NJBIA In Action

Rejoining RGGI Brings Added Cost with Little Benefit

In Action on RGGI

Joining the Regional Greenhouse Gas Initiative (RGGI) has been a contentious issue since it was first raised in the early 2000s. New Jersey was one of the seven states that founded RGGI in 2005, but the state withdrew from the agreement in 2012 under then-Gov. Chris Christie. Once again, New Jersey has a new governor, and the state is poised to rejoin RGGI. 

NJBIA has opposed joining RGGI from the beginning. The program does not account for pollution from other states, such as Pennsylvania and Ohio, which contribute to New Jersey’s air quality. In addition, the costs of compliance would add to the price of power generated in New Jersey. And since the state has shown it can maintain low CO2 emissions rates without RGGI, little if any environmental benefit can be gained by joining it.

Cap-and-Trade Program. RGGI is the first mandatory market-based program that uses a cap-and-trade approach to reduce the emissions of greenhouse gases in participating states. The program places a cap on the amount of CO2 that power plants can emit by issuing a limited number of tradable CO2 allowances. Generators can buy or sell the allowances based on the carbon emissions they produce.

Today, nine states participate in RGGI – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

 Compliance Costs. Generators pass along the cost of purchasing CO2 emission allowances by increasing the price of the electricity. Six RGGI states are ranked within the nation’s top 10 highest retail electricity rates. New Jersey already has the 10th highest electricity costs in the nation.

Nearly one-fourth of the cost of New Jersey’s electricity can be traced to government-imposed taxes and fees. Joining RGGI will only add to that burden. The state’s commercial and industrial electricity consumers will be hit the hardest by any energy increases because they consume 64 percent of the state’s total electricity.

A major concern is that rejoining RGGI would incentivize dirtier generation to be dispatched in place of New Jersey’s cleaner fleet and artificially drive up the cost of power for no net environmental benefit.

Already a leader. New Jersey is already a leader in reducing greenhouse gases. The state has lower carbon emission rates than most RGGI states and the lowest carbon emission rates on the PJM electric grid. The state’s power generation plants collectively have the 10th lowest CO2 emission rate in the US. They are tied for the lowest in nitrogen oxide and tied for third in sulfur dioxide emission rates.

New Jersey has committed to increasing the amount of renewable energy it uses. To date, it is the fifth largest user of solar energy in the nation, and has shut down two major coal plants. Rejoining RGGI is unnecessary.

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