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Regional Greenhouse Gas Initiative

George Gantz. This issue has been updated by Citizens Count Editors.

Global climate change is arguably the biggest and most difficult environmental challenge of the 21st century—the outcome may determine the ecology and climate of the Earth for millennia. The problem is big and the suggested solutions complex, potentially involving geo-political cooperation of unprecedented scale and technical/economic transformations affecting the way of life of every human being on the planet.

On the other hand, there are those who dispute the science, or the accuracy of the climate predictions, or the root causes of observed climate change, or the need for immediate action, or the types of action needed, or whether any action will do any good.

Assuming there is a problem, how do you even begin to address it? In New Hampshire, the approach is a four letter word—RGGI, the Regional Greenhouse Gas Initiative, the first cap-and-trade program for greenhouse gases in the U.S. RGGI is an agreement among nine* Northeastern and mid-Atlantic states to reduce global greenhouse gases. In New Hampshire, enabling legislation was passed in 2007.

What is 'cap and trade'?

The concept of "cap-and-trade" is simple: The government creates a limited pool of carbon dioxide (CO2) emission allowances. Major emitters of greenhouse gases (i.e. the several substances that are responsible for global climate change, primarily carbon dioxide) must use the allowances to cover their emissions. Over time, the government reduces the quantity of those allowances which will drive up the price and force polluters to find efficient, low-cost ways of reducing carbon emissions. The long-term goal: reduce greenhouse gas emissions significantly over time through measures that impose the lowest total cost on society.

Most current cap-and-trade programs and proposals, including RGGI, require emitters to purchase a significant portion of their allowances through an auction, instead of having them issued pro-rata to existing emitters. Allowances can also be bought and sold on the secondary market, providing an opportunity for companies that efficiently reduce their emissions to sell excess allowances, potentially for a profit. Auctioning allowances provides revenues which can be used to jump-start the transition of our energy system by funding energy efficiency measures and clean energy development.

The money that the power companies pay for the allowances comes from increased electric rates to consumers (businesses and individuals). In the run-up to RGGI, studies indicated the rate increase over time would be in the range of 2%, or $2 per month on the bill for a typical residential customer using 500 KWH. Larger users were expected to pay more. However, the most recent report by the New Hampshire Public Utilities Commission indicates lower than expected impacts, with a net average increase of $0.18 per month for residential customers, or a roughly 0.16-0.20% rise in electric bills.

How RGGI works in NH:

The five fossil fuel power producers in NH must purchase one allowance for every ton of CO2 emitted. These allowances can be purchased at quarterly auctions or on the secondary market via futures and options contracts or over-the-counter. The quarterly auctions, held by RGGI, cover all nine states and the proceeds are divided between them. RGGI compliance occurs in three-year control periods.

At the end of each control period, each regulated power plant must submit one CO2 allowance for each ton of CO2 emitted over the preceding three years. The first control period extended from 2009 – 2011, with a second spanning 2012 – 2014. We are currently in the fourth control period, which extends from January 1, 2018 to December 31, 2020.

Originally, 10% of auction proceeds were used to help low-income residential customers lower their energy use, with the remaining funds allocated to the Greenhouse Gas Emissions Reduction Fund (GHGERF). Legislation passed in 2013 replaced the GHGERF with the Energy Efficiency Fund (EEF), and dictated that only the first $1 ton of each sale of CO2 allowances be used to fund the EEF. The remaining proceeds are rebated directly to utility ratepayers.

EEF and GHGERF funds have been used to support low-income energy assistance programs, education and outreach programs for the building trades, auditing and bench-marking for municipalities and schools, energy management for campuses, along with many other projects.

In total, New Hampshire has collected $94 million in revenue since joining the program in 2008.  In 2010, Gov. Lynch diverted $3 million from the GHGERF to the state's general fund. Several other states in RGGI have redirected such funds.

One of the goals of RGGI is to encourage the power plants to emit less CO2. Coal and oil burning plants  have more of a challenge as these fuels emit more CO2 than natural gas. In addition to finding ways to clean up their CO2 emissions, utilities can explore capture and sequestration which involves storing their CO2 (difficult to execute in the Northeast), and offsets, in which the utilities invest in CO2 reducing or absorbing projects such as planting trees. Offset credits may be used in place of allowances to meet up to 3.3% of a plant's CO2 emissions.

