Columinist Tom Borelli wrote glowingly about the Value Added Tax in Townhouse.com a year and a half ago. How is the Regional Greenhouse Gas Initiative (RGGI) doing at this juncture? We don’t hear after it was enacted. However, many business owners are upset. They feel it is colossal failure, despite the lies coming out of each state’s publicity department and RGGI itself.
While the prospects for passing a federal cap-and-trade law in the U.S. Senate have all but evaporated, this economically-damaging energy policy is alive and well in the states.
Ten northeastern states are currently implementing a regional cap-and-trade system known as the Regional Greenhouse Gas Initiative (RGGI). Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont are mandating that utilities reduce their carbon dioxide emissions 10 percent by 2018.
Examination of the RGGI experience unmasks cap-and-trade as a con game from progressive governors to transfer taxpayer money to bloated state coffers and to special interest groups. Initiated in 2003 when then-Governor George Pataki (R-NY) sent a letter to regional governors calling for states “to develop a strategy that will help the region lead the nation in the effort to fight global climate change,” RGGI became the first program in the nation to use cap-and-trade to reduce greenhouse gases.
Under RGGI, participating states require utilities to purchase a permit or an allowance for each ton of carbon dioxide the power plant emits. Utilities buy carbon dioxide allowances in an auction and the revenue from the sale goes to the state. If a utility’s emissions exceed its allowance, the power plant must purchase additional carbon permits or it can sell its excess allowances. From 2009 to 2014, emissions are capped at 188 million tons annually. In 2015, the amount of allowance available for auction is reduced 2.5 percent for the next four years to meet the 10 percent reduction emission target.
Not surprisingly, the states’ proclaimed intention to use the revenue “to invest proceeds in consumer benefit programs to build a clean energy economy” have gone off-track.
Some states are very unhappy with this VAT approach to taxation for greenhouse emissions. Opponents say it is driving up electricity rates for local consumers. In reality, says RGGI, most ratepayers probably haven’t noticed any substantial increase in their electricity bill. RGGI has resulted in a 36-cent increase in the average household energy bill, according to Public Service of New Hampshire. What about large businesses, which may consume considerably more energy than the average homeowner? “We’ll just say when something impacts the largest residential user by pennies or dollars over the course of the month, you can add a couple of zeros onto that when you talk about the impact it has had on BAE systems,” a spokesperson for the state’s largest manufacturer recently told NHPR. Translation, BAE systems monthly energy bill has increased by anywhere between a few dollars and a few hundred dollars as a result of the Regional Greenhouse Gas Initiative. Not exactly a specific figure.
Indeed, the text of HB 519 acknowledges that, “There has been no credible economic analysis of the costs associated with carbon dioxide emissions reduction mandates and the consequential effect of the increased costs of doing business in New Hampshire.” Despite acknowledging this key fact, the bill’s authors go on to make a number of assumptions about the RGGI’s impact on New Hampshire’s economy. They say the state’s participation in the cap and trade program has “increased the cost of doing business, pushed companies to do business with other states or nations, and increased consumer costs for electricity, fuel, and food.” Notably, they do so without providing even a single citation or statistic to back up these claims.
Since 2008, the sale of greenhouse gas emissions allowances emissions through quarterly RGGI auctions has raised millions of dollars used to support energy efficiency and conservation projects in New Hampshire. Many of these programs benefit ratepayers directly. For example,RGGI funds helped launch the University of New Hampshire’s New England Carbon Challenge back in 2009. This program provides ratepayers with free information they can use to conserve energy at home, helping residents save an estimated $151,797,336 on their energy bills.
From a strictly cost benefit analysis, it seems like the Regional Greenhouse Gas Initiative is a winner for the state of New Hampshire, proponents say. This is a state that enjoys the fourth lowest unemployment rate (5.5%) in the nation. (This is an old figure). Offsetting that is evidence that it increases costs for businesses, which in turn affects homeowners and jobs. If that is true, which it seems to be, then why have RGGI in the first place?