Lawsuit Filed Against New York’s Participation in RGGI

by Brian McGraw on June 28, 2011

in Blog

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The Competitive Enterprise Institute announced today that it is acting as co-counsel in a recently filed lawsuit in the state of New York against the state’s participation in the Regional Greenhouse Gas Initiative (a state cap and trade program). The lawsuit has been filed on behalf of small business owners in New York State who have faced increased electricity costs, and can be read here (.pdf). The American Spectator has a short write up here. The basis for the suit relies on the fact that elected officials in New York enrolled in the RGGI without approval by the state legislature. New York is the only state involved with RGGI who entered the initiative without approval from its legislature. As RGGI has forced electricity generators to purchase annual carbon allowances, it has raised the price of electricity for New York residents, effectively acting as a tax on electricity producers (those who produce more than 25 megawatts annually) in New York.

As far as its success or failure, the RGGI has faced many of the same problems similar programs have faced around the world. A very low allowance price for carbon will result in very little actual emissions reductions. Much of the ‘on paper’ emissions reductions will be made up by increased emissions in bordering states, as energy intensive industries relocate and electricity producers import energy from out of state. State legislators have raided the funds raised by RGGI and used them for unrelated purposes (the stated goals of RGGI are to use the funds to spur development in energy efficiency measures and increased production of non carbon emitting energy sources). In New York alone,$90 million of the ~$320 million raised by RGGI has been redirected towards budget shortfalls.

New Jersey recently signaled its intention to end its participation. Similar efforts are underway in New Hampshire (though they face a threatened veto by the Governor).



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