Gov. John Lynch vetoed a bill this week that sought to pull New Hampshire out of a regional carbon trading scheme formed by 10 Northeast and Mid-Atlantic states, citing jobs and cost savings the program provides.
"I am vetoing this legislation because it will cost our citizens jobs, both now and into the future, hinder our economic recovery and damage our state's long-term economic competitiveness," he said in a written statement on June 6.
"RGGI continues to have bipartisan support today because it is ... creating jobs, and helping our businesses save money and become more competitive. I believe that we should continue that progress."
His veto appeared to put to rest, at least for now, a nearly six-month campaign by Republican state legislators to remove New Hampshire from the Regional Greenhouse Gas Initiative (RGGI). Although the House passed the bill with the two-thirds majority needed to override Lynch, the Senate did not, and is likely to uphold the veto.
Still, observers said the battle may not be over yet. The House is said to be preparing a new RGGI withdrawal bill for the next legislative session in January.
"It is the 'Night of the Living Dead' bill, so it will come back again and again," Catherine Corkery, director of the state's Sierra Club chapter, told SolveClimate News.
Even so, she added: "We are ready to live another day and fight for the support of RGGI in New Hampshire."
The veto emboldens supporters of RGGI across the Northeast who have been forced into defending the nation's first cap-and-trade scheme in recent months, in the face of increasingly vocal GOP-led opposition in other states.
In New Jersey late last month, the state Senate and Assembly approved two sets of companion bills that would keep the state in RGGI despite Gov. Chris Christie's vow to withdraw by year's end. The governor is expected to veto the bills, and it remains uncertain whether legislators can muster enough support to override him.
In New York, Gov. Andrew Cuomo and two state agencies are facing a lawsuit from the conservative group Americans for Prosperity that accuses them of charging ratepayers "coercive taxes" through RGGI.
RGGI requires power plants in participating states to cap CO2 emissions at 188 million short tons per year through 2014, and to eventually cut 10 percent of annual emissions in 2018. States can sell carbon allowances through auctions and invest the proceeds in energy efficiency programs and clean energy technologies.
New Hampshire has raised $32.4 million in 12 quarterly online auctions since 2008, while the entire program has amassed $866.4 million in earnings.
The state emitted 7.1 million tons of carbon dioxide in 2008, compared with 153.5 million tons from all participants. New Hampshire imports about 90 percent of its power from neighboring states who are also part of RGGI.
In mid-February, the House Science, Technology and Energy Committee passed a bill to withdraw New Hampshire from RGGI. A Senate committee voted to uphold the state's participation while making major changes to the way New Hampshire operates in the program.
When legislators from both committees could not agree on the changes, however, the bill was dropped altogether. Sensing a likely rejection from the Senate, the House finance committee then tacked a RGGI withdrawal provision onto Senate Bill 154, a totally separate measure that would have reformed and renamed the state's Shoreland Protection Act.
The shoreland legislation enjoyed widespread and bipartisan support in the Legislature, and it was seen as a vehicle for getting the RGGI provision passed. But the strategy appears to have backfired.
Despite his veto of SB154, though, Gov. Lynch assured lawmakers and citizens that some of the most urgent changes to the shoreland act have already become law through a separate House bill.
GOP Call for a Veto Override
"House members welcome the opportunity to override the governor's veto on this issue to lower utility bills for the working families and small businesses of the state," House speaker William O'Brian said in a statement on the state's House Republican website.
O'Brian called RGGI a "failed policy" and said the program has driven New Hampshire's electricity rates to 149 percent above the national average.
"It is time to scrap this ill-conceived plan and offer relief to our residents and employers by dumping RGGI, so that we can get our economy moving forward," he said.
James Garrity, the House Science, Technology and Energy chairman, said: "I'm disappointed that Gov. Lynch chooses to subsidize the 'green pork' pet projects of the rich and powerful and leave ordinary New Hampshire citizens to pay the bill."
Lynch, however, maintains that ratepayers would pay as much as $6 million in additional electricity costs while losing $12 million of annual funding should New Hampshire exit RGGI.
The state would continue to pay elevated rates from RGGI members tied to the regional electricity system regardless, he said.
"SB154 would effectively cause New Hampshire ratepayers to pay higher electric rates to subsidize efforts to reduce energy costs in other states," Lynch said in the statement.
He cited an independent evaluation by the University of New Hampshire that found the cumulative impact of RGGI through the end of 2010 has been a net benefit of more than $16 million in allowance revenues.
"These are funds that have been invested directly in helping New Hampshire families, businesses and local governments become more energy efficient, reduce costs, and create jobs."
'Ecstatic,' but Concerns Remain
Sierra Club's Corkery said the organization was "ecstatic" that Lynch had vetoed the bill.
"RGGI has helped communities and small businesses all over the state to increase their energy efficiency and reduce their electricity bills," she said.
Jim Cavan of the 94-member Green Alliance business group said that he was proud of Lynch's decision but remained concerned of the challenges to RGGI ahead.
"RGGI is a classic example of something that, while it costs money up front in terms of taxpayer dollars ... the long-term benefits in terms of millions of dollars of revenue and thousands of new jobs is a no-brainer if you take the long view," he told SolveClimate News.
"But we are saddled with a state government that refuses to take the long view," he said.