CASE STUDY: Koch Front Groups Attack RGGI – the Northeast Regional Greenhouse Gas Initiative

Page - April 13, 2011
BRIEF: Koch front groups campaigned against the Regional Greenhouse Gas Initiative (RGGI), a market-based cap-and-trade program established in 2007 by ten U.S. Northeast and Mid-Atlantic states to reduce greenhouse gas emissions from power plants.

UPDATE, May 2014 from Greenpeace's blog, the EnvironmentaLIST:

Koch used NJ Gov. Chris Christie to Undermine Climate Policy

Authored by Connor Gibson for Greenpeace Investigations.

The major SHOWTIME series Years of Living Dangerously has an inside look at how the billionaire Koch brothers used their advocacy group Americans for Prosperity to force New Jersey out of a regional climate change program:

This is ironic, since Koch itself profited from the cap-and-trade program called the Regional Greenhouse Gas Initiative, or RGGI. RGGI ("reggie") has helped ten northeastern states reduce climate emissions and raise revenue. That revenue has helped drive investments in jobs in the clean energy and energy efficiency sectors, in addition to reducing electricity bills for families in need of such assistance.

Years of Living Dangerously adds depth and detail to the Koch brothers' assault on the Regional Greenhouse Gas Initiative, as included in Greenpeace's 2011 report on Koch Industries and climate change denial. Our case study on the Koch-fueled RGGI attack was written before hurricane Sandy devastated large portions of coastal New Jersey, and before Governor Chris Christie unlawfully pulled NJ out of RGGI. We documented attacks on RGGI from Koch-funded political groups like AFP, the American Legislative Exchange Council (ALEC), and the Heritage Foundation.

After Gov. Christie inappropriately repealed his state from RGGI, the Mother Jones and Brad Blog recordings revealed Christie's attendance at one of the Koch brothers' regular strategy & fundraising meetings in Vail, CO. Christie tried to hide his brief Koch keynote speech from his constituents, but recordings revealed that Christie and David Koch met privately in Mr. Koch's Manhattan apartment just five months before Christie pulled NJ from RGGI. Both have denied discussing RGGI at that timely meeting. Hurricane Sandy Aftermath

Despite Chris Christie's claim, "I will be New Jersey's number-one clean energy advocate," the Governor ultimately caved to David Koch and groups like AFP, of which David Koch is the founding chairman.

Note an angle we didn't initially cover: an agenda-driven blog called "New Jersey Watchdog" was very active in promoting material used to attack RGGI's public reputation. People reading NJ Watchdog may not realize that it is run by the Franklin Center for Government and Public Integrity, a network of corporate-friendly blogs disguised as investigative reporting outlets. The Franklin Center is formally affiliated with fossil fuel front groups like AFP and ALEC through the State Policy Network.

Like many of those groups, the Franklin Center isn't transparent about whose agenda it serves. Franklin Center is almost exclusively funded (80% to 95%) through the secretive Donors Trust & Donors Capital Fund network, which Koch and others use to obscure their giving to controversial causes.

These surrogate groups allowed the Koch bros to exert overlapping influence on Gov. Christie: ALEC provided the policy pressure, AFP provided the public pressure and attack advertising against RGGI, Franklin Center helped create favorable media to support Koch's campaign, groups like Heritage Foundation amplified the noise to reach national audiences. This is how the State Policy Network helps out-of-state billionaires attack policies that threaten the long-term profits of businesses that refuse to proactively address 21st Century challenges like global warming.

Important to realize is that ALEC, AFP and the rest of the State Policy Network aren't done attacking RGGI. The Beacon Hill Institute, a SPN affiliate at Suffolk University in Boston, was recently chastised by its host university for seeking funds for biased reports to advance political campaigns against RGGI. Beacon Hill sought that money last fall from the Searle Freedom Trust, indicating a renewed push by the State Policy Network to attack the east coast's most significant climate policy.

Chris Christie, Hurricane Sandy, and Climate Science:

After pulling out of RGGI, Christie made it clear that he’s not a climate science denier:

“In the past I’ve always said that climate change is real and it’s impacting our state. There’s undeniable data that CO2 levels and other greenhouse gases in our atmosphere are increasing. This decade, average temperatures have been rising. Temperature changes are affecting weather patterns and our climate.”

This is not to say that RGGI participation would've stopped Sandy from slamming the east coast--it wouldn't have. However, there is unsavory irony in Christie's attempt to undermine a regional climate change mitigation program just before his state was hit by a disaster that credible scientists say climate change intensified--see Politico op-ed by Corell, Trenberth, & Masters.

Sandy killed over 30 people in New Jersey and over 72,000 homes and businesses were destroyed. The Star-Ledger reports NJ received about $1.8 billion in federal aid and billions more from the National Flood Insurance Program. Recent reporting has touched on how mismanaged these federal funds have been as outside contractors hired by Christie's administration have neglected people that still need help. In typical pessimistic fashion, this neglect has disproportionately impacted people of color who weathered the monstrous storm.

David Koch: Normal People Can't Fly on a Private Jet to their Other Mansion.

David Koch's Southampton mansion was not apparently harmed in the storm, so Mr. Koch isn't coming any closer to understanding how the policies he demands from his political friends are punishing those who weren't born into fortune. Koch himself joked over this inheritance:

“You might ask: How does David Koch happen to have the wealth to be so generous? Well, let me tell you a story. It all started when I was a little boy. One day, my father gave me an apple. I soon sold it for five dollars and bought two apples and sold them for ten. Then I bought four apples and sold them for twenty. Well, this went on day after day, week after week, month after month, year after year, until my father died and left me three hundred million dollars!”

At the present date, Charles and David Koch are each worth about 50 billion dollars when considering their personal fortunes and the value of the companies they privately own. The Kansas billionaires continue to invest millions of that fortune into organizations denying climate change science and attacking all viable policies to address the problem.

The tangible disconnect between those who are being hurt by our changing climate and those who have the resources to indefinitely protect themselves only partially explains how the Kochs' wealth buffers them from reality. They also have a financial incentive to fund politically malicious activities: Koch Industries continues to generate profit from its carbon-intensive businesses, hastening the onset and severity of global warming.

Hurricane Sandy Aftermath An amusement park on a pier in Seaside destroyed by Hurricane Sandy on the New Jersey coast. © Greenpeace / Tim Aubry

 

Original case study from Greenpeace's 2011 Koch report:

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."

FULL SCOOP:

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.

Deliberate Strategy

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.

See also PolluterWatch profiles of Koch IndustriesCharles Koch and David Koch.