State Axes Cap-and-Trade
After more than a year of death-defying escapes, an environmental rule was repealed on Monday, Feb. 6, with a unanimous vote by a Gov. Susana Martinez-appointed board.
The rule up for debate was on capping and trading carbon dioxide emissions—putting a cap on how much can be produced and allowing companies that come in under the limit to trade what remains of their allowance.
The regulation was approved by the Environmental Improvement Board in 2010 during the final months of Democrat Gov. Bill Richardson's administration. But it was never implemented. Martinez fired all seven of those 2010 members and replaced them. The overhauled board axed cap-and-trade.
The rule was one of many pieces of environmental legislation Republican Gov. Martinez tried to halt when she took office [“Guv Sued Over Eco Rules,” Jan. 20-26, 2011]. The rule survived that round only to be challenged by utility companies in the state [“Utilities Protest Carbon Caps,” April 28-May 4, 2011].
This cap-and-trade system is the core component of the Western Climate Initiative. The more jurisdictions that sign up for the system, the bigger the trading marketplace is and the better it works.
Environmental Improvement Board member Elizabeth Ryan says the decision was based on the belief that the cost would outweigh the benefit. Because many states that were part of the Western Climate Initiative pulled out, she says, there’s not an adequate marketplace for trading.
Arizona, Utah, Montana, Oregon and Washington have also withdrawn, leaving California and four Canadian provinces (British Columbia, Manitoba, Ontario and Quebec). “The whole point for New Mexico is that we were likely going to need to purchase allowances from somewhere,” she says. “Who were we going to purchase them from?”
Ryan argues that since no neighboring states have emission caps, local utilities could simply hit New Mexico’s limit and then draw more energy from the plants they have across borders.
Bruce Frederick is a staff attorney with the New Mexico Environmental Law Center, which fought for the rule. He says that isn’t a sound argument. When it comes to trading, “California was the only participant that mattered. California is the ninth-largest economy in the world,” he says. “The bottom line is that as long as California’s participating, the Western Climate Initiative works.”
PNM spokesperson Don Brown says the plan would have cost customers up to $841 million over the first 20 years. No technology exists yet to reduce carbon emissions in power plants, he says—at least not on a large scale. The only way to meet the cap-and-trade requirements would have been to run coal-fired plants less often and natural gas plants more, which are more expensive.
The Environmental Law Center’s Frederick says the group is considering filing an appeal against the board’s decision. He says the choice to repeal the rule is a classic example of the tragedy of the commons, wherein a resource that belongs to everyone and therefore no one, like air, is ruined by lack of accountability. “We never said that New Mexico was going to cure climate change,” he says. “No one jurisdiction can solve the problem. We can demonstrate some leadership, though.”
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