New Hampshire poised to pull out of regional cap and trade system

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In 2006, the New York State Department of Environmental Conservation (DEC) announced the creation of the Regional Greenhouse Gas Initiative (RGGI), an initiative championed by then-Republican Gov. George Pataki. Less than five years later, 10 states had signed onto the cap and trade plan as a way to reduce emissions. But now, one of them may be about to withdraw, citing budget and economic concerns.

On Wednesday, the New Hampshire House passed a bill that would repeal the state’s membership in the RGGI. The bill was championed by its Republican co-sponsors who called the cap and trade program a “stealth tax” on energy consumers. It is expected to easily pass the state House and quite possibly the state Senate within the next month.

“The reasons used to promote RGGI were based in false, exaggerated and highly politicized science,” state Rep. Andrew Manuse, one of the bill’s co-sponsors, told The Daily Caller. “Even if you believe carbon dioxide causes climate change, there is no scientific evidence to support the idea that RGGI does anything to solve this alleged problem.”

The move by state lawmakers in New Hampshire is a blow to environmental advocates who have pointed to the RGGI as a model example of a nationwide cap and trade system.

“When we started, we were hoping that there would be a larger-scale federal program in the future,” Laurie Burt, commissioner of the Massachusetts Department of Environmental Protection, said in 2009.

In some respects, that strategy worked. In that same year, Democratic Reps. Henry Waxman of California and Edward Markey of Massachusetts used the RGGI as a blueprint for their proposed cap and trade legislation.

But now, Manuse and his Republican colleagues argue that New Hampshire’s membership in the RGGI raises energy costs, taxes energy producers and does nothing to stimulate clean energy projects.

“RGGI was a bad idea based on political conjecture and misinformation that has stymied economic growth and hindered the market approach to energy efficient and economically sustainable solutions,” said Manuse.

“Eliminating RGGI will lower energy costs, which will help all businesses and families in our struggling economy,” he added.

Moreover, in recent months, the money RGGI member states have earned through the auction of carbon credits hasn’t even gone toward clean energy projects like lawmakers intended. Instead, the money is being used to pay down state deficits and balance the budget.

In New Hampshire, legislators voted to put their earned $3.1 million from selling carbon credits toward paying down the deficit. In New York and New Jersey, the states took $90 million and $65 million, respectively, from their cap and trade funds to pay off debt.

But for New Hampshire or any of the ten member states to withdraw from the RGGI is easier said than done. Any prospect of withdraw raises the question of what will happen to all those carbon credits New Hampshire businesses purchased because of the RGGI program.

“The same thing that happens to any business or investor that buys into a bad idea,” Manuse bluntly replied when asked by TheDC.

Chris Horner of the Competitive Enterprise Institute took an even harder line with businesses that could soon find themselves out millions of dollars if their credits suddenly become worthless if New Hampshire withdraws from the RGGI.

“So we’re to concern ourselves with the folks who tried but failed with their Enron-designed scheme…just because reality caught up with them too quickly for windfall to materialize?” asked Horner.

“They designed a scheme with some buddies in government to line each other’s pockets at the ratepayer’s expense,” he added. “What about the ratepayers who underwrote this scheme while it was in place? We should be talking about refunds, not weeping about the poor rent-seekers whose scheme failed to hit paydirt.”

New Hampshire, however, isn’t alone in curbing environmental programs to combat worsening state deficits. In Maine last month, newly-elected Republican Gov. Paul LePage proposed rolling back 63 different environmental regulations, and he has voiced support for removing his state from the RGGI. In New Mexico, newly-elected Republican Gov. Susana Martinez angered environmentalists by abruptly firing all members of the state’s Environmental Improvement Board, and threatening to withdraw from the Western Climate Initiative – a cap and trade system similar to the RGGI.

The RGGI has not yet returned requests to comment.

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