A relatively small provision buried in New York state’s $150 billion budget has got environmentalists in a bit of a tizzy.
In the budget passed last week, lawmakers agreed to take $41 million away from state’s climate change mitigation program and sweep that money into the general fund. The program is the Regional Greenhouse Gas Initiative, also known as RGGI (pronounced “Reggie”), and is essentially a cap-and-trade system operated by nine Northeastern states and Eastern Canada.
First, a primer on how RGGI works. Under the initiative, states agree to put limitations the amount of carbon that power plants can emit every year. If those power plants want to emit more than they’re allowed, they buy “allowances” — or simply, the right to pollute a little more — from other entities that did not pollute enough to meet their emissions limit. Part of the money from the sale is given to the state, and used to invest in energy efficiency, renewable energy, and other clean energy technologies.
The $41 million that is being taken away from RGGI is the money that was collected from those sales. Right now, according to the Times Union, New York has approximatively $760 million that it has collected from carbon auctions. So, instead of $760 million, the state now has $719 million to spend on energy efficiency and conservation and so on.
But environmentalists aren’t really worried about the reduction in funds, per se. What they’re worried about is the actual practice of using RGGI money for purposes not intended by the program. That practice could open up the program to lawsuits from anti-climate action groups.
That’s at least according to Peter Iwanowicz, head of the Albany lobbying group Environmental Advocates of New York. Iwanowicz is also a former acting commissioner of New York’s Department of Environmental Conservation, where he led the state’s participation in RGGI.
Iwanowicz told ThinkProgress that, if money collected from RGGI is now going to be spent on general budget matters, anti-climate action groups could attack the program in court as an illegal tax. That’s because, unlike in some other states, RGGI was adopted as an executive action by the governor — it was not passed by the Legislature. All taxes must be passed by the Legislature.
“New York has to be extremely careful about what they do with RGGI proceeds because the collection of proceeds has not been approved by the Legislature,” Iwanowicz said. “New York has prevented legal challenges in the past because they’ve used that money to drive down carbon pollution. It’s directly related. If they move away from that concept, they open up the prospect of legal action.”
There is some precedent to worry about a legal challenge to RGGI. In 2011, Americans for Prosperity — a group backed by billionaire brothers Charles and David Koch — sued the state over its participation in the program, claiming it was an illegal tax. That lawsuit was thrown out in 2012.
So why is Iwanowicz so worried about a lawsuit challenging RGGI again? The main reason, he said, is because a successful challenge could undermine President Obama’s plans to fight climate change. Specifically, he said, Obama has held up the RGGI program as one way states can meet carbon reduction goals set out under his proposed Clean Power Plan. If New York is bumped out of RGGI, there’s no guarantee the program could continue to be as successful.
“Nearly 40 percent of the pollution reduced [under RGGI] comes from New York,” Iwanowicz said. “So a successful lawsuit would throw the entire RGGI program into chaos, because New York is such a big part of the entire regional market.”
If the program is thrown “into chaos” as Iwanowicz predicts could happen, then there would be no successful U.S. model for states to participate in cap-and-trade systems. And without that successful model, Obama would lose a key argument proving his aggressive carbon reduction goals can be feasibly met.
This doesn’t seem like it would be an intended consequence. New York Gov. Andrew Cuomo has generally been supportive of climate action, spearheading programs like a $1 billion solar power investment and pushing stricter emissions reductions under RGGI. New York’s attorney general is also fighting for Obama’s climate plan in court, arguing the President’s goals are legally sound and necessary to protect public health.
Unintended or not, however, Iwanowicz said the consequences could get very real.
“If New York’s participation in RGGI was invalidated because of Cuomo’s climate raid, it could make it much more difficult for Obama’s climate action plan to move forward,” he said. “Plain and simple.”