Legislative changes

With the passage of HB 306, NH joined the 8 other RGGI states in lowering the cap on carbon dioxide emissions from the current 165 million tons to 91 million tons in 2014. The cap would be lowered an additional 2.5% per year from 2015 to 2020. Each state ratified the new changes.

A 2012 law contains a contingent repeal of RGGI if two or more New England states withdraw or if a state which has at least 10% of the total load of the participating states withdraws.

*New Jersey withdrew from the initiative in 2011.

Recent updates

In August 2015, the Environmental Protection Agency released the Clean Power Plan (CPP), which requires states to develop and implement plans to meet targeted reductions in power plant emissions.  RGGI is generally compatible with the CPP and would have served as the primary means by which participating states meet its requirements, though the program might have needed to be adjusted and extended to do so. A federal court imposed a stay on the CPP in February 2016. Before the case was settled, the Trump administration announced it was pulling back from the CPP with a plan to replace it with a new policy on carbon emissions. 

Citizens Count Editor

"New Hampshire should continue to participate in RGGI."

  • RGGI benefits consumers, including low-income ones, as a significant portion of the New Hampshire share of the net proceeds of the RGGI auction is reinvested in energy conservation.  Studies show that over time the benefits of this reinvestment to consumers outweighs the costs of increased electricity bills. 
  • RGGI investments are good for businesses and will create jobs. Grants handed out by the PUC directed towards commercial and industrial consumers will help cut costs and help them to remain competitive over the long-term, while investing in energy efficiency and clean energy can attract green companies to New Hampshire, positioning both to be leaders in the transition to a clean energy economy.
  • Selling allowances, rather than giving them away, is the right way to go. Opponents of auctions argue that allocating allowances freely rather than having utilities pay for them would prevent emitters from being forced to pass the cost of allowances through to consumers, but regardless of whether allowances are auctioned or given away for free, each allowance has an opportunity cost - essentially the cost of not selling that allowance on the open market. In general, these costs are passed along to consumers. If the allowances are allocated for free, the entities who receive them may actually earn windfall profits, since they are not required to pay for the allowances, and still raise prices. This is the situation that occurred in Europe when a cap-and-trade was first introduced. By auctioning allowances, raising revenues, and then reinvesting that revenue to boost clean energy and energy efficiency, a cap-and-trade program can both reduce emissions and ensure long-term benefits for consumers.
  • RGGI benefits our citizens and the world. Taking this first step with RGGI will push the nation, and ultimately the world, towards a carbon reduction program.
  • By investing in energy efficiency and renewable energy, New Hampshire and the other RGGI states will reduce their dependence on fossil fuels, which are subject to price volatility, potentially saving money for residents and business in the future.
  • RGGI will be key to meeting the requirements of the Clean Power Plan, once a federal court stay is removed and the plan put into full effect. 
Citizens Count Editor

"RGGI is bad for New Hampshire."

  • RGGI has damaged New Hampshire economically and competitively. Higher energy costs in New Hampshire have damaged the state's competitive position. They deter business investments and hence affect incomes and jobs throughout the state. Electric rates have gone up as a result of RGGI. The impacts will vary as the price of the allowances varies, but this can be expected to increase over time as allowance prices increase.
  • RGGI was unnecessary. The same energy efficiency benefits that may be enabled by RGGI could have been achieved without RGGI, simply by increasing the System Benefit Charge rates and reinvesting that money in energy efficiency.
  • RGGI increases costs of energy production within the region but has no effect outside the region.  This may result in pushing energy production or economic activity to other regions which use more polluting fuels, thereby undermining any carbon reduction benefits from the program.
  • The secondary market for carbon credits in RGGI is not regulated. There are concerns that speculators will get involved, increasing market volatility, and siphoning off profits that will drive costs up to consumers. There are reports that some traders have gotten rich in the European carbon credit market and there have been problems with volatile prices. It is not clear what happens to RGGI if or when the federal government implements a national approach to carbon reduction. Why should NH citizens bear the costs of cap-and-trade while the 40 nonparticipating states have a free ride?
  • There is disagreement among scientists as to whether controlling CO2 emission is the answer to global warming. We are now paying for a debatable scientific theory.
  • New Hampshire citizens have been subjected to a cost increase in their utility bills through legislative action. This seems like a tax increase that was never disclosed or voted on by the public.
  • The revenues for RGGI are being used for the wrong purpose. They should be passed on to consumers or used to reduce taxes. An economic study by UNH professor Dr. Ross Gittell, concluded that by 2015, found that the overall economic impact would be positive if 100% of the RGGI auction revenues were used to reduce business taxes. Using RGGI auction revenue in this way would increase the state's economy by $78M and add 884 jobs, mostly in construction and services.


