New Jersey is proposing a new state carbon emissions trading program, which means it will rejoin the Regional Greenhouse Gas Initiative (RGGI). RGGI is a cooperative effort among northeastern states to reduce carbon emissions from the electric power sector through allowance trading. New Jersey previously left the initiative in 2011. RGGI expansion promises several benefits, such as improved market efficiency, increased competitiveness, and lower carbon reduction costs. We submitted comments to both RGGI and New Jersey on how to best reintegrate the state.
New Jersey will increase total RGGI-regulated emissions by almost 30%. As a result, the state’s carbon cap will have a substantial effect on the total number of emissions allowances available at each RGGI auction. It is important that RGGI carefully assesses the effects of New Jersey’s initial allowances level. It should be set below business-as-usual emissions and should decrease each year to account for the state’s plans to become less carbon-intensive. We submitted comments to RGGI providing suggestions for how New Jersey can best reduce emissions as a member of the regional initiative.
We also submitted comments to the New Jersey Department of Environmental Protection (DEP) making similar recommendations for how the state can maximize the benefits of its carbon dioxide trading program under RGGI. DEP must set its initial allowances lower than state emissions levels for 2020, and continue to do so as the state pursues further emissions reductions in years 2021-2030. In the future, offsets will be an important aspect of the trading program, and New Jersey needs to ensure the offset projects create verifiable carbon reductions. Our comments also suggest that DEP apply the social cost of greenhouse gases metric in a full cost-benefit analysis of the proposed carbon dioxide trading program.