Chris Christie Gets It Wrong On Cap-and-Trade Emissions Reduction Plan


When New Jersey's Chris Christie abruptly pulled his state out of a regional greenhouse gas reduction agreement, his supporters hailed it as another example of bold leadership by the pugnacious governor. Unfortunately, a new study shows just how wrong Christie was in his decision: the Regional Greenhouse Gas Initiative (RGGI), the program branded by Christie as "not effective" and "gimmicky," actually reduced greenhouse gas emissions among its nine member states by an average of 23% in its first three-year period from Jan. 1, 2009 to Dec 31, 2011.

RGGI is designed to reduce carbon dioxide emissions from power plants in the nine member states located across New England and the Mid-Atlantic regions; CO2 emissions are considered to be one of the major sources of the greenhouse gases that are contributing to global climate change. RGGI is a cap-and-trade program. Each power plant within the RGGI plan is given an emissions target – a level of CO2 exhaust from their operations that they are not suppose to exceed. To do this, plants invest in cleaner-burning fuel technologies or “scrubbers” that physically remove CO2 from plant exhaust at the smokestack. Plants that are “cleaner” — whose emission levels already fall below their target amount — can sell the difference between their actual emissions level up to their target level to another plant whose emissions are exceeding their target. This has the effect of reducing overall emissions levels while providing a market incentive to power plants to adopt cleaner technology. Since this cleaner tech can be commoditized, the result is a “cap-and-trade” emissions reduction program.

Despite cap-and-trade being a market-based approach to limiting greenhouse gas emissions, the Republican Party has been staunchly opposed to programs like RGGI since such schemes were first proposed, a position amplified by conservative lobbying groups like Americans for Prosperity, a group funded by the Koch Brothers, who themselves are personally opposed to cap-and-trade programs. By pulling New Jersey out of RGGI, Christie was polishing his bona fides with the Republican establishment. Unfortunately for the governor, RGGI has actually done quite a good job at reducing emissions among its member states, despite Christie's claims to the contrary about the program last year.

Predictions of RGGI-driven economic doom and gloom have also failed to materialize. Americans for Prosperity predicted that participation in RGGI would drive up electricity prices by as much as 90%; the true impact of RGGI on electricity prices has in fact been negligible. At the same time, a study by the Analysis Group indicates that RGGI actually added $1.6 billion in value to the participating states and laid the framework for lower energy prices for consumers through RGGI-inspired efficiency upgrades at power plants. A similar, though more limited, study by the group Environment New Jersey issued their own study on the affects of RGGI, which indicated that RGGI member states saw their emission level fall by 20%, while their having a faster growth rate in their Gross Domestic Product than did the rest of the nation; though the Environment New Jersey study was limited only to the first year of RGGI.

Rather than saving New Jersey from the negative economic effects of RGGI, Christie's decision to unilaterally withdraw from the compact will wind up costing the state money. In addition to the theoretical revenue growth suggested by the Analyst Group and Environment New Jersey, the state will have to spend real money defending itself from lawsuits filed by the latter group and the Natural Resources Defense Council charging that Christie acted illegally since he did not provide advanced notification and a chance for public comment in his decision to withdraw from RGGI – requirements under New Jersey law for such an action.

And whether Christie will admit it or not, the early evidence indicates that a cap-and-trade program like RGGI is an effective, market-based way of reducing greenhouse gas emissions.