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New York is among states raiding climate change funds to fill budget holes

By Brian Mann


WRVO – In September 2008, the first U.S. carbon auctions were launched in Northeastern and MidAtlantic states. Companies that operate big power plants in the region are required to buy one credit for every ton of greenhouse gases they release. So far, the auctions, part of the Regional Greenhouse Gas Initiative, or R.G.G.I., have raised more than $770 million. That money is supposed to be set aside for environment and conservation projects, but last year three states raided the fund.

"I mean this was a one time deal that we needed cash and we needed it fast. The state was literally last December running out of money."

Peter Iwanowicz is New York state's acting Environment Commissioner. New York diverted R.G.G.I. money to pay for things like roads and schools.

"It was sort of a tough decision that we had to make last year at this time to divert $90 million of proceeds from the Regional Greenhouse Gas Initiative auctions to go to cover bills that we had due for local school districts."

Iwanowicz says New York is committed to R.G.G.I.'s goal of cutting CO2 emissions in the Northeast by 10% by 2018.

He insists that diverting the money was an extraordinary event - triggered by the recession and by the state's brush with bankruptcy. But New Hampshire also diverted about $3 million and New Jersey about $65 million

And critics say the temptation to use R.G.G.I. revenues for other projects is sure to grow.

"It reveals the fact that cap-and-trade is just a new tax."

Steve Lonegan is the New Jersey director of an energy-industry financed group called Americans for Prosperity. Lonegan questions whether climate change is a serious problem - and like many conservatives he opposes cap-and-trade style programs.

"It's another form of taxation that will continue to expand and eventually all states will be taking all of this money over time."

But supporters of the R.G.G.I. program point out that 80% of the auction revenue is still going to conservation programs like this one in Middlebury, Vermont.

On a frosty night, Laura Asermily trudges through the snow, studying rooftops.

"And you can see the evidence of heat loss here."

Asermily is a volunteer with a statewide project called Efficiency Vermont that trains people to help neighbors assess the energy efficiency of their homes. Asermily heads down into the cellar of her neighbor and friend, Sas Carey, looking for easy ways to make this cottage more snug.

"So we have a typical cement block basement, terrible - conducts in all the cold."

The homeowner, Sas Carey, says with the help of Efficiency Vermont she learned qualifies for a low-cost government winterization program.

"The thing that amazes me is to think that it actually could be warmer in my house and more energy efficient."

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

"The vast majority of R.G.G.I. money is being used for energy efficiency. Which not only reduce fossil fuel imports, but also emissions, and the money being saved on energy bills flows into the local economy."

But some environmentalists worry that raids on the RGGI money will continue.

John Sheehan is with a group called the Adirondack Council that helped pioneer the cap-and-trade approach to reducing pollution.

"The recession and the pressure that's been put on state governments to come up with money from everywhere has really taken a toll on its ability to do what we'd hoped that it would do in the first couple of years."

R.G.G.I.'s 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, even the three that raided the funds.