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In an Op-Ed in the Union Leader of April 13, two biologists, Pam Hunt of New Hampshire Audubon and Loren Valliere of Wild Life Federation, cites climate change impacting the New Hampshire forests and the bird and animal population adversely, forcing to near extinction of Bicknell Thrush which nests in the spruce-fir woods at the highest elevations of New Hampshire mountains.  They further assert: “ New Hampshire’s average temperatures are climbing in step with global trend largely due to carbon dioxide that traps energy in the atmosphere…In addition we have seen more droughts, wild fires, flooding and sea level rise.”

When has the earth’s climate stayed flat in its 4-billion year history?  The answer is never.  For example, some 20,000 years ago, the Penobscot Bay was about a mile thick of ice. We do not see any trace of ice now.  Is it reasonable to conclude then that the earth has been in a warming cycle for a long time?  How about Cape Cod?  Some 15,000 years ago, the Cape Cod was beginning to form as we know it today.  You can see some huge boulders at the beach pointing to the evidence of receding ice age. At the Marconi Point the Park Service has a plaque that states boldly that the Cape is destined to disappear in another 15,000 years.  As a matter of fact, they had to move the historic marker locating the spot from which Marconi transmitted President Theodore Roosevelt’s message across the Atlantic because of the side of that hill disappeared in a storm.  In the 1880s, the whole island of Krakatoa blew up sending billions of tons of debris high into the atmosphere causing snow to fall in July!  Yellow Stone is also sitting on top of a powder keg that unleashes terrain changing event about every three hundred years and the geologists are warning us that we are due for one.  Earth’s core is a nuclear fission reactor and its temperature rivals the Sun’s surface temperature.  Earth is not a static place.  Its atmosphere is not a static mass.

Climate change due to carbon dioxide is about as scientific as voodoo is to medicine.  Carbon dioxide is a trace element in the atmosphere, about 0.04% (400PPM).  The heat trapping ability is better than 95% due to water vapor.  75% of the earth is covered with water.  What started out as an assertion based on crude computer modeling (without any validation to any past events) that carbon dioxide due to human use of fossil fuel causing global warming has suddenly underwent a metamorphosis into a more generic term of climate change when the theory started to fall apart.  The carbon dioxide theory is largely proven incorrect even if one allows for the shallow understanding of earth’s atmosphere and the resulting crudity of predicting models due to the fact that global average temperatures have remained flat in the last seventeen years in spite of increasing CO2.  In addition, to suppose that increasing atmospheric CO2 is inherently bad for humans and other life forms is ludicrous.  Plants need CO2 in addition to warmer temperatures to grow.  Humans and other animals exhale CO2, in a biological exchange.  Green house farmers pump up CO2 to about three times the atmospheric level to maximize plant yield.  When you go to the produce section of your supermarket, you can quickly conclude that there are no produce from frozen sections of the earth.  Human life has been made possible because of global warming.  Otherwise, human species would not have developed into the modern homosapiens. 

Extinction of species is a natural occurrence.  That does not mean that we must be careless.  However, it has no relationship to CO2 levels in the atmosphere because CO2 has nothing to do with the earth’s warming or cooling.  There are overwhelming natural cycles due to orbital variations, sun’s activities and cosmic ray activities.  Human activity has no influence in any significant way on the solar system cycles.  Dinosaurs became extinct some 60 million years ago with no one interfering.

