States Dip Into Climate Funds To Shore Up Budgets

Two years ago, 10 northeast states set up a regional cap and trade program to reduce carbon emissions and promote conservation. The money raised was supposed to be used for green energy and environmental initiatives, but in an era of tight budgets, it has proved a tempting target for some state officials. Three of those states — New York, New Hampshire and New Jersey — have used some of the revenue from the initiative to shore up state budgets.

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Two years ago, 10 northeastern states setup a regional cap and trade program. The point was to reduce carbon emissions and promote energy conservation.

As Brian Mann, with the Northeast Environmental Hub reports, some of those states are instead using cap and trade revenue to shore up their budgets.

BRIAN MANN: In 2008, states from Maine to Delaware began auctioning carbon pollution credits. Companies that operate big power plants are required to buy one credit for every ton of greenhouse gas they release. The auctions, known as the Regional Greenhouse Gas Initiative, or RGGI, have raised more than $770 million, while only boosting people's electric bills by about a dollar a month.

The revenue from RGGI is supposed to be set aside for new environment and conservation projects. But last year, three states started raiding the fund to close gaping holes in their budgets.

Peter Iwanowicz is New York states acting environment commissioner.

Mr. PETER IWANOWICZ (Acting Environment Commissioner, New York State): This was a one-time deal that we needed to cash and we needed it fast. The state was literally, last December, running out of money.

MANN: New York stripped $90 million to pay for schools.

Iwanowicz insists that diverting the money was an extraordinary event, triggered by the recession and by New York's brush with bankruptcy. He says the state is still committed to RGGIs goal of cutting CO2 emissions in the Northeast by 10 percent by 2018.

But New Hampshire also diverted about $3 million and New Jersey, about 65 million. And critics say the temptation to use RGGI revenues for other projects is sure to grow.

Mr. STEVE LONEGAN (Director, Americans for Prosperity): It reveals the fact that cap and trade is just a new tax.

MANN: Steve Lonegan is the New Jersey director of an energy-industry financed group called Americans for Prosperity. He predicts that states will be tempted to use cap and trade revenue to pay for such things as roads and social programs that have nothing to do with climate change.

Mr. LONEGAN: It's just another form of taxation, which will continue to expand, and eventually all states will be taking all of this money over time.

MANN: But supporters of the RGGI program point out that 80 percent of the auction revenue is still going to conservation programs like this one in Middlebury, Vermont.

(Soundbite of wind and footsteps)

MANN: On a frosty night, Laura Asermily(ph) trudges through the snow, studying rooftops.

Ms. LAURA ASERMILY (Volunteer, Efficiency Vermont): And you can see the evidence of heat loss here.

MANN: Asermily is a volunteer with a statewide project called Efficiency Vermont that uses RGGI money to train people to help neighbors assess the energy efficiency of their homes.

Peter Shattuck, a carbon trading analyst with a non-profit called Environment Northeast, says revenue from the cap and trade auctions has paid for hundreds of renewable energy and conservation projects - putting solar panels on schools and helping low-income families insulate their homes.

Mr. PETER SHATTUCK (Carbon Trading Analyst, Environment Northeast): The vast majority of RGGI money is being used for energy efficiency, which not only reduce fossil fuel imports but also emissions. And the money saved on energy bills flows into the local economy.

MANN: Still, Shattuck and other environmentalists share the concern of cap and trade skeptics that states will keep raiding the RGGI funds.

John Sheehan is with the Adirondack Council, a green group that helped pioneer the use of cap and trade as a way to cut pollution.

Mr. JOHN SHEEHAN (Communications Director, Adirondack Council): It's our sincere hope that this is only a short-term phenomenon. The recession and the pressure thats been put on state governments to come up with money from everywhere has really taken a toll on its ability to do what we had hoped that it would do in the first couple of years.

MANN: The RGGI programs rules only require that participating states use a quarter of the carbon auction revenue to boost conservation and renewable energy. So far, every state has met that goal.

For NPR News, I'm Brian Mann.

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