When is a tax not a tax? When it can be hidden under another name, of course.
Anyone who lives in one of nine Northeastern states, including Maine, and uses electricity pays for “emission allowances” to support “green” energy projects and efficiency programs under a 6-year-old law called the Regional Greenhouse Gas Initiative (RGGI, commonly pronounced “Reggie”).
It used to be 10 states, but in 2011, Republican Gov. Chris Christie took New Jersey out of the compact.
The New York Times quoted Christie as saying, “RGGI does nothing more than tax electricity, tax our citizens (and) tax our businesses, with no discernible or measurable impact upon our environment.”
When the program took effect in 2008, The Times noted, “Ten Northeastern and mid-Atlantic states ranging from Maine to Maryland set a ceiling on carbon dioxide emissions (that would) require power plants to purchase credits or allowances that allow them to emit specified amounts of carbon dioxide.”
The “cap-and-trade” program, it said, lets “companies that cut their emissions below their designated caps … to sell or trade their excess carbon allowances in online auctions.”
Christie, however, called RGGI “a failure,” noting that “power suppliers have easily met their caps, and carbon allowances are trading at bottom-level prices because plants are taking advantage of cheap prices for natural gas, which is less polluting than fuels like coal.”
The government had a “fix” for RGGI’s woeful ineffectiveness: Raise the cost of the permits.
A new analysis of the program, prepared jointly by the Maine Heritage Policy Center and the Beacon Hill Institute at Suffolk University (two think tanks that make no apologies for defending the free market), says, “RGGI changed its â€˜Model Rule’ to cut the number of allowances available for auction by almost half. â€¦ As a result, allowance prices increased dramatically,” potentially tripling by 2020.
Needless to say, it’s not the power companies that pay for those permits. Ratepayers are the ones on the hook, and Mainers have paid $48 million into the program since 2008.
What happens to the money? State governments “invest” it in projects favored by politicians and bureaucrats, including high-cost, but low-return, wind and solar projects and energy-efficiency programs directed not by consumer choice but by government-approved grants to companies favored by the states.
In Maine, at least, 35 percent of RGGI payments subsidizes home energy upgrades and conversions for the next three years.
Many may think those purposes are worthwhile, but if these programs are good ideas, they should be supported by taxes whose purposes are openly linked to their outcomes. That’s just simple honesty.
But the justification for charging us for these “allowances” is false for two reasons: First, RGGI, as Christie noted, fails in its reason for existing, as it has no impact on the environment that anyone can determine.
While global warming theorists say carbon dioxide emissions will inevitably lead to higher temperatures, a 30 percent increase since the 1850s has produced no discernible warming for almost two decades.
And carbon dioxide emissions in the United States have been dropping without any national “cap-and-trade” program (which Congress has refused to pass), partly because of the recent business downturn but primarily because of the widespread adoption of cleaner natural gas for power generation.
Second, the emissions saved by RGGI are “a rounding error of a rounding error” when viewed globally, as Beacon Hill’s director of research, Paul Bachman, told a MHPC gathering last week.
With China, India and other nations building new coal-fired power plants by the hundreds, what Maine saves is metaphorically equivalent to taking a pail of water out of Sebago Lake.
And yet, RGGI is costly: According the MHPC/Beacon Hill analysis, a Maine withdrawal from RGGI would save consumers “$106 million to $132 million from 2015 to 2020; raise employment by an expected 270 to 330 jobs over the period; increase Mainers’ real disposable income by $10 million to $11 million; and boost investment by $5 million to $6 million.”
RGGI’s defenders dispute those figures, using thumb-on-the-scale economic models that claim a huge “multiplier effect” for government spending while simultaneously minimizing the effects of private investment.
As with any dueling studies, you can pick whichever one you like. But let’s set aside liberals’ self-serving claims that the think tanks are “biased” while tax-rising bureaucrats and lawmakers are “objective.”
As if. Instead, progressive politicians wanted to raise money for their pet “green” programs, but figured that might not be an easy sell to taxpayers. So they disguised their tax-and-spend programs under the camouflage of “global warming,” raising taxes behind a smokescreen of environmental virtue.
Christie saw through it, and saved his state’s consumers tens of millions of dollars. Why can’t we do that for Mainers?
M.D. Harmon, a retired journalist and military officer, is a freelance writer and speaker. Email at: firstname.lastname@example.org.