May 26, 2011 - NJ to withdraw from greenhouse gas compact

New Jersey Governor Chris Christie has announced that he will pull New Jersey out of the nation's leading regional greenhouse gas cap-and-trade program.

The Maine State House, seen on a recent day of legislative debate over energy policy.

Since 2007, New Jersey has participated in the Regional Greenhouse Gas Initiative.  RGGI is the first market-based greenhouse gas regulatory program in the United States.  RGGI represents a cooperative effort by Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.  These ten states agreed to cap and reduce their electrical energy sector's greenhouse gas emissions by 10% by 2018.

While each state's legislature implemented its own version of the compact, the overall structure is that carbon allowances are auctioned off to the power sector.  Proceeds from these auctions are invested in energy efficiency, renewable energy, and other clean energy technologies.  The program has been a success in creating jobs, reducing greenhouse gas emissions from the power sector, and funding high-yield energy efficiency projects at businesses.

If New Jersey withdraws from RGGI, it will be the first state to end its participation in the program.  Other states are considering whether to stay in the compact.  For example, New Hampshire recently considered the question, and the Maine Legislature's energy committee recently voted to support a bill to withdraw from RGGI if enough other states withdraw first.  Under LD 793 as amended, Maine would withdraw from RGGI if the total carbon dioxide emissions budget for remaining states is less than 35,000,000 tons.  While New Jersey's departure alone would not shrink the program below Maine's proposed threshold, it would represent the first concrete erosion of RGGI's base.