Home > Uncategorized > NJ Gov. Murphy’s RGGI Funding Plan Will Subsidize Fossil & Threaten NJ Forests

NJ Gov. Murphy’s RGGI Funding Plan Will Subsidize Fossil & Threaten NJ Forests

Plan lacks critical details and funding priorities and gives short shrift to real solutions

Available Revenues Not Close To Matching the Scale & Scope of The Challenge

Allocation of RGGI funds (source: NJ DEP, BPU, EDA) - Red are my edits

Allocation of RGGI funds (source: NJ DEP, BPU, EDA) – Red are my edits

On Friday, the Murphy Administration released a draft “Regional Greenhouse Gas Initiative Auction Proceeds Scoping Document”.

The scoping document, a joint product of NJ DEP, BPU, and the Economic Development Authority (EDA), outlines plans for the use of projected $80 – $100 million per year proceeds from the sale of carbon pollution allowance under the Regional Greenhouse Gas Initiative (RGGI) program.

Those RGGI revenues don’t scratch the surface of the cost of investment in the numerous programs outlined in the plan, which would be several billions dollars. So it is absurd for the Gov. to claim that the RGGI funds will spur “transformational investments” or “significant greenhouse gas emission reductions”.

According to the Murphy plan:

New Jersey will participate in the first RGGI auction of 2020 and proceeds will be available for investment shortly thereafter. Three state agencies receive auction proceeds, the New Jersey Department of Environmental Protection (NJDEP), the New Jersey Board of Public Utilities (NJBPU) and the New Jersey Economic Development Authority (NJEDA). NJDEP, NJBPU, and NJEDA will focus this initial three-year Strategic Funding Plan and investment of RGGI auction proceeds on two overarching priorities: (1) providing meaningful benefits to communities most affected by pollution and climate change; and (2) catalyzing the electrification of the various modes of transportation in the State. This scoping document seeks to provide residents, businesses and community leaders with a common understanding of the legal and regulatory framework surrounding the distribution of the RGGI auction proceeds and provides example initiatives for how the State could invest those proceeds. Seven example initiatives are explored within this document:

  1. Clean Transportation
  2. New Jersey Green Bank
  3. Community Clean Energy Microgrid
  4. Net-Zero Energy Solutions for Waste Management
  5. Beneficial Role of New Jersey Forests in the Carbon Cycle
  6. Sequester “Blue Carbon” in Coastal Habitats
  7. Strengthen Clean Tech Innovation

We have written numerous critiques of the greenhouse gas emissions side of the RGGI program, including detailed explanations of fatal flaws in RGGI, including: 1) why the so called “emissions cap” is not legally or functionally an enforceable cap on emissions; 2) how the “cap” is way too high and therefore the price of the carbon allowances (at $4/per ton, about 1% of what mainstream economists call the “social costs of carbon”) are way too low to drive the deep and rapid GHG emissions reductions scientists warn are required to avoid catastrophic irreversible warming; 3) the narrow scope of RGGI applies to only portions of the fossil power sector, addressing less than 25% of NJ’s total greenhouse gas emissions; 4) numerous loopholes and subsidies to powerful corporate carbon polluters; and 5) lack of effective GHG emissions quantification, monitoring, and enforcement by DEP.

So, in the best case, RGGI will drive very little if any reductions in total greenhouse gas emissions.

But it’s not just the emissions side of the RGGI program that is fatally flawed. So is the revenue expenditure side.

The supporters or RGGI have essentially conceded these fatal flaws on the emissions side and instead shifted the focus to the alleged GHG emission reductions associated with investment of the revenues from the sale of RGGI carbon pollution allowances, estimated to be $80 – $100 million per year.

The Murphy plan (on page 5), misleading grossly exaggerates NJ’s benefits, by citing a private group’s estimate of the lifetime benefits of RGGI across the entire region. (i.e. an economic estimate generated by RGGI Inc. itself, a self evaluation that lacks any credibility due to an egregious conflict of interest and bias.)

However, close examination of the RGGI funds allocation statute and the Murphy administration’s plan for proposed uses of these funds reveals additional major flaws that will have very little effect on reducing GHG emissions.

Equally, perversely, RGGI funds will be used to subsidize GHG polluters and threaten NJ forests. Here’s how:

While drenched in feel good rhetoric, the plan lacks internal coherence, rational priorities, crucial technical details, and, amazingly, is loaded with corporate subsidies and perverse incentives, including some to fossil fueled carbon polluters. (see red arrows above – those are mine).

Let me repeat: Sixty percent (60% – or perhaps $60 million/year)) of the funds from the sale of carbon pollution allowances, which are supposed to create economic incentives to reduce greenhouse gas emissions, are instead going to be used to subsidize greenhouse gas polluters, including:

  •  “state of the art electric generation facilities” (which include natural gas power plants and possibly garbage incinerators and “biofuels” from logging forests);
  • combined heat and power and other high efficiency electric generation facilities” (these are fossil fueled industrial boilers); and
  •  “innovative carbon emissions abatement technologies” (this is the so called carbon capture technology, which does not exist at a commercial scale and is wildly expensive).

