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New Jersey is on the cusp of rejoining the Northeastern greenhouse gas trading program it spurned in 2011, which could be a boon for power companies such as Consolidated Edison Inc. and Public Service Enterprise Group Inc. that have utilities across the region.
The Garden State is expected to rejoin the Regional Greenhouse Gas Initiative sometime after electing a new governor in November. Both the Democratic candidate for governor, Phil Murphy, and the Republican candidate, Lt. Gov. Kim Guadagno, support rejoining the program that Gov. Chris Christie (R) abandoned six years ago.
New Jersey would be the third-largest source of carbon dioxide emissions in the trading program should it rejoin the initiative. That would mean a larger marketplace for power companies to buy and sell emissions allowances and give utilities more options for making the necessary emissions reductions, Marjorie B. Kaplan, associate director of the Rutgers Climate and Environmental Change Institute at Rutgers University, told Bloomberg BNA in an email.
“But perhaps even more importantly, it would send a signal to the RGGI states that New Jersey is serious about addressing carbon emissions and a signal outside of the region that the Northeast region is uniting on addressing carbon emissions,” she said.
Electric power companies are expected to have a relatively smooth transition if New Jersey takes the expected step of rejoining the trading program. The state’s electricity generators participated in 14 RGGI auctions between 2008 and 2011. There were 40 electricity generators required to purchase carbon allowances when the state exited the program, according to RGGI data.
The trading program requires power plants with 25 megawatts of capacity or more in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to purchase one allowance for each short ton of carbon dioxide they emit. The allowances are sold in quarterly auctions, with proceeds returned back to the states for use on renewable energy, energy efficiency and certain other program.
“We will support their decision and will work with the new administration to make sure that the transition back into RGGI goes smoothly,” Paul Rosengren, a spokesman for PSEG, told Bloomberg BNA in an Aug. 31 email.
Mike Donovan, a spokesman for Orange & Rockland Utilities Inc., which provides transmission service in the northern part of New Jersey, said its parent company, Consolidated Edison, has been a supporter of RGGI.
The market could grow even larger if Virginia also joins the initiative. Virginia is considering joining RGGI, as part of Gov. Terry McAuliffe’s (D) May directive that the commonwealth develop a trading-ready program to reduce carbon emissions.
Virginia, with a relatively large number of coal plants, would be second only to New York in terms of carbon dioxide emissions if it joined RGGI.
Christie withdrew his state from RGGI in 2011 and vetoed three bills from the Democratic legislature to rejoin the program. In his latest veto message July 13, he said the bill “is nothing more than an unnecessary, politically motivated tax increase.”
But his own lieutenant governor has taken a more moderate position on RGGI and other issues in her bid to win election in the largely Democratic state. Ricky Diaz, a spokesman for Guadagno, declined to elaborate on her position, but confirmed that she supports rejoining RGGI.
Murphy, the Democratic candidate, plans to immediately rejoin RGGI if elected, according to his campaign’s policy statement on climate change. He also supports developing a plan to eventually make New Jersey’s power sector carbon-free.
“Gov. Christie’s decision to pull out not only slowed progress on lowering emissions, but it also cost New Jerseyans tens of millions of dollars that should have been used to further reduce greenhouse gas emissions, increase energy efficiency, and improve air quality in urban communities,” the policy statement said.
The New Jersey power sector produced 16.7 million metric tons of carbon dioxide emissions in 2014, while the nine current RGGI states had 78 million metric tons of emissions that year, according to Energy Information Administration data.
Putting a price on carbon in the state would help recognize the value of nuclear generation in producing carbon-free electricity, according to Rosengren. About half the state’s electricity comes from nuclear power, he said.
New Jersey also would benefit from a new sources of revenues for renewables and energy efficiency because RGGI auction proceeds are returned to states for those types of programs, Rosengren said.
Though some utilities back rejoining the emissions trading program, other businesses fear the move will only drive up electricity bills.
“In order for businesses to remain competitive in our region, we need to control electric costs,” Bob Considine, a spokesman for the New Jersey Business & Industry Association, told Bloomberg BNA in an email.
“About 24 percent of our electric bill is government-imposed taxes and fees,” he said. “Increasing generation costs through cap-and-trade would only increase that portion on the ratepayers of New Jersey.”
To contact the reporter on this story: Gerald B. Silverman in Albany, N.Y., at GSilverman@bna.com
To contact the editor responsible for this story: Rachael Daigle at firstname.lastname@example.org
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