Koch-funded front groups – led by Americans for Prosperity (AFP) -- joined right wing mouthpieces like Glenn Beck and others who labeled RGGI a “cap and tax” initiative. Conservative activist Clint Woods of the Koch-funded American Legislative Exchange Council (ALEC) stated that RGGI and other regional cap-and-trade regimes had become the “new battlefield” since federal climate legislation was defeated.
ALEC has provided template legislation for states across the country to pull out of regional climate accords such as RGGI and the Western Climate Initiative. The Kochs have already had success in New Hampshire where, on February 28, 2011, the state’s House Republicans voted to leave the RGGI program in a veto-proof vote.
Despite supporting campaigns against RGGI, a Koch subsidiary participated in the very first RGGI trade of physical carbon allowances. As a Koch Supply and Trading spokesperson said, "Koch has participated in the RGGI market since its inception."
The Regional Greenhouse Gas Initiative (RGGI -- pronounced “Reggie”) is a market-based cap-and-trade program established in 2007 by ten Northeast and Mid-Atlantic states (CT, DE, ME, MD, MA, NJ, NH, NY, RI and VT) to reduce greenhouse gas emissions from power plants. In just over two years, RGGI states raised over $770 million, putting most of the proceeds into clean energy development, home weatherization and other conservation programs that reduce energy consumption and lower energy bills.
Spreading Lies About a “Stealth Tax”
By the middle of 2010 Americans for Prosperity (AFP) and other Koch allies began protesting at RGGI offices and attacking the program as a “stealth tax” that threatens to raise electricity rates so high that they will sap the nation’s economic strength.
AFP offers little evidence to back the charge. RGGI allowances account for 0.4% to 1% of average electricity bills across the region, or about 73 cents per month. Under the RGGI program, ratepayers end out saving $3 to $4 for every dollar invested.
Utility officials agree that RGGI has had a tiny effect on electric bills. Early projections were that RGGI would add $3 to the average household bill in 2015. The actual cost has been less than that, according to the New Jersey-based Public Service Enterprise Group (PSEG):, one of the ten largest electric companies in the U.S.
According to Gavin Donohue, executive director of Independent Power Producers of New York, an industry lobby, the program was targeted by critics because of its potential to help build momentum for a national cap-and-trade climate program.
This strategy was confirmed in September, 2010 by conservative activist Clint Woods of the American Legislative Exchange Council (ALEC), who said RGGI and other regional cap-and-trade regimes have become the “new battlefield” since federal climate legislation was derailed. ALEC, which has created template legislation for state lawmakers to use as a way to back out of regional climate accords, received $125,000 from the Koch brothers’ Claude R. Lambe Charitable Foundation in 2009 and has received donations totaling $533,000 from the Koch foundations since 1997. Koch Industries consultant and former executive Mike Morgan sits on ALEC’s Private Enterprise Board, and Wall Street Journal editorial board member Stephen Moore, who has attended the Koch brother’s political strategy meetings, is on ALEC’s Board of Scholars.
After two states diverted a substantial portion of the RGGI program’s revenues for other purposes in 2010 ($65 million in New Jersey and $90 million in New York), AFP and others began to focus its attacks on the program as a “stealth tax” that should be scrapped altogether.
Environmentalists agree that RGGI revenues should not be diverted, especially since the programs have created thousands of clean energy jobs. According to RGGI officials, 80 percent of the revenues have gone to energy-efficiency and related programs, as intended. Peter Shattuck, a carbon trading analyst with Environment Northeast, told NPR’s Robert Siegel, “the vast majority” of RGGI funds had gone to hundreds of renewable energy and conservation projects, including putting solar panels on schools and helping low-income families insulate their homes.
New Hampshire Legislators Target RGGI
In 2008, New Hampshire committed to cut CO2 emissions from power plants 10% by 2018.
NH was one of the founding states of the RGGI program, with its first auctions taking place in 2009. Since then, the state has awarded over $31 million to 36 different energy efficiency projects and programs.
In the 2010 elections, the GOP took over the House, winning 297 of 400 seats, along with 19 of the 24 Senate seats, creating a majority that has not happened since 1962 .Six New Hampshire state Representatives have signed AFP’s “No Climate Tax” pledge, designed to dissuade lawmakers from supporting legislation designed to implement solutions to global warming. Among state candidates who signed a separate “Anti-Tax Pledge,” also created by AFP, which more broadly opposed taxes and government spending, was House speaker William O’Brien.
O’Brien then spearheaded the GOP campaign to take down the RGGI program, and on February 23, 2011 New Hampshire’s House voted to repeal RGGI with a majority that ruled out a veto by the governor. The repeal legislation received full support from AFP, with NH state director Corey R. Lewandowski claiming in January that RGGI money “was taken by regulators from consumers in the form of higher electricity bills and then redistributed to environmental special interests friendly to the politicians in power.”
The weekend before the vote, Americans for Prosperity paid for automated “robo calls ” across the state urging the vote against RGGI.
After the vote, Lewandowski, with AFP policy director Phil Kerpen, in an opinion piece for FoxNews.com, hailed the vote as “one giant leap forward”, saying it would raise the pressure against similar efforts in New Jersey.
New Jersey Legislative and Political Attack
Americans for Prosperity has been promoting legislation in New Jersey that would yank the state out of the RGGI climate compact, while pressuring Gov. Christie to issue an executive order that would do the same. Although Christie has quietly maintained his support for RGGI (he has used RGGI proceeds to help develop the state’s offshore wind program), AFP and its allies have threatened to oppose any future presidential nomination bid if he refuses to change his position. "It's difficult for him to be a credible option for conservatives nationally if he doesn't take a stand on cap and trade, and that's why we think we'll be able to appeal to him," AFP policy director and Fox News columnist Phil Kerpen told Politico.
In 2010, AFP organized a series of anti-RGGI rallies in New Jersey and outside the RGGI’s auction house in New York City. At the New York rally, AFP’s New Jersey State Director Steve Lonegan declared that RGGI is “the biggest conspiracy between the public sector, big banks and government that Americans have ever seen and you -- the ratepayers -- are going to pay the price.” Lonegan went on to blast the two-year-old program as "sketchy, shadowy, clandestine and top-secret" to a booing crowd of AFP supporters.
Before organizing the protest, Lonegan and AFP do not appear to have checked the list of prospective auction bidders, that included Koch Supply and Trading of Wichita, KS, a subsidiary of Koch Industries, AFP’s key backer. Koch traders proudly purchased the very first trade of physical carbon allowances made at a RGGI auction in 2008.
According to the Albany Times Union, Koch’s traders took part in at least three of RGGI’s first nine credit auctions—including the auction that AFP recently protested as “secretive”. As a Koch Supply and Trading spokesperson said "Koch has participated in the RGGI market since its inception."
Ironically, the David H. Koch Institute at the Massachusetts Institute for Technology has received a fifth of its funding for energy efficiency from the RGGI program.
Despite RGGI’s positive impact on Koch companies and outlets, Americans for Prosperity has continued its assault on regional climate initiatives in numerous other states, complimenting the template legislation provided by the American Legislative Exchange Council and cheerleading from the Koch-funded Heritage Foundation.