Gov. Chris Christie says he pulled New Jersey out of the multistate Regional Greenhouse Gas Initiative because the pact's carbon-emission permits cost the state too much.
Paying for the allowances, he told reporters a few days ago, "does nothing more than tax electricity. Tax our citizens. Tax our businesses. With no discernible or measurable impact on the environment."
The other problem, Christie said, is that the carbon-emission permits cost the state too little.
"RGGI allowances were never expensive enough to change behavior, as they were intended to, and ultimately fuel different choices," he said at the same news conference — and, practically, in the same breath.
Now you know why Christie is deemed presidential. A lesser politician might have let logic get between him and the TV cameras.
Of course, RGGI's merits or demerits aren't the primary concern. The main thing for Christie was to pass a Republican initiation rite by trashing a scheme now portrayed by some conservatives as a liberal plot. (It was Republican George Pataki who conceived the broad outlines of RGGI as governor of New York in 2003.)
If Christie supports cutting carbon emissions, as he claims he does, he would have kept New Jersey in RGGI and continued using some of the revenues to subsidize conservation and alternative energy, as Maryland does.
On Wednesday, RGGI (pronounced "Reggie" by the cognoscenti) will hold another quarterly auction and mark its third full year of selling emissions allowances to power companies.
Electricity plants will bid for the right to emit carbon dioxide based on limits, set by the 10 member states, that grow more stringent year by year. Generators pass along the permits' cost in the wholesale market, if they can, to customers of Baltimore Gas & Electric and other Northeast power consumers.
The idea is to raise the cost of carbon emissions to a level that better reflects the harm they inflict on the environment, to create incentives to steer power generators and consumers toward low-carbon energy, and to produce revenue to help make that cleaner power more accessible. The program was inspired by the highly successful cap-and-trade program to reduce sulfur dioxide emissions and acid rain that was signed into law in 1990 by (Republican) President George H.W. Bush.
It's true that RGGI allowances are a kind of environmental tax on electricity consumers. But so is any switch to any fuel cleaner and more expensive than coal, the gold standard for cheap, dirty kilowatts. The expensive, offshore-wind generation that Christie supports will cost New Jerseyites a heck of a lot more than the RGGI charge ever did.
Many prominent economists, among them N. Gregory Mankiw, the (Republican) former chairman of the Council of Economic Advisers under (Republican) President George W. Bush, believe the government should simply tax carbon emissions directly. (Mankiw favors simultaneously cutting other taxes.)
RGGI allowances cost the typical BGE household less than $2 a month, the utility has calculated.
While Christie's right to say that kind of cost isn't enough to change energy-consumption behavior, attaching a small price tag to carbon is better than no price tag.
Thanks to the poor economy and cheaper natural gas, carbon dioxide emissions have fallen in the RGGI corridor, which stretches from Maryland to Maine. Given states' generous emissions caps, that makes CO2 permits — even for coal stations such as Constellation Energy's Brandon Shores and C.P. Crane plants in Maryland — plentiful and cheap.
But not meaningless.
RGGI has generated more than $160 million in revenue for Maryland in less than three years. Unfortunately, most of it is spent on cutting electricity rates, especially for low-income households, even as electricity prices have been falling. Rather than making a tiny difference in kilowatt prices, the state should spend all the money on subsidizing solar-energy installations, electric-vehicle stations, conservation and the like.
Even so, what revenue has been invested has helped increase the infrastructure of solar-panel installers, insulation companies and conservation experts that the state will need to slow the increase in greenhouse-gas emissions.
This kind of decentralized response is part of what makes RGGI attractive. Set up incentives linked to carbon prices, and let individual producers and consumers choose options that make sense for them.
Instead, Christie supports the Soviet-style option of building a huge complex of wind pylons several miles off New Jersey's shore. Maryland Gov. Martin O'Malley favors a similar project in this state. But O'Malley backs RGGI and criticized Christie for withdrawing, saying "Governor Christie is simply wrong when he claims that these efforts are a failure."
Of course, RGGI is not a screaming success, either. The carbon caps aren't tight enough. The allowance market is weak. RGGI has not inspired Congress to impose a similar system nationally.
And Christie is right about one thing: RGGI has had "no discernible or measurable effect on the environment."
But if that's the standard for success, we should do nothing. Heightened carbon dioxide levels are the product of decades. They will take decades or centuries to undo. Better to move forward than back.