The allocation  formula and eligible uses of RGGI funds is set by law.

But Gov. Murphy didn’t even try to press the legislature to reform these perverse incentives in the awful 2008 law, strong armed by Senate President Sweeney and signed by Gov. Corzine. And of course, it is ratepayers that pay for all these subsidies to corporate fossil.

Even given these legislative constraints, overall, the Murphy administration RGGI plan amounts to a hodge-podge of conflicting policies, programs, and objectives. Here is how the plan was developed (my edits are in red to illustrate what really went on).

Red are my edits

Red are my edits

That corporate influence is reflected throughout the Murphy plan, including these disgusting subsidies:

EDA Grants to profitable private corporations:

  • Grants to private jitney companies operating in New Jersey’s urban corridor;
  • Grant/loan combinations to support deployment by private commercial companies of electric “last-mile” delivery vehicles;
  • Funding the deployment by port operators of electric cargo handling equipment (e.g., straddle carriers, gantry; and
  • Funding for establishments that regularly use electric medium and medium/heavy duty trucks (e.g., warehouses) to install DC Fast Charging (DCFC) capacity cranes) in the Ports of Newark and Elizabeth;

“Green Bank”

  • Provide loan guarantees to private lenders who extend credit to fund energy efficiency and power management measures by small to medium-sized businesses;
  • Take funding positions in a capital stack, financing clean energy and/or energy storage project(s);
  • Purchase, securitize and resell private loans, funding purchases of electric trucks on longer-than-customary truck financing terms; and,
  • Provide administrative support to parties participating in Commercial Property Assessed Clean Energy (C-PACE) programs.

The public sector is starving – it is far more deserving of public funds than private corporations.

Grants to carbon emitting waste management incineration and sham “biofuels” (logging forests):

Beware these initiatives in the Waste Management section of the plan:

Under this initiative moneys from the Global Warming Solutions Fund could be dedicated to projects and programs to:

  • Maximize the use of source separated organic waste for energy production and encourage the use of biogas for electricity production or natural gas pipeline injections; and,
  • Encourage local municipalities to partner with waste facilities to collect organic waste from larger generators for use in energy production.

The plan lacks essential policy definition, weighted or hierarchical priorities, and technical details, like:

  • definitions, standards, criteria, and methodologies on how to calculate and measure real greenhouse gas emissions and determine “net” reductions;
  • how to reconcile conflicting objectives and programs;
  • how to balance competing interests and weigh priorities; and
  • how to measure relative emission reduction technical effectiveness in investments between various purported “net” reduction strategies

NJ DEP’s regulations are equally vague and prone to abuse.

It seems that NJ DEP has learned nothing from their prior “Open Market Emissions Trading” (OMET) debacle, where weak technical quantification protocols, lax DEP oversight and corporate polluter abuses forced DEP to withdraw and revoke the OMET program.

The Murphy plan ignores recent academic research that revealed huge flaws and perverse incentive in California’s cap and trade program. That research documented massive mis-measurement and fraud that grossly exaggerated alleged emissions reductions.

But there’s no need to take my word for it, just read this MIT Technology Review story (hereafter “MIT”):

And the Murphy Administration is poised to repeat exactly these same errors and abuses in NJ’s proposed forest carbon sequestration program.

Carbon Sequestration in Forests and Tidal Marshes

The NJDEP’s remaining 10 percent of the allocation from the Fund must be used to oversee efforts to enhance the stewardship and restoration of the state’s forests and tidal marshes *7, which provide important opportunities to sequester or reduce greenhouse gases. The percentage of funding allocated to forests versus tidal marshes is not defined in either the Global Warming Solutions Fund Act or NJDEP’s corresponding rule but will be determined in each Plan.

The scope of use for funding allocated for the restoration of forests is further limited by the Forest Stewardship Act, P.L. 2009, Chapter 256. Any RGGI auction proceeds designated by the Plan for forestry-based carbon sequestration would be transferred from the Fund to the Forest Stewardship Incentive Fund. Once in the Forest Stewardship Incentive Fund, those funds would be governed by the guidelines established by the Forest Stewardship Act (i.e., dedicated to working with private property owners to protect and enhance their forest land and to provide for the stewardship and management of state forests). Individual grants can be awarded to local government units, non-profits and private forest land owners to assist in the cost of developing and implementing approved forest stewardship plans.

Note how DEP – in a footnote, no less –  broadly interpreted Legislature’s use of the phrase “State’s forests” to include not just public lands, but privately owned lands, thereby providing subsidies to wealthy and corporate landowners and land speculators:

7  This is interpreted as all the forests and tidal marshes within New Jersey, not just those that are management and/or owned by the State of New Jersey.

Note also that “forest stewardship” is a far broader set of activities than “carbon sequestration”.

I fear that the arsonists and pyromaniacs at DEP will team up with the loggers at DEP to grab as much of the RGGI money to fuel their budgets, salaries and expand the scope of the current destructive activities they conduct under cover of “controlled burn”, “wildfire suppression” and “forest restoration” and “forest health” – plus the new “biofuels” program. All of these are eligible for RGGI money, which, could be almost $10 MILLION/year, a HUGE increase in the current budget.

