National Center Policy Experts to Speak at Wall Street Rally Protesting the Regional Greenhouse Gas Initiative
Cap-and-Trade Program is an Energy Tax that will Harm the Economy and Unleash Another Wall Street Risky Trading Scheme
Washington, DC - Policy experts from the National Center for Public Policy Research will be speaking today at a rally to protest the auction of carbon credits under the Regional Greenhouse Gas Initiative (RGGI).
The rally is being organized by Americans for Prosperity, a free market grassroots organization.
RGGI is a joint effort of ten northeast states that have implemented a cap-and-trade system for utilities to reduce carbon dioxide emissions 10 percent by 2018.
"The goal of cap-and-trade is to make traditional forms of energy more expensive so we use less of these resources. It's outrageous that northeast states have implemented a cap-and-trade scheme that will raise electricity prices. New York, New Jersey and Connecticut already have some of the highest electricity prices in the nation and this scheme will only drive them higher," said Project 21 Fellow Deneen Borelli.
"Despite the claims by governors that RGGI is designed to combat climate change and spur investment in renewable energy, the record shows this cap-and-trade scheme is basically an energy tax with the revenue being used to plug budget gaps. In New Jersey, Governor Chris Christie moved $65 million that the state generated from its carbon dioxide auction to its general fund and New York Governor David Paterson took $90 million from RGGI auctions to help fill a gap in the state budget," added Deneen Borelli.
Under RGGI participating states require utilities to purchase a permit or an allowance to emit carbon dioxide. Utilities buy carbon dioxide allowances in an auction and the revenue from the sale goes to the state. If a utility's emissions exceed its allowance the utility must purchase additional carbon permits or it can sell its excess allowances if the utility's emissions fall under its anticipated amount.
Over time, the states cut the amount of allowances to meet their 10 percent reduction emission target.
Carbon allowances can also be bought and sold in a secondary trading market. Wall Street firms such as Goldman Sachs and JPMorgan Chase have also purchased carbon allocations from the RGGI auctions.
"Trading carbon dioxide allocations or credits is very risky because unlike other commodities carbon dioxide does not have any intrinsic value. The value of carbon dioxide is subjected to a range of political and regulatory risk. The sulfur dioxide trading market which was the model for the carbon market is collapsing because of a change in EPA regulations," said Tom Borelli, Ph.D., director of the National Center for Public Policy Research's Free Enterprise Project.
"The involvement of Wall Street firms trading in the RGGI market is alarming. It seems Goldman Sachs and other banks are desperate to fill the revenue hole left by the housing market collapse. It appears Wall Street is addicted to risky trading schemes and when this market crashes 'we the people' are going to get stuck with the bill," said Tom Borelli.
The states participating in RGGI are - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.
The rally will take place at the RGGI offices on Wall Street (90 Church Street) at 11:00 am on Wednesday, September 8.