Republicans in New Hampshire's legislature took their first step toward withdrawing the state from a regional carbon trading program this month, passing a bill out of committee that advocates say may have enough support to override a potential veto by Gov. John Lynch.
The on Feb. 16 voted 13 to 5 along party lines to end New Hampshire's participation in the (RGGI), a carbon market between 10 Northeast and Mid-Atlantic states and the first mandatory emissions trading plan in the country.
Supporters say the GOP-backed bill, , would help loosen the pinch on ratepayers' wallets. But opponents, including Republican leaders of clean energy firms, sharply disagree, saying it could end up forfeiting more than $60 million in energy savings and dry up millions more in funding for alternative energy and efficiency programs.
The legislation would lift the requirement that New Hampshire cap carbon dioxide emissions. However, amendments would give the state until the end of the year to exit RGGI and keep the , which was created in 2008 to run the state's green enery programs, from disbanding.
Any money left over in the state that was set up to dispense RGGI revenues would be shifted to a more general energy efficiency programs fund.
In 2010, the legislature diverted $3.1 million from the RGGI fund to help balance the state's budget. The bill's sponsors have latched onto that as evidence that the scheme isn't helping to reduce greenhouse gas emissions. Instead, they claim it is a "stealth tax" that silently charges ratepayers for higher electricity costs incurred by the program.
"The regional greenhouse gas initiative has simply not impacted the overall reduction of emissions, yet it has had — and will continue to have — a significant negative impact on the economy," said State Rep. Andrew Manuse, the bill's co-sponsor, at the House committee hearing.
Study: RGGI Saved Ratepayers $1.5 Million
RGGI requires power plants in participating states to cap CO2 emissions at 188 million short tons per year through 2014, with additional annual reductions of 2.5 percent from 2015 to 2018. States can sell carbon allowances through auctions and invest the earnings in energy reduction and efficiency programs in businesses, schools and homes, as well in clean energy technologies.
The program was launched in 2005 and held its first quarterly online auction for carbon credits in 2008. New Hampshire, which joined RGGI in June 2008, raised $80.5 million last June in an auction of around 40 million emissions allowances.
A by the University of New Hampshire studied the impact of 30 grants from $17.7 million used for energy programs from June to October 2009, out of a total $28 million in RGGI grants awarded in the state since in 2008. During the first reporting period from July 2009 to June 2010, those grants saved residents and businesses $1.5 million in energy costs and reduced CO2 emissions by 4,600 metric tons.