Court battle could force New Jersey to resume carbon trading

L.E.MORMILE / ShutterstockNew Jersey Gov. Chris Christie doesn’t want carbon trading in his state, but he might not have a choice.

Last year was a good one for the Regional Greenhouse Gas Initiative, a carbon-trading program in nine Northeast and Mid-Atlantic states. And on Wednesday, environmentalists will push forward with a bid to make 2014 an even better year — by dragging New Jersey back into the program.

RGGI, the first mandatory carbon-trading program in the U.S., caps the amount of CO2 that can be released by power plants and allows those facilities to buy and exchange the rights to release the pollution. RGGI revenue, which could hit $2 billion by 2020, is poured back into clean energy programs — mostly into renewable energy and energy efficiency.

New Jersey was a participant in RGGI when it launched, but in 2011 Gov. Chris Christie (R) directed his administration to withdraw the state from the program — and it did so without calling for any kind of public comment or debate. Christie and other conservatives at the time lamented the costs to electricity ratepayers and said RGGI wasn’t performing as expected. “This program is not effective in reducing greenhouse gases and is unlikely to be in the future,” Christie said. “It’s a failure.” The majority of state lawmakers today want New Jersey to rejoin RGGI, but they don’t have enough votes to overcome an inevitable Christie veto.

So attorneys with the Natural Resources Defense Council and Environment New Jersey are rolling up their lawyerly sleeves and heading into an appellate court on Wednesday to battle it out against the state’s legal team. Here is NRDC’s Dale Bryk with an explanation of the groups’ lawsuit:

In court this week, we will be arguing that the state did not follow proper administrative procedure when, in 2011, it simply posted a statement on the Department of Environmental Protection’s website declaring an end to the rules requiring pollution reductions from power plants. Rather, according to New Jersey’s Administrative Procedure Act, the agency must give the public a chance to comment before taking such action. Had it done so, the state would have heard from the many businesses and residents who benefited from RGGI when the program was still in effect in New Jersey, and who see the program as a boon to the state’s burgeoning clean-energy economy.

The department, for its part, is arguing that it followed the proper procedures when it posted information about the state’s withdrawal on its website.

Environmentalists point out that the litigation could be avoided if Christie would wake up to the growing benefits of the carbon-trading market and agree to rejoin. Again from Bryk:

As part of President Obama’s important climate plan, the Environmental Protection Agency will issue carbon pollution standards for existing power plants this June, and states will be required to develop proposals to meet those standards by 2016. If they don’t, the EPA will develop a plan for them. In all likelihood the EPA will consider RGGI to be an appropriate compliance mechanism.

That means that if New Jersey rejoins RGGI, it can meet the forthcoming federal regulatory requirements, while reaping all of RGGI’s benefits: consumer energy savings; new and much-needed jobs for the Garden State; and a reduction in the kind of pollution that turbocharges our weather, making extreme events like like Hurricane Sandy more common. Not a bad bargain, if you ask me.

The 2014 cap for CO2 pollution under RGGI was lowered from from 165 million to 91 million tons, a reduction of 45 percent, which will help the region keep shrinking its carbon footprint. The move also “spurred a recovery after years of undersubscribed auctions clearing at the price floor and illiquid secondary market trading,” wrote Thomson Reuters Point Carbon in a recent analysis of worldwide carbon markets. This is one reason why carbon markets are flourishing in North America while more established programs flounder elsewhere.