Green Jersey

A new mantra for New Jersey: Pay to pollute?

The state has an extra $15 million in its coffers this week, money it made last week from power plants. The millions were dues paid as part of the country’s first market-based cap and trade program — under the Regional Greenhouse Gas Initiative, power plants must purchase an allowance for every ton of CO2 they emit.

The goal is to lower plants’ emissions levels. Money raised by New Jersey and nine other states from Maine to Maryland — the Regional Greenhouse Gas Coalition — is to be spent on energy-efficiency and renewable energy projects. This was the second auction, but the first for New Jersey and the first in which all 10 states participated.

Environment Northeast, a nonprofit advocacy group, found that power-sector emissions in coalition states were already 16 percent below the cap set, according to the New York Times’ Green Inc. blog. As the blogger points out, though, the report says one cause of reduced emissions has been high energy prices, and emissions are unlikely to remain as low in ’09.

And, a warning: A Massachusetts-based nonprofit, the Union of Concerned Scientists, has raised concerns that the program could actually increase pollution elsewhere. Power in the coalition states will become “marginally more expensive,” which could make utilities want to set up outside the region, according to an energy analyst quoted in the Boston Globe.

Last week, the price of an allowance was $3.38 (per ton of CO2) — that works out to about half a percent sales tax on energy generation, or just under 2 percent on coal-fired power, Jeff Tittel of the Sierra Club told the Bergen Record.

Tittel said that wasn’t enough to motivate power companies to move away from coal; the price would have to rise to about $20 to do that. The coalition expects allowances ultimately to cost about $7, Tittel told the Record, and that would mean about $40 million a year for the state.

There’s a big gap between $7 and $20, but Tittel told the Record the real benefit of the program was to provide a model for cap and trade on a national level and in the meantime, raise money for the state to spend on renewable energy and other green initiatives. This is just a start.

President-elect Obama, during his campaign, called for a national cap and trade program.

More: Auction to decrease greenhouse gas emissions raises $15 million for state (Bergen Record)

Northeast states hold second carbon auction (Green Inc.)