Climate Fund with No Impact on Climate Becomes Miracle Money Stash

A number of conservative and libertarian types have pointed out that these days, smokers are basically “smoking for the children.” States are relying heavily on cigarette taxes to fund such a variety of programs that it’s practically an act of public spiritedness to buy cigarettes. And now, for residents of the 10 Northeastern states, the same can be said of flipping your light switch to the “ON” position – or, presumably, using incandescent bulbs and setting the thermostat on 72. The more electric power you use, the more money there is in the state treasury to raid for the children.  The Regional Greenhouse Gas Initiative (RGGI, or “Reggie”), which requires the power industry to purchase carbon dioxide permits from the governmental RGGI collective, has seen to that.


There is a problem with this perfect scheme, however. Cash-strapped Northeasterners, reverting to their infamous thrift (and with businesses closing to boot), are using a lot less electricity than they were a couple of years ago.  A whole lot less.  In fact, the results from the latest sale of RGGI carbon dioxide permits were abysmal: only 57% of those on offer in the RGGI exchange sold, and the selling price was the minimum allowable bid of $1.86 per unit. The reason is simple:  electricity use is way, way down in the Northeast.  The power industry doesn’t need all the CO2 units being offered.

Environmentalists, who ought to be ecstatic, can still kvetch. The diversion of the RGGI funds already deposited with the states is problematic: instead of being used for energy-salvation measures, they are being used to pay for schools and other state expenses. One environmental activist is quoted as follows:

Some environmentalists who support the multistate pact agree that without the investment in programs that cut energy use and create green jobs, the initiative’s potential economic benefit becomes an expense.

“There’s a direct consequence for taking this money,” said Jeff Tittel, director of the New Jersey chapter of the Sierra Club. “Families are going to pay higher energy bills this winter if they didn’t weatherize their homes.”


It’s worth briefly unpacking this logic. Mr. Tittel’s statement – “Families are going to pay higher energy bills this winter if they didn’t weatherize their homes” – is a truism independent of whether there is a RGGI or not.  If you weatherize your home, you will pay lower energy bills than if you don’t weatherize your home.  There could be no RGGI at all, and that would still be true.

The differences with RGGI are the following:

1. Energy bills are higher, regardless of whether you weatherize or not.

2.  Additional money goes to the state treasuries, with RGGI in effect.  The additional amount doesn’t deliver more electricity to you, or deliver it better.  You just pay more per unit than you did before, and the state gets a new income stream.

You may get a home weatherization out of the deal, but you could have gotten that anyway, without RGGI.  Either way, you’re paying for it; the difference lies in who extracts income from the process, and how.

It’s in the nature of politics that money sitting around in a fund becomes the target of public spenders.  It’s in the nature of economics that when people have less income, but things cost them more, they buy less of those things.  Nevertheless, it’s funny how quickly politics and economics have kicked in to torpedo RGGI, our nation’s grandest (so far) carbon rent-seeking scheme.


Make no mistake:  carbon-credit schemes are about generating income.  They are not about reducing emissions until we can declare victory; their purpose is to institute a method for government and interest groups to perpetually manipulate and make money off of humanity’s most basic interactions with the environment.

Think of it this way.  Option One: you could weatherize your home, and pay lower utility bills.  But why do that, when with Option Two, you could arrange for the government to make the power industry pay it a new surcharge for the authorization to generate power; a move that raises your energy bills (and all your other bills, since everyone you buy anything from uses energy) to cover the surcharge, but also puts more money in the state kitty, some of which might be used to weatherize your home?  Is there any question that Option Two is preferable?  Higher costs overall, money going to the government, special interests rather than the market  dictating the system’s premises – and still you have the possibility, although not the guarantee, of course, of a home weatherization.  What’s not to love?

J.E. Dyer blogs at The Green Room, Commentary’s “contentions” and as The Optimistic Conservative.  She writes a weekly column for Patheos.


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