $473,000.

If the budget passes, it would be the third year in a row that Christie, a first-term Republican, has dipped into the state's clean economy coffers. His first two enacted budgets diverted a total of more than $400 million from the clean energy fund, instead of using it on energy savings for homes and businesses, according to a report Wednesday in the New Jersey Spotlight.

Christie's budget for fiscal year 2011 also took $65 million in RGGI revenues to help patch a budget shortfall. The money from the regional cap-and-trade scheme is supposed to be invested in renewable energy and energy efficiency and to help low-income customers pay their electricity bills.

Last May, Christie said he would remove the state from RGGI by Dec. 31, 2011, saying the nearly seven-year-old program was not an effective way to reduce greenhouse gas emissions. Christie did acknowledge that "climate change is real" and "that humans plays a contributing role." 

State legislators are set to vote on the governor's 2013 fiscal year budget in June.

A governor's spokesperson told New Jersey Spotlight that the state's efficiency and renewable energy programs have enough funding to meet current and future commitments and that the $210 million in the clean energy fund was "surplus dollars." The money comes from a surcharge on utility bills. Environmentalists say the governor has treated RGGI revenues similarly.

"The administration is making it sound as if there's a glut of money that would've never gotten spent," Matt Elliot, a clean energy advocate at Environment New Jersey, an advocacy group, told InsideClimate News.

Elliot said this practice of clearing these funds sends the wrong signal to clean energy developers. "You always want to have a balance in the fund so that the market knows that there's money available" for green projects. New Jersey is the nation's second-largest solar PV market behind California.

The issue touches on a hot debate in Washington and on the presidential campaign trail over whether and how to regulate climate-altering gases and to build the clean economy. Environmentalists, renewable energy developers and their political supporters say state-supported green energy funding can power a job-creation engine. Many conservative and Tea Party Republicans view such programs as a waste of taxpayer money and have branded cap-and-trade schemes like RGGI as a "cap and tax."

Christie's decision to exit RGGI coincided with a campaign led by the Tea Party-aligned Americans for Prosperity, a group founded and financed by oil industry interests, to get states to abandon the pact. Attempts to force a withdrawal in New Hampshire, Delaware and Maine have failed.

Under RGGI, 10 Northeast and Mid-Atlantic states agreed to cap carbon dioxide emissions from power plants and charge plants for every ton of CO2 they produce over the designated limit. Facilities that can't cut their emissions below the cap must buy pollution allowances from states in auctions held four times a year. States agreed to use at least 25 percent of auction proceeds to benefit customers, such as energy-saving programs.

Every state has benefited economically from the pact, none more than Massachusetts, mainly because it invested the bulk of its money to help fund  aggressive energy efficiency goals.

In its three years in RGGI, New Jersey has generated more than $113 million in revenues from 14 auctions, even with Christie's diversion of millions of dollars. The proceeds helped homeowners and businesses purchase energy-efficient appliances, weatherize homes and install rooftop solar panels, resulting in $150 million in economic activity and the creation of nearly 1,800 jobs, according to a November report by Analysis Group, a Boston-based consulting firm.

A report this month by Environment New Jersey claims that scrapping RGGI would cost the state hundreds of millions of dollars in future revenues. The state, at minimum, could generate more than $170 million in auction proceeds between 2012 and 2018, the report found. RGGI authorities are now reviewing the program and could move to tighten emissions requirements. If that happens, the state could bring in between $340 million and $680 million during that six-year time period, it said.

"With data like this, the right choice is crystal clear: New Jersey should remain in RGGI," Elliot of Environment New Jersey said in a statement.

State legislators in the Democrat-controlled Assembly and Senateare now considering legislation to reinstate the program. A similar measure last year made it to the governor's desk, which he vetoed. Christie is likely to do the same this year.

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