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Christie to Pull New Jersey Out of ‘Gimmicky’ U.S. Northeast Carbon Market

New Jersey Governor Chris Christie said he plans to pull his state out of the U.S. Northeast’s carbon market by year-end.

The 10-state Regional Greenhouse Gas Initiative, a cap-and- trade program that regulates carbon-dioxide emissions, is “nothing more than a tax on electricity, a tax on our residents and on businesses with no discernible effect on our environment,” Christie, a 48-year-old Republican, told reporters in Trenton today.

“We remain completely committed to the idea that we have a responsibility to make the environment of our state and world better,” Christie said. “We’re not going to do it by participating in gimmicky programs that don’t work.”

The market, similar to a cap-and-trade system backed by President Barack Obama that failed in Congress last year, requires power plants to pay for carbon dioxide released from their smokestacks. Since 2008, the program said its 10 participants, including all six New England states plus New Jersey, New York, Delaware and Maryland, have raised more than $860 million by auctioning pollution rights, or allowances.

‘A Failure’

New Jersey has already reached reduction targets for greenhouse-gas emissions, and the program has failed to accomplish its goal of motivating companies to cut pollution, Christie said. The state won’t allow the construction of new coal-fired power plants and will seek to increase solar-and wind-energy production, he said.

“The whole system did not work as intended and was a failure,” he said. “The future of New Jersey is green energy.”

The decision followed discussions with scientists, academics and government leaders on the causes of global warming, Christie said. He said scientific consensus has since convinced him that people are “at least part of the problem.”

The regional carbon market has created $2.3 billion in economic activity and 18,000 jobs, said Jeff Tittel, director of the Sierra Club’s New Jersey chapter. “The only science involved in this decision was political science,” he said.

Campaign Support

The move puts Christie at odds with the New Jersey Environmental Federation, which was the state’s only major conservation group to endorse him in his 2009 run against Democrat Jon Corzine, a supporter of the initiative. David Pringle, campaign director for the group, said the move may cost Christie an endorsement should he run again in 2013.

“Clearly we have a major disagreement here -- the biggest one to date,” Pringle said in an interview.

Almost two-thirds of the money states have raised selling carbon-dioxide allowances is set aside for energy-efficiency and renewable-energy projects, according to a Feb. 28 report from the group. The most recent auction in March brought in $83.4 million, according to a statement from operators.

“This is a disaster,” said Senator James Whelan, a Democrat from Atlantic City. “We used to say clean energy was the future. It’s right now. And where is the money going to come from to do it?”

Republican lawmakers in states including New Hampshire are trying to break up the carbon-trading program, which they say is an energy tax that increases the cost of electricity. Christie’s decision will bolster the repeal effort elsewhere, said New Jersey Senator Michael Doherty, a Republican from Warren County who sponsored a bill to end the state’s participation.

U.S. Declined

“Hopefully the whole thing falls apart,” he said in a telephone interview. “The federal government didn’t do it, so why should 10 states hamstring themselves?”

New Hampshire’s Republican-led House of Representatives passed a bill in March to abandon the regional carbon market.

Granite State Governor John Lynch, a Democrat, has threatened to veto the bill. The Senate, run by Republicans, voted May 11 to stay in the program unless other states back out.

The cap-and-trade system “has widespread support across the region and will continue,” Regional Greenhouse Gas Initiative Inc., the group that administers the program, said in a statement.

Maryland Governor Martin O’Malley and Vermont’s Peter Shumlin, both Democrats, said Christie was making a mistake and rejected his assertion that the program is ineffective. The effort has reduced carbon-dioxide emissions by the equivalent of taking 3,500 cars off the road and has produced $162 million in his state alone, O’Malley said.

‘Important’ Program

The carbon market “represents an important multistate effort to address climate change at a time when consensus eludes Congress,” O’Malley said in a statement. “Governor Christie is simply wrong when he claims that these efforts are a failure.”

December-delivered carbon allowances from the Northeast’s cap-and-trade program rose 1 cent today to $1.93 each on the Chicago Climate Futures Exchange. Each allowance represents 2,000 pounds (907 kilograms) of carbon dioxide.

The U.S. Environmental Protection Agency also urged Christie to reconsider his decision.

“This is a disappointing step given New Jersey’s legacy of leadership on environmental issues,” Brendan Gilfillan, an EPA spokesman, said in a statement.

The Natural Resources Defense Council, a New York-based environmental group, said an opinion poll showed 61 percent of New Jersey residents “would support a program that curbed climate change while also creating jobs.” The group released the survey results before Christie’s announcement.

‘Popular’ Effort

The program is “hugely popular” and its supporters will pressure Christie to reverse course, Dale Bryk, the council’s energy director, said by telephone. “This is just the beginning, not the end, of the story in New Jersey,” she said.

Some states, including New Jersey, have used part of the proceeds to plug budget holes. Last year, Christie sought $65.2 million from carbon-allowance auctions to help close a $10.7 billion deficit.

Christie’s announcement today won praise from the New Jersey Business & Industry Association, which represents 22,000 employers in the state.

“High energy costs, like taxes, just make New Jersey a tougher state in which to do business,” Philip Kirschner, president of the Trenton-based group, said in a statement. “This is not a partisan issue, it’s just a bad deal for New Jersey.”

Not so, according to Assemblyman John McKeon, a West Orange Democrat who leads the Environment and Solid Waste Committee. He said he will take “whatever legislative steps that may be possible to prevent this from happening.”

“Governor Christie has in one wrong-headed decision decimated New Jersey’s clean-air and energy-advocacy efforts,” McKeon said in a statement. “This day will go down in history as the one in which New Jersey ceded its standing as a leader in environmental-protection efforts.”

To contact the reporters on this story: Terrence Dopp in New Jersey at tdopp@bloomberg.net; Simon Lomax in Washington at slomax@bloomberg.net

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