New Mexico Adopts Emissions Cap, But Challenges Expected

The Environmental Improvement Board approves a controversial plan to restrict greenhouse gases starting in 2012. The state can now trade carbon allowances

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WASHINGTON—Call it Bill Richardson’s last green hurrah. 

Even though cap-and-trade measures were maligned as poison for the tottering economy during the midterm election cycle, New Mexico’s Democratic governor is finally able to boast that his state has endorsed such a method for slicing global warming pollutants. 

Fittingly, it was Election Day when a regulatory body named the New Mexico Environmental Improvement Board voted 4-3 to approve a controversial and relatively aggressive plan to restrict greenhouse gases beginning in 2012. The New Mexico Department of Environment–backed policy requires major polluters such as coal-fired power plants and the oil and gas industry to curb carbon dioxide emissions 2 percent per year until 2020. 

But with Republican governor-elect Susana Martinez opposed to the initiative, will Richardson’s joy be short-lived? 

It’s hard to say. New Mexico’s Legislature remains a Democratic stronghold but the GOP narrowed that margin of control somewhat in the state House Nov. 2. 

“We’re expecting to see legislative efforts to roll back the decision,” Sanders Moore, policy advocate with Environment New Mexico, told SolveClimate News. “We don’t know what it’s going to look like, but the environmental community will be playing a lot of defense on that.” 

In the meantime, the conservation-minded are savoring what they interpret as a monumental victory for clean technology in the Land of Enchantment. States are daring to tread, they say, where the U.S. Congress can’t gain its footing. 

“This is another example of the states actually treating climate change like the important and serious issue it is,” Shrayas Jatkar, a New Mexico-based organizer with the Sierra Club, explained. “This is how we’re going to make the transition to the clean energy economy. We can be the solar capital of the world, but we need the rules of the road to set that transition in place.”   

How the Decision Reverberates in the West 

New Mexico can now begin to trade carbon allowances in the nascent Western Climate Initiative. It’s a collaboration among seven U.S. states and four Canadian provinces seeking to reduce emissions 15 percent from 2005 levels by 2020. 

In addition to New Mexico, other partners in the Western Climate Initiative include Arizona, California, Montana, Oregon, Utah and Washington, according to the WCI web site. Provinces on board are British Columbia, Manitoba, Ontario and Quebec. Fourteen other jurisdictions in the U.S., Canada and Mexico have observer status. 

The state’s Environmental Improvement Board did include a sunset provision if Congress enacts a nationwide cap-and-trade program. In addition, cost containment provisions are part of the package, just in case allowances exceed a certain price tag. 

About 63 large industrial sources that emit at least 25,000 metric tons of greenhouse gases a year would participate in the program initially, according to the New Mexico Department of Environment (NMED). State figures reveal that annual greenhouse gas emissions are roughly equal to 24 million metric tons of carbon dioxide.  

However, NMED had always made it clear that New Mexico had to have a high enough volume of emissions allowances to be sure trading was cost-effective and efficient.  

California Provides Emissions Oomph 

By resoundingly rejecting Proposition 23 last week, Californians prevented the dismantling of their landmark legislation to trim heat-trapping gases and convert to a low carbon economy. That green light also gives New Mexico the emissions heft it needs—at least 100 million metric tons—to trigger its policy in tandem with other states and provinces. 

In late October, the California Air Resources Board outlined its proposed cap-and-trade plan. By 2015, the program would cover close to 400 million metric tons of greenhouse gases emitted from power plants, factories, refineries and vehicle tailpipes, according to a board report. 

The cap-and-trade segment is part of Assembly Bill 32, the California Global Warming Solutions Act, which requires the state to cut carbon emissions to 1990 levels by 2020. It will require 360 businesses to acquire allowances for carbon emissions, although most allowances will be free when the program begins in 2012. 

Free allocation of pollution credits to regulated sources is one mechanism New Mexico chose when designing its program because that can contain costs to industry and consumers, according to the Environment Department.

“I’m just really pleased with how thoughtful they were in their deliberations and their consideration of the cost to industry and the consumer as well as the urgency of the matter,” said Sandra Ely, the department’s environment and energy policy coordinator. “Every single board member agreed that climate change is one of most important issues of our time that has to be addressed.”

Governor Elated, Utilities Annoyed 

Richardson began championing the cap-and-trade cause a few years after first being elected as New Mexico’s governor in 2002. He appointed not only all seven members of the board who voted on the plan but also the head of the Environment Department who proposed it. 

Barred from vying for a third round because of term limits, the exiting governor urged the federal government to use programs developed by New Mexico and the Western Climate Initiative as the backbone for a national cap-and-trade system.  

“Addressing climate change immediately is the right thing to do,” said Richardson, who served as Department of Energy secretary from 1998 to 2000 under the Clinton Administration. “I am pleased that the Environmental Improvement Board adopted the program I have worked so hard to develop.” 

But not everybody is as elated. Not surprisingly, electric utilities claim the measure will boost electricity prices and make their state less competitive. 

New Mexico’s largest electric utility, Public Service Co., has stated that the yearly expenses to comply with the new regulations—estimated to grow to $110 million by 2020—would burden its customers. The utility is a subsidiary of Albuquerque-based PNM Resources Inc., the state’s largest electricity provider. 

PNM Resources chief executive and president Pat Vincent-Collawn called the board’s decision “disappointing” and pointed out that legal action is possible. 

“We remain convinced that comprehensive federal legislation is the only way to meaningfully reduce emissions, minimize costs to customers and to our economy, and not disadvantage any particular state,” Vincent-Collawn said in a statement. 

PNM Resources is a founding member of the U.S. Climate Action Partnership. The coalition of businesses and environmental organizations had vowed to support nationwide legislation to drop carbon emissions to 80 percent below 2005 levels by 2050. 

New Mexico’s Environmental Edge 

Martinez, the incoming GOP governor, beat out Democrat Diane Denish in a scrappy but lopsided race. Denish, who is Richardson’s lieutenant governor, earned 46 percent of the vote to Martinez’s 54 percent.  

Environmental advocates point out that green issues were not highlighted in the gubernatorial campaign. However, issues such as cap and trade, which Republicans repeatedly harped on as “cap and tax,” were significant bones of contention in the state’s trio of hard-fought U.S. House races. 

All three freshmen Democratic incumbents—Martin Heinrich in the 1st Congressional District, Harry Teague in the 2nd Congressional District and Ben Ray Lujan in the 3rd Congressional District—had voted for the American Clean Energy and Security Act that the lower chamber passed in 2009. During the campaign, their GOP challengers all labeled it a risky and inappropriate vote for a state that relies so heavily on the oil and gas industry. 

Lujan and Heinrich prevailed on Nov. 2 but Republican Steve Pearce bested Teague by a 10 percent margin. Pearce, who failed in a bid for the U.S. Senate a few years ago, regained the seat he had before Teague ousted him in 2008. 

Despite this political hopscotching, environmental advocates are convinced New Mexico is ready to embrace a strategy to cap carbon emissions. 

“For us, dealing with climate change is a jobs issue, a public health issue and a water security issue,” said the Sierra Club’s Jatkar. “In the Southwest, the effects of climate change are not some sort of hypothetical scenario in the future.”  

Residents are concerned about their natural resources because even in the state’s largest city of Albuquerque, looming mountains are visible, said Moore of New Mexico Environment.  

“You’re surrounded by the environment here,” she emphasized. “You can’t miss it. People can see this big, beautiful, blue sky, and they want to keep it that way.”

(Photo: sskennel)

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