The two biologists fail to point out however that humans can do something about killing of raptors unnecessarily due to installation of wind turbines to generate electricity – a backward mode of power generation propped up by vast government tax dollars subsidy based on the false notion of the CO2 reduction.  The environmentalists banned DDT worldwide in the 1970s condemning millions of African babies to die ever since due to unchecked malaria because it was falsely attributed to declining population of raptors!  Now, they are OK with the wind turbines killing them off by the hundreds in California alone.  This is not science.  It is pure ideology based on the hatred of capitalism in general and the oil and gas industry in particular.  Isn’t it surprising that the New Hampshire Audubon has been very quiet about the potential of wind turbines in New Hampshire killing birds.  Where are the lawsuits on behalf of preserving those birds by World Wildlife? 


The post states that the CO2 level in the atmosphere exceeded 400 parts per million for the first time. That is a blatant misstatement. 

In the medieval time about 1000-1200 AD, the CO2 levels were in excess of 750 ppm according to the ice core data.  Let us put that in perspective. Four hundred parts per million is 0.4% of the atmosphere. 

The ability of CO2 to prevent heat escape is limited to that trace level and at particular frequencies in the infrared range.  Compare that to the presence of clouds or water vapor in the atmosphere that accounts for over 95% of the warming effect. 

The so-called models have no credible way of representing the water vapor as it requires extremely complex mathematical model representation.  So, the CO2 level causing the kind of warming projected is not supportable based on physics.

The global surface temperatures in the last fifteen years have flattened out in spite of increasing CO2 levels. Russian climatologists have come out with a prediction of global cooling ahead for the next 250 years just like we had during Maunder Minimum, 1600-1750, due to reduced sun spot activities which are not taken into account in the man-made global warming models.

One thing about science is that you have to prove the hypothesis unlike politics which purely appeals to base instincts of human beings -- jealousy, greed, etc.  There are no believers in science (it is not a religion!) until the hypothesis is proved. 

Einstein's theory of relativity was still a hypothesis between 1905 and 1920 until it was proved independently during a solar eclipse in S. America.  CO2 causing man-made global warming is in the same state until proven. One way to prove that model is to prove global temperatures during the Maunder Minimum when initial conditions are known. No proof has been offered; only assertions, followed by demonizing people that question the validity of predictions.

RGGI is using that unproven hypothesis to tax energy indirectly. Even if we (RGGI region) eliminated all the man-made CO2 exhaust, save for their own breath it still would not make a dent in the global CO2 level. The politicians latched on to it to tax the not-favored-energy-producing-and-consuming class (politicians always have to create two classes-one favored and the other demonized to keep themselves in power) by allocating a false price for CO2. 

Bottom line of RGGI is the electricity costs will rise in New Hampshire, making life harder to more people. That is how the state promotes general welfare!!!


Five years in, the Regional Greenhouse Gas Initiative isn’t working out the way its supporters said it would, and they want to make drastic changes to the program in order to get state revenues flowing again.

When New Hampshire entered into the ten state compact in 2008, the economy was on the verge of recession. One minor benefit of our half-decade in the economic doldrums is that it mitigated the impact of the RGGI program on ratepayers. The program has had absolutely no effect on the environment, but it has done so while costing much less than it could have.

Under RGGI, ten northeastern states agreed to cap the amount of carbon dioxide emitted from a group of fossil fuel power plants, and auction off the right to emit CO2 through a series of quarterly auctions. Proceeds from the sale of CO2 allowances would go back to the states, which would use the revenue to fund energy efficiency and weatherization programs.

The fatal flaw of RGGI’s first five years in the same problem at the core of all central planning. The very smart, very well-meaning people who designed the interstate carbon trading compact could not anticipate the large shifts in the regional electricity market that swamped any impact RGGI had.

The first year went according to plan. The price of a CO2 allowance fluctuated between $3 and $4. That generated revenues above $100 million each of the first three auctions in which all ten states participated. New Hampshire brought in nearly $12.5 million in that period, using some of the revenue to cover one of Gov. John Lynch’s many budget crises, some to fund the state’s weatherization program, and the rest of set up the Greenhouse Gas Emissions Reduction Fund, administered by the Public Utilities Commission.

