Will Democrats Seek Real RGGI Reform?

The Senate Environment Committee will meet tomorrow (Monday 6/20/11) to hear the Senate version of a bill to reverse Governor Christie’s plans to withdraw from RGGI (see:  S 2946)

The Senate hearing provides another opportunity for Legislators to show that they are serious about global warming, and not just playing political games.

It is simply astounding that Republicans voted “No” on party lines last week in the Assembly Environment Committee vote on A4108.

Obviously, Assemblywoman Coyle’s well heeled and highly educated Somerset County constituents know global warming is real and demand real solution, not political games.

And we’re sure that they are willing to pay far more than 28 cents per month on their electric bill (the current RGGI charge) to be part of the solution to the world’s climate change crisis.

It also gives Republicans another chance to move beyond pure unprincipled partisan loyalty to Governor Christie, and show that they see global warming as more than a political football.

So we will be closely watching how Republican members Beck and Bateman vote.

And I’m not convinced yet the Democratic Chairman Bob Smith is serious in reforming the RGGI program – ironic in that Senate President Sweeney was the sponsor of the original RGGI legislation that Governor Christie has abandoned (for RGGI’s legislative history, see this and this and this and this).

So, here are 9 specific amendments that should be considered and will serve as a test of whether this Committee is serious:

Dear Chairman Smith:

Please accept this email testimony on S2946. I am providing suggested amendments in advance of the hearing, so that there is sufficient time for consideration and for OLS to draft amendments.

While I opposed RGGI from the outset, given the failure of national global warming legislation and the fact that RGGI states’ recently wrote to EPA to support using RGGI to satisfy compliance with forthcoming EPA New Source Performance Standards for greenhouse gas emissions for existing sources under Section 111(d) of the Clean Air Act, I support the objectives of the bill to assure that NJ remains involved in RGGI.

[Note: EPA projects that the upcoming new Clean Air Act “New Source Performance Standards” (NSPS) regulations on greenhouse gas emissions from existing coal power plants will reduce current emission by at least 10%. But RGGI would allow those emissions to increase by 10 – 30%. So if EPA adopts the state recommendations and allows RGGI to satisfy NSPS compliance, we are talking about 20 – 40% increase in emissions from coal power plants. That is HUGE. I doubt most NJ legislators are even aware of how EPA and State actions are related.]

However, passing a bill to merely retain RGGI in its current form would be an empty gesture. RGGI must be reformed in light of 6 years experience and the forthcoming new EPA NSPS rules.

Therefore, I strongly urge you to adopt amendments to clarify and strengthen RGGI’s original objectives.

Given the Governor’s withdrawal statement and DEP’s testimony before Chairman Chivukula’s Committee, it is a virtual certainty that the Governor will veto this bill.

Therefore, it is even more important that you pass a bill that eliminates political considerations and strictly adheres to sound policy and science.

As you know, the RGGI caps are far above current electric sector emissions. When the original RGGI MOU was signed in 2005, NJ’s RGGI caps were 10% above then current emissions.

DEP testified to Chairman Chivukula’s Cmte. last week that the cap is 30% above current emissions.

The Governor has used this fact to claim – correctly – that RGGI is ineffective in terms of changing behavior of energy producers and consumers. PSEG themselves described the affect of RGGI as “negligible” (see page 59) 

Environmentalists (i.e. NRDC and Environment NJ) testified that RGGI originally was designed to undergo an internal performance review scheduled for 2012. The expectation all along is that the generous caps would be renegotiated and lowered.

However, given the Administration’s opposition to RGGI, it would be foolish to think – even if the bill were to pass and NJ remain a part of RGGI – that the caps would be lowered via the RGGI administrative negotiating process among State Governors.

Outside intervention and legislative policy direction are required.

With that in mind, I recommend the following amendments.

1. Legislatively reduce the RGGI cap in statute to current 2010 emissions, or the most recent actual emissions monitoring data. This would lock in any emissions reductions that have been achieved and assure that emissions do not increase.

2. Eliminate the discretionary use of “up to 100%” of revenues derived form RGGI auctions and mandate that 100% be used for the legislatively specified purposes. This would be consistent with your announced intent to Constitutionally dedicate the RGGI proceeds.

3. Delete reference to and required consistency with “the terms of the Memorandum of Understanding signed by NJ and other states on December 20, 2005.” This would be consistent with legislatiely establishing policy and lowering the NJ emission allowances (cap).

4. Insert the year “2008” to clarify that the Corzine Energy Master Plan goals and principles are to be considered, not the proposed changes by Governor Christie.

5. Delete the subsidies, exemptions and loopholes of the original RGGI legislation provides to a cogeneration facility, combined heat and power, and any other “on-site generation facility”.

6. Mandate that all RGGI records shall be public records and subject to the Open Public Records Act.

7. Mandate that DEP adopt the January 20, 2009 proposed greenhouse gas emissions monitoring and reporting rule that was killed by Governor Christie’s Executive Order moratorium (see: http://www.nj.gov/dep/rules/proposals/012009a.pdf

This will provide actual NJ data to base decisions on, not projections based on federal emissions factors and fuel use estimates.

8. Eliminate the $7 per ton relief valve. If we are going to have a market based trading scheme, prices should be determined by supply and demand and the market.

9. Eliminate the $2 per ton price cap for certain emission sources.Market assumptions require a level playing field between all sources.

Let me know if you’d like these proposed amendments formatted to the provisions of the current bill. I’d be glad to go over this with OLS staff.

Thank you for your favorable consideration.

Bill Wolfe, Director

NJ PEER