(NYT) States Diverting Money From Climate Initiative



States Diverting Money From Climate Initiative
2010-11-29 09:20:10.801 GMT

(New York Times) -- In New York, government officials found
$90 million to pay for schools by dipping into money generated by
a multistate greenhouse gas initiative.
In New Hampshire, the state took $3.1 million from a similar
environmental fund. And in New Jersey, the government diverted
its whole share: $65 million.
At least three financially troubled states have discovered
in the Regional Greenhouse Gas Initiative, a cap-and-trade
system, a convenient pool of money that can be drawn on to help
balance state budgets.
In just over two years, the initiative, known as RGGI, has
generated more than $729 million for the 10 states that have
participated. Each state is supposed to use its share of the
money raised to invest in renewable energy and to promote energy
efficiency and consumer benefits, like programs that help
low-income electricity customers pay their utility bills.
But the money is proving too much of a temptation for states
not to use in other ways.
Critics say that diverting money from the fund for general
spending, instead of using it on emissions control and energy
savings, makes the initiative little more than a hidden tax on
Already, RGGI opponents in New Jersey have sponsored a bill
to end the state's participation.
"This is nothing but a new form of taxation, and
environmentalists have been used," said Steve Lonegan, New Jersey
state director for Americans for Prosperity, a conservative group
founded and largely financed by oil industry interests.
Under RGGI, which is pronounced Reggie, 10 Northeast and
Mid-Atlantic states agreed to cap carbon dioxide emissions from
electric power plants and charge the plants for the emissions
they produce. As an incentive for power plants to pollute less,
the states allow the plants that cut their emissions below the
cap to sell or trade their excess carbon allowances through
online auctions four times a year.
The agreement binds the states to spend at least 25 percent
of the money on direct consumer benefits or "strategic" energy
The participating states have agreed to devote virtually all
their RGGI money to energy-use reduction. Administrators of the
system say that, even with the diversion of money by state
governments, about 80 percent of the proceeds for carbon credit
auctions still goes to such programs.
Some environmentalists who support the multistate pact agree
that without the investment in programs that cut energy use and
create green jobs, the initiative's potential economic benefit
becomes an expense.
"There's a direct consequence for taking this money," said
Jeff Tittel, director of the New Jersey chapter of the Sierra
Club. "Families are going to pay higher energy bills this winter
if they didn't weatherize their homes."
At the national level, efforts by Democratic leaders and the
Obama administration to include a cap-and-trade scheme as part of
a national energy policy were contested in Congress, with
opponents branding it "cap-and-tax" and Tea Party followers
singling it out as a symbol of what was wrong with Washington.
But the controversy over cap-and-trade has percolated down to the
states, where it became fodder for some candidates in the midterm
elections and sparked anti-RGGI rallies in New York and New
Jersey, organized by Americans for Prosperity.
"We don't need this when the federal government didn't go
forward with a national plan," said Alison Littell McHose, a
Republican assemblywoman in New Jersey who sponsored the bill to
get that state out of the initiative.
Some opponents said they feared that the multistate system
would encourage cap-and-trade to spread. "The other states are
watching this program to see if they can get away with it," Mr.
Lonegan said.
Two agreements similar to RGGI — the Midwestern Greenhouse
Gas Reduction Accord, with six states and one Canadian province,
and the Western Climate Initiative, with seven states and four
Canadian provinces — envision their own cap-and-trade systems.
The regional groups have their own rules and features, but the 23
states in them have discussed linking efforts.
The regional carbon-trading market among the states has been
free of speculation, administrators for the initiative say, and
so far most carbon credits have been purchased by power
suppliers. The main criticism from environmental groups is that
the cap on emissions is too lax — in fact, power suppliers have
easily met their caps, and carbon credits are trading at
bottom-level prices, because plants are taking advantage of cheap
prices for natural gas, which pollutes less than fuel sources
like coal.
But with the renewed opposition, "now we're going to be
fighting to save RGGI," Mr. Tittel of the Sierra Club said,
rather than focusing on strengthening and expanding the program.
Gov. David A. Paterson of New York set the precedent last
year when he took $90 million from the money generated by the
initiative to deal with a projected state budget deficit of
nearly $50 billion through March 2013. New York has so far
collected $265 million from RGGI, the most of any of the
participating states.
Peter Iwanowicz, the governor's environmental adviser and
acting commissioner of the State Department of Environmental
Conservation, called the action "a one-time deal."
"New York was facing historic deficits," he said. "It wasn't
a decision that was made lightly."
In New York, much of the money in the fund has gone to
investments in alternative energy technologies, training for
green jobs, and energy efficiency programs like subsidized energy
audits for homes and other buildings. The energy initiative has
added 72 cents to the monthly electricity bill of New Yorkers,
Mr. Iwanowicz said, but he noted that because of reductions in
energy use and cheaper fuel prices in the last two years,
customers might not have seen a rise.
In New Jersey, Gov. Chris Christie said that the state
would use its $65.2 million in RGGI money to help offset a $10.7
billion budget deficit for fiscal year 2011. Mr. Christie has yet
to add his voice to calls among fellow Republicans to withdraw
from the cap-and-trade regional group. Still, some experts note
that the availability of RGGI money to help states deal with
their economic woes may be the very thing that saves the
initiative and similar accords.
"The states are so broke that it's going to be unbelievably
difficult for them to stop this program," said Leigh Raymond, the
associate director of the Climate Change Research Center at
Purdue University. "They're desperate for money."

Copyright 2010 The New York Times Company

-0- Nov/29/2010 09:20 GMT