Also note that the Murphy plan fails to include legislative caps on total “forest stewardship” grants – from just $2,500 to an individual forest plan to $150,000 per year statewide. Those caps make any sequestration program so small as to be ineffective and unworkable:

C.13:1L-33 “Forest Stewardship Incentive Fund.”
[a – c]
d. The department may award individual grants of up to $1,500 from the fund to pay for the cost of developing a forest stewardship plan pursuant to section 3 of P.L.2009, c.256 (C.13:1L-31). If the cost of developing a forest stewardship plan exceeds $1,500, the department may also award 80 percent of the cost that exceeds $1,500 to the owner, up to a maximum grant of $2,500. Grants from the fund may be made to local government units, nonprofit organizations, and private owners of forest land. …
e. The department may award individual grants through a cost-sharing program established pursuant to subsection c. of section 8 of P.L.2009, c.256 (C.13:1L-36) to private owners who have obtained a forest stewardship plan approved by the department pursuant to section 3 of P.L.2009, c.256 (C.13:1L-31). The department shall expend no more than $150,000 in any State fiscal year for grants awarded through the cost-sharing program.

Because the law allows RGGI funds to be used for “forest restoration” and stewardship” – two sham slogans that DEP has used to justify logging State forests in the Highlands –  the Murphy plan poses a serious threat to NJ’s forests.

A prior Report by Berkeley similarly found serious flaws – of particular concern to NJ – flaws that I have been writing about in the context of the Sparta Mountain logging scheme.

The MIT Technology Review paper spells it out by highlighting egregious flaws documented in the Berkeley analysis of the California forestry offset program: (MIT)

But the [Stanford] paper comes on the heels of an April report by the same lead author, Barbara Haya, who leads the Berkeley Carbon Trading Project at the Center for Environmental Public Policy. It found that California’s US Forest Projects protocol—which accounts for more than 80% of the credits issued to date—may have already inflated emissions reductions by 80 million tons of carbon dioxide. That’s a third of the total cuts that the state’s cap-and-trade program was expected to achieve in the next decade, and it suggests landowners could have earned hundreds of millions of dollars for carbon dioxide reductions that may not happen (see “Landowners are earning millions for carbon cuts that may not occur”).

Get that? Alleged GHG emissions reductions were inflated by 80 million tons! Landowners were paid hundreds of millions of dollars by ratepayers for no reductions. BOOM!

And the icing on the cake is the hypocrisy of the “overarching priority” of the plan, i.e on “environmental justice”.

For example, a real environmental justice climate program would be a massive investment in urban forestry.

Trees provide shade that cools cities (e.g. the heat island effect) and reduces energy demand and thus greenhouse gas emissions. More importantly, an urban forestry program would target these benefits to disproportionately impacted communities, purportedly an “overarching priority” of the Murphy plan and Gov. Murphy’s Executive Orders #7 and #23.

DEP outlines that in the plan (among six other competing sequestration programs, with no criteria to prioritize allocation between these competing uses):

  • Provide technical and financial assistance to local governments to implement urban and community forestry projects; including but not limited to increasing canopy coverage, reducing urban heat island effect, and strategic tree planting to reduce heating and cooling costs with a focus on projects in communities which have been disproportionally impacted by the effects of environmental degradation and climate change;

But, look at this table from the plan – see page 25 “Priority Ranking Summary Table” and note that Initiative #5 – which includes urban forestry – does not satisfy the “overarching priority” regarding “disproportionate impact” (Also note that sequestration does not meet another priority criteria to provide significant reductions in GHG emissions).

That means urban forestry will be a low ranking in competing for scarce funds.

A series of public meetings is anticipated. The first is sponsored by DEP ad scheduled for November 7 – check out the plan for details on how to submit comments or testify at the public meetings.

[End Note:

I forgot to mention that the 10% allocated to DEP for local government projects will likely be used for totally ineffective window dressing slogan feel good measures like voluntary Sustainable NJ bullshit.

And anything local governments could do with teeth on sequestration was pre-empted by the Legislature, something virtually no “home rule” NJ Towns even know:

“C.13:1L-34 Enactment of conflicting ordinance, rule, regulation prohibited.
6. No local government unit may enact, on or after the date of enactment of P.L.2009, c.256 (C.13:1L-29 et al.), any ordinance, rule, or resolution, as appropriate, that conflicts with, prevents or impedes the implementation of a forest stewardship plan approved pursuant to section 3 of P.L.2009, c.256 (C.13:1L-31) or impose a fee in excess of $100 in any calendar year for the cutting of trees on any land that is the subject of an approved forest stewardship plan. The provisions of P.L.2009, c.256 (C.13:1L-29 et al.) supersede any such ordinance, rule, or resolution, as appropriate, enacted or adopted on or prior to the date of
enactment of P.L.2009, c.256 (C.13:1L-29 et al.).”
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