Oct. 10 (Bloomberg) -- What a difference a year makes.
In the aftermath of Hurricane Sandy, which blew ashore last Oct. 29, New Jersey residents have warmed up to the threat that climate change poses to their beach-loving state and want politicians to address it more boldly.
That’s one reason state lawmakers are holding a hearing today about rejoining Regional Greenhouse Gas Initiative Inc.’s carbon-trading program, according to Upendra Chivukula, the Democratic chairman of the State Assembly’s Telecommunications and Utilities Committee. His panel is evaluating a bill that would require the state to return to the system that New Jersey helped create in 2005.
The potential roadblock here is Republican Governor Chris Christie. Three times he’s used his executive powers to keep the state out of RGGI, arguing that it costs too much and does little to curb climate change. The $30 billion pummeling New Jersey took at the hands of Sandy has been sobering to politicians of all stripes.
With the governor facing re-election next month in a state where a majority of citizens say climate change will bring on more extreme storms, Chivukula said Christie may be won over.
“The science is there, but Christie refuses to accept it,” Chivukula, who is also a deputy speaker of the Assembly, said in an interview. “We have to convince him or go around him. We’re coming up to the first anniversary of Sandy, and we’ve seen the economic damage that doing nothing causes. We’ve done nothing to prepare for the next storm.”
RGGI was created in 2005 and operates a carbon cap-and-trade system that limits fossil-fuel emissions for electric utilities in nine states from Maine to Maryland. Christie announced plans to pull New Jersey out of the group in May 2011, calling it a failure. Since then, he’s twice vetoed resolutions from the legislature that would mandate a return.
In tours of the damages along the coastline in the past year, Christie has said there’s no evidence linking Hurricane Sandy to global climate change. Michael Drewniak, the governor’s spokesman, didn’t reply to e-mail and voice-mail messages.
Support for action on the environment is growing in New Jersey along with concern about the climate. Almost two-thirds of the state’s residents blame recent storms including Hurricane Sandy on global warming, and more than half are more likely to believe in it because of weather-related damage, according to a Rutgers-Eagleton poll of 923 people conducted in April.
In a report released last month, the Intergovernmental Panel on Climate Change found that global warming will probably mean fewer, but more intense, hurricanes. Scientists continue to debate whether any single weather event can definitively be linked to climate change.
Michael Doherty, a Republican state senator, doubts that Christie will embrace RGGI.
“The bold action was in getting us out of RGGI, and he’s not going to reverse himself,” Doherty said in an interview. “I don’t think he’s the kind to reverse course.”
Carbon permits auctioned under RGGI have raised $1.4 billion for clean energy investments over the past five years. That’s a fraction the $61 billion traded last year in a global carbon market that’s largely centered in Europe. President Barack Obama tried and failed to bring cap-and-trade to the U.S. in his first term, and has since focused on regulating emissions from power plants through the Clean Air Act.
In the absence of a federal program, states in the Northeast and California decided carbon markets may be the cheapest way to encourage utilities to clean up emissions.
The recession sent carbon markets worldwide into disarray. As the economy lost steam, factory production fell and emissions dropped below the limits imposed under cap-and-trade. In Europe, the cost of carbon emissions has plunged more than 80 percent since the middle of 2008, and politicians are squabbling about how to clear up a glut of permits.
Part of RGGI’s appeal is that it’s working -- arguably better than a similar program in place across Europe.
Emissions in the nine states under RGGI fell 13 percent to 92 million tons of carbon dioxide last year. That was 73 million tons below the cap imposed under the system. The system’s administrators in New York acted in February to clear the surplus by lowering the amount of available emissions permits by 45 percent, starting next year.
Prices for permits in December, the auction preceding the February changes, sold at $1.93, the minimum allowed. That’s increased 38 percent to $2.67 in the latest auction on Sept. 4., exceeding the current mandated floor of $1.98. Each permit gives a company the right to emit one ton of carbon dioxide, comparable to the amount put out by a car burning 102 gallons (386 liters) of gasoline.
“When Christie dropped out of RGGI he said it was because it was ineffective,” said Dale Bryk, director of the energy and transport program at the Natural Resources Defense Council in New York. “RGGI has made a lot of improvements since then. He may have softened his stance. There’s good reason for legislators to change their mind if they didn’t support it before.”
Retail power prices in RGGI’s member states declined 10 percent on average from 2008 to 2012, showing that putting a price on carbon emissions hasn’t led to higher utility bills, said Peter Shattuck, director of market initiatives at ENE, a clean-energy research non-profit group.
“The revenues that states get from the auctions get plowed back into energy-efficiency investments,” Shattuck said in an interview today. “That creates a virtuous cycle that actually reduces costs over time.”
Christie faces re-election Nov. 5, and held a 64 percent to 30 percent lead over challenger Barbara Buono in a Sept. 19-22 Quinnipiac University survey of 1,249 likely voters.
Buono, the Democratic majority leader in the state senate, supports returning to RGGI, according to David Turner, her communications director.
“Not only was it good for the economy, it helped fight against climate change,” Turner said in an e-mail.
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