NY State defends RGGI raid, says cash to fund new CO2 cuts

Published 18:03 on April 9, 2015  /  Last updated at 13:47 on November 16, 2015  /  Americas, US  /  No Comments

New York State has defended a decision to pluck $41 million from its RGGI allowance revenue pot and put it towards the general budget, a move that the former acting head of the state’s Department of Environmental Conservation said could threaten the entire north-eastern regional carbon market.

New York State has defended a decision to pluck $41 million from its RGGI allowance revenue pot and put it towards the general budget, a move that the former acting head of the state’s Department of Environmental Conservation said could threaten the entire north-eastern regional carbon market.

Peter Iwanowicz, now head of lobby group Environmental Advocates of New York, earlier this week said the move by Governor Andrew Cuomo may invite climate change denier groups and other opponents of the scheme to challenge it in court as an illegal tax, which could lead to RGGI’s eventual unravelling.

But a spokesman for the New York government on Thursday said that “every penny” of that $41 million, an amount he said was raised in addition to expected proceeds thanks to the governor’s decision to support decreasing RGGI’s overall emissions cap, would be directed towards carbon-cutting causes.

“We are proposing to use this funding, intended to fight climate change, to fund programmes intended to fight climate change. It’s perplexing that some people who call themselves environmentalists would oppose this because numbers are moving on a ledger,” he said.

Funds raised through the sale of RGGI allowances to utilities are meant to be invested in carbon-cutting projects. The market’s nine state participants opted to reduce the scheme’s CO2 cap last year in a bid to cut emissions beyond targets that were being easily met.

“We backed a reduction of the cap, and that led to an increase in revenue. There were no concerns about underfunding existing RGGI programmes, so we want to invest it in other programmes with the same goals as RGGI,” the spokesman told Carbon Pulse.

He said the initiatives include tax credits for residential solar installations, and investments in clean heating fuel, biofuel production and electric car recharging stations, amongst other programmes.

“These are all programmes that environmentalists would support, and we’re happy to have these because we have excess funds,” the spokesman added.

BUDGET BORROWING

Iwanowicz said RGGI could be vulnerable because it was adopted by the governor at the time rather than passed by the state’s legislature, as all taxes must be.

New York’s RGGI permit sales fund has been tapped by the state’s governor once before. In 2009, $90 million was taken to help balance the budget, but that move was legally framed as a loan, which has yet to be repaid.

Conservative group Americans for Prosperity, which was founded by billionaire oil tycoons the Koch Brothers, tried to sue the programme in 2011 but the suit was rejected by a New York court.

In 2013, California Governor Jerry Brown borrowed $500 million from his state’s carbon permit sales fund to help plug holes in the budget. $100 million of that has since been repaid, with the balance earmarked for California’s high-speed rail project.

President Obama has said RGGI could act as a model for states under his Clean Power Plan, or for a future nationwide cap-and-trade scheme.

By Mike Szabo – mike@carbon-pulse.com