On Thursday, the Governor of New Jersey, Chris Christie announced that New Jersey would withdraw from the Regional Greenhouse Gas Initiative, citing the program as having done nothing more than tax electricity, citizens, and New Jersey businesses “with no discernible or measurable impact upon our environment.” The Regional Greenhouse Gas Initiative, known as RGGI (pronounced Reggie), is a pact between ten Northeastern and mid-Atlantic states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont) that created a cap-and-trade program requiring fossil fuel-burning power plants to buy credits to cover carbon emissions from such plants. Utilities which are able to cut greenhouse gas emissions below their designated caps are permitted to sell or trade their excess carbon allowance at quarterly online auctions.

Gov. Christie believes that current reductions in carbon dioxide emissions within New Jersey are not the result of RGGI, but instead are the result of an increased reliance on natural gas and less reliance on coal to fill its energy needs. He noted that since joining RGGI, New Jersey has passed fourteen laws which provide significant market incentives for renewable energy resources and instate natural gas generation. Gov. Christie stated that New Jersey will continue its commitment to increasing the proportion of electricity generated by natural gas, and renewable energies such as solar and wind. As part of this commitment, Gov. Christie has also stated that the state will not allow the construction of new coal-fired power plants.

Analysts predict that the impact of New Jersey’s exit from RGGI would be limited given the continued participation of the remaining states. A joint statement was issued by the other nine states affirming their commitment to the program and stating, “[w]ith each state exercising its independent authority to achieve low-cost greenhouse gas emissions reductions, the RGGI market-based program has widespread support across the regions and will continue.”

RGGI’s office estimates that more than $700 million has been generated under RGGI in less than three years. RGGI initially estimated that the carbon allowance could cost as much as $20 to $30 per ton, but current prices have been hovering far below this amount, around $2 per ton of carbon dioxide. On the day of Gov. Christie’s announcement, the December-delivered carbon allowances from the Northeast’s cap-and-trade program rose 1 cent to $1.91 each on the Chicago Climate Futures Exchange.