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Ray Cantor Vice President Government Affairs

On behalf of our member companies that provide more than 1 million jobs in the state and make the New Jersey Business & Industry Association the largest statewide business association in the country, we would like to offer comments on the state of New Jersey reentering Regional Greenhouse Gas Initiative (RGGI). 

NJBIA has long opposed New Jersey’s return to RGGI as we believe it will lead to higher electricity costs that will negatively impact New Jersey’s competitiveness, without providing any environmental benefit. It is merely a tax on New Jersey ratepayers on top of the many other energy and industry taxes our members are forced to pay. 

It is not just our opinion that RGGI is ineffective in reducing carbon emissions.  According to a May 16, 2017 report by the Congressional Research Service, “from a practical standpoint, the RGGI program’s contribution to directly reducing the global accumulation of GHG emissions in the atmosphere is arguably negligible.”  Rather, the report finds, that emission reductions were attributable largely to switching from dirtier coal and oil to clean natural gas generation.  These changes were market driven, and had no relation to the RGGI program or tax.

Even with the recent reduction in the emissions cap, RGGI is unlikely to have a positive impact on carbon emissions from electric generation in New Jersey.  New Jersey, as detailed below, is already one of the nation’s cleanest electricity generation sectors relying almost exclusively on clean natural gas and nuclear power, as well as some renewables.  Any further reduction in carbon emissions from this sector will likely come from the closing of these clean electric facilities, or a shift in facility generation, and “leakage” to dirty energy from Pennsylvania.  Pennsylvania is not a RGGI participant but is connected to New Jersey through the PJM electrical grid.   The RGGI program does not take this leakage into account.  It is a fact that should not be ignored, as it is in the RGGI program and this proposal.  RGGI, in all likelihood, can only make our electric generation sector more carbon dependent, not less.

RGGI is a multi-state program that establishes a regional cap on carbon dioxide (CO2) emissions and requires fossil fuel power plants to obtain an allowance (i.e. tax) for each ton of CO2 emitted annually. Power plants comply by purchasing allowances, set at a minimum rate of taxation, from quarterly auctions, other generators within RGGI, or through projects that offset CO2 emissions. The state can presumably use these tax revenues to invest in programs that will reduce Greenhouse Gas emissions but historically has diverted these funds for other purposes as well as other clean energy funds.  To the extent these past tax revenues have been used in New Jersey for their intended purposes, they have had a negligible impact on carbon emissions, if any.  Merely dedicating these funds in regulations to various purposes cannot and does not guarantee they will not be diverted in the budget process nor will they have a significant impact on emissions even if used as intended.  Moreover, these tax revenues are in addition to the many clean energy taxes and mandates that were adopted subsequent to the State’s initial entry into RGGI.

Under Governor Christie Administration, New Jersey withdrew from RGGI because the data showed that it was an ineffective way to curb emissions and thought it did nothing more than tax our citizens and businesses. Last year, Governor Phil Murphy signed executive Order 7 directing the Department of Environmental Protection (DEP) and the Board of Public Utilities (BPU) to take all necessary regulatory and administrative measures to ensure New Jersey’s timely return to full participation in the Regional Greenhouse Gas Initiative (RGGI).

But New Jersey is already a leader in curbing emissions and producing clean power. The RGGI program does not account for other non-RGGI, upwind states, such as Pennsylvania and Ohio, which contribute to New Jersey’s air quality.

Despite being a highly industrialized state, New Jersey also has lower carbon emission rates than most (7 of 9) RGGI states and has the lowest carbon emission rates on the PJM electric grid.

These positive results are in part due to New Jersey’s in-state power generation that comes from carbon-free nuclear energy and the replacement of coal with cleaner natural gas, renewable energy and energy efficiency.  If all other states had as clean an electric energy sector as New Jersey’s there would not be a need for a cap-and-trade program.

New Jersey’s electric generation energy sector is already, by far, the cleanest in the PJM Region. Our sulfur dioxide (SO2), nitrogen oxide (NO2) and carbon dioxide (CO2) emission rates are among some of the lowest in the country, and yet we already have the 10th highest retail electricity costs in the nation. But despite these positive moves, there are negative environmental impacts affecting New Jersey that is out of the state’s control. New Jersey is downwind from Pennsylvania and Ohio, two states that are not a part of RGGI and have significantly higher emission rates of Nitrogen Oxides (NOx), Sulfur Dioxide (SO2) and Carbon Dioxide (CO2).

According to AQES based on the latest emissions data (2015), New Jersey was tied for the lowest utility Nitrogen Oxides (NOx) emission rate in the United States, tied for the third lowest Sulfur Dioxide (SO2) emission rate, and was the tenth lowest in Carbon Dioxide (CO2) emission rates. 

This means that, whether or not New Jersey rejoins RGGI, the State will still have a certain level of emissions that is out of its control. While rejoining RGGI will not improve New Jersey’s air quality it would increase electricity costs throughout the state. 

In New Jersey, 24% of a ratepayer’s electric bill are government imposed taxes and fees. 

To put the potential rate increase into perspective, according to the most up-to-date annual averages from the USEIA (2015), New Jersey is currently ranked 10th in the nation for highest retail electricity costs.  And in September 2017, New Jersey ranked 12th in the nation for highest retail electricity costs.  Reentering RGGI and re-imposing the RGGI tax will only drive up these costs even further and put more burdens on New Jersey’s businesses and residents.

For these reasons, NJBIA remains opposed to New Jersey’s return to RGGI as we believe it will lead to higher electricity costs and will negatively impact New Jersey’s competitiveness, without providing any environmental benefit. 

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