The GHGERF wasn’t just a horrible acronym. It was also a prime example of what happens when unelected state officials are given the power to make appropriations. They awarded money to Dartmouth College and Dannon subsidiary Stonyfield Yogurt to pay for capital improvements that would lower their electric bills. Some would argue that an Ivy League college and an international food conglomerate could afford their own energy upgrades. Millions more went to green energy consultants. The PUC even gave grants to many of the groups advising them on how to spend RGGI money.

The PUC handed out more awards in RGGI’s first two years than the program could fund in three. While the PUC was writing checks, RGGI was melting down. The recession and falling natural gas prices resulted in less demand for coal-fired electricity, and that meant power producers were going to come in well below the RGGI carbon cap.

Imagine playing Musical Chairs, with ten chairs and only seven players. Since you know there are going to be plenty of seats when the music stops, there isn’t much urgency. Likewise, the market for RGGI allowances collapsed, and the secondary trading market disappeared.

The RGGI auction price has remained at or near the price floor since June of 2010, and the number of bidders has dropped from 84 to a low of just 29. In the September 2011 auction, 82% of the allowances on the block went unsold, even at the floor price. A quarter to a half of allowances offered are routinely unsold. Low prices and low volume have meant much lower state revenues, and that means less money for NH’s Greenhouse Gas Emissions Reduction Fund.

While Gov. Chris Christie took New Jersey out of RGGI two years ago, the remaining states are hoping to boost RGGI revenues by dramatically lowering the carbon cap. Their recent proposal would cut the CO2 emissions allowed by 45% next year, with annual cuts of 2.5% for the next four years.

Limiting supply would seemingly prompt higher demand. Power plants would be forced into a bidding war for the few carbon allowances on the market, and states would get more money. All of these costs would ultimately be borne by ratepayers.

RGGI supporters will again claim that lower CO2 emissions would help combat climate change. That’s hogwash. The 45% cut would lower covered emissions by about 70 million tons per year, which certainly sounds like a lot. Until you remember that total US emissions, from fossil fueled electricity along, are 6.8 billion tons annually. That doesn’t include transportation, agriculture, or the rest of the world. RGGI could not possibly make any measurable difference in global CO2 concentrations.

RGGI was never designed to actually do anything about climate change. It was designed as a model for national cap-and-trade legislation, and as a revenue stream for green energy lobby.

As the Legislature considers whether or not to lower the RGGI carbon cap, they should be honest with us about how the program actually works.

Grant Bosse is Editor of New Hampshire Watchdog, an independent news site dedicated to New Hampshire public policy.

Cross Post at NH Watchdog.


Rebuttal to "Con" position:
1. Please show us evidence for how NH has been hurt economically by RGGI. If anything, state, regional, and federal policies have been hurting us economically in favor of the energy industry profits. New England spent the last 20 years deregulating energy utilities, promoting rising energy costs more than RGGI ever could.
2. If you think RGGI was unnecessary because "increasing the System Benefit Charge rates and reinvesting that money in energy efficiency" could achieve the same thing, then do it and show us. But don't back out of RGGI until you do.
3. Gotta start somewhere. New England is a large market region. If that's not good enough, continue negotiations to expand it to our neighbors rather than scrapping it.
4. Again, you spent the last 20 years deregulating the energy industry, and now you're afraid of an unregulated market? If that's the case, then regulate it. But don't back out of RGGI. Besides, energy is currently susceptible to speculation via commodties futures and market manipulations by cartels like OPEC.
5. There is no disagreement among credible scientists about the need to reduce CO2 to prevent climate change. The only scientists still trying to argue this are paid shills of the fossil fuels industries.
6. Energy companies are local monopolies, so we can't vote with our feet/money if we don't like our rates. As far as legislative tax policy, we're a representative democracy. We rarely get to vote directly on tax policy, just the representatives who create it. So, instead of complaining about industry fees, create policies to combat them. Here's an idea: invest in renewable energy like solar panels. There's a high up-front cost that is preventing a lot of citizens from entering this market, decentralizing it and destabilizing energy monopolies. We're watching you, so get to work.
7. 884 more jobs!? OMG!!?*# We already have one of the lowest unemployment rates in the country. That's not the problem. The whole point of the cap and trade system is to wean us off of fossil fuels. Invest revenue in programs that do that, not reinvest in the same old broken system.

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