New Jersey Governor Chris Christie on Thursday announced he would withdraw his state by the end of the year from the Regional Greenhouse Gas Initiative (RGGI)—a cap-and-trade carbon trading system that involves 10 Northeastern states—because the “program is not effective in reducing greenhouse gases and is unlikely to be in the future,” he said. The governor also said the state would not permit any new coal plants and that it would shut down “dirtier” intermediate and peaker plants.

Christie said that an “extensive review” with the state’s Department of Environmental Protection (DEP) and others in his administration revealed that RGGI was ineffective because “allowances were never expensive enough to change behavior as they were intended to and ultimately fuel different choices.”

When RGGI began, the industry projected that the cost of allowances would eventually be as high as $20 to $30 dollars a ton compared to the current price of less than $2 per ton, at which point the cost would have been sufficient to affect a decision of energy producers to choose lower carbon fuels or more efficient production technologies, he said.

“This is not the case. It has not happened. Trends indicate the cost of the allowance will continue to be at the floor reserve price and there will be no significant secondary market for allowances. In other words, the whole system is not working as it was intended to work. It’s a failure.”

The Republican governor said another reason for the withdrawal was that New Jersey’s carbon emissions were already below goals for 2020 set out in New Jersey’s Global Warming Response Act, the legislation that permitted the state to participate in RGGI. Also, the state had enacted laws that provided market incentives for wind, solar, and “instate natural gas generation,” he said. “Any benefits that the RGGI tax may have had are miniscule.”

Christie said that RGGI did nothing more than “tax electricity, tax our citizens, tax our businesses, with no discernable or measurable impact upon our environment.” It was also unfair, he claimed: “Because states such as Pennsylvania are not RGGI members it’s just possible that by making the cap too stringent clean New Jersey plants would be forced to close only to be replaced by power from dirty Pennsylvania coal plants,” he said.

“It doesn’t make any sense environmentally or economically and the continuation of this tax makes no sense for my efforts and the Lieutenant Governor’s continued efforts to make New Jersey a more business-friendly environment and a place where private sector jobs can continue to be created.”

RGGI to Continue Auction

RGGI said in a statement on Thursday that it would continue its 12th carbon allowance auction as scheduled on June 8 despite New Jersey’s announced withdrawal. “With each state exercising its independent authority to achieve low-cost greenhouse gas emissions reductions, the RGGI market-based program has widespread support across the region and will continue,” the organization said.

Last month, three states separately passed measures to continue participation in the initiative. States that are active members of RGGI are: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. The system affects fossil-fueled power plants that have a capacity of 25 MW of more.

No New Coal

In a speech announcing the withdrawal, the governor said he stood by previous statements that “climate change is real and it’s impacting our state,” adding that “there’s undeniable data” that [carbon dioxide] levels and other greenhouse gases in our atmosphere are increasing. “When … over 90% of the world’s scientists who have studied this [state] that climate change is occurring and that humans play a contributing role it’s time to defer to the experts,” he said.

Coal was a “major source” of carbon emissions, which is why the state would “no longer accept coal as a new source of power in the state,” and it would work to shut down “older dirtier, peaker and intermediate plants that emit high greenhouse gases,” Christie said.

The governor said New Jersey was working instead to become a leader in offshore wind production. “Last year I signed the Offshore Wind Economic Development Act to provide financial assistance and tax credits to businesses that construct, manufacture, and assemble water access facilities that support offshore wind products,” he said.

“The DEP has completed the first of its kind, two-year baseline study that identifies optimal sites for offshore wind turbines. This study combined with the strong policies I’ve spoken about is going to be instrumental and has been instrumental at the Department of the Interior recognizing New Jersey in its Smart from the Start program as a wind energy area.”

Expedited federal permitting will speed the implementation of 1,100 MW of wind turbines. Interest in developing the turbines was already surging, the governor claimed. “Since the call for interest last month we will be receiving applications for more than 3,000 MW of projects within the next two weeks.”

Sources: POWERnews, RGGI, Gov. Chris Christie