New Jersey's Solar Energy Future | Emissions Trading | Renewable Energy

Introduction State capitals across the United States have embraced renewable energy as a focal point of their energy

and economic future. Most states now require utilities to source some percentage of their generated electricity from renewable energy projects. 1 Some states even created programs to help finance renewable energy projects. 2 But these programs often lack focus and precision. As for focus, states often justify their renewable energy programs with a mixture of conflicting policy objectives. As for precision, poor design of some renewable energy programs created market distortions that nearly toppled the programs. To avoid these problems, state policy-makers should consider two questions: First, what are the broader goals that renewable energy policies are meant to serve? Second, how can policymakers design effective and efficient renewable energy programs? This Article suggests answers to each of the two questions. First, policy-makers should make climate change avoidance the primary objective of any renewable energy program. Second, policy-makers must design renewable energy programs that effectuate six policy criteria: (1) protect ratepayers, (2) insulate money from politics, (3) create jobs, (4) protect the reliability of the electric grid, (5) facilitate private lending, and (6) build in flexibility for program modifications. This Article uses New Jersey's Solar Renewable Energy Certificate program as a case study to propose specific solutions for each of the six criteria. Part I: Climate Change Avoidance as a Policy Goal for Renewable Energy Programs The policy goal of climate change avoidance holds two advantages over other energy policy goals: (1) it is the least political energy policy goal, and (2) it is the most compelling energy policy goal. It is the least political because it promotes decisions based on science rather than political pressure and influence. And it is the most compelling because climate change will negatively affect most people. Renewable energy programs serve the goal of climate change avoidance for two reasons. First, these programs can create a home-grown constituency for greenhouse gas reductions in states that have not supported more comprehensive measures, like cap-and-trade programs. Second, they can prepare the state's economy for more comprehensive solutions in the future. Climate Change Relies More on Science, and Less on Politics, Than Other Policy Goals. Avoiding climate change requires policy-makers to lean on the expertise of scientists. Scientists explain the scope of the problem, and they define the boundary of possible solutions. As for the problem, scientists determined that the world must limit the increase in global average temperatures to two degrees Celsius to avoid catastrophe. 3 As for the solutions, scientists have developed technologies that lower emissions without compromising our standard of living. 1 of 14

(Because of technological advances, Americans do not need to embrace bulky sweaters to avoid climate change, as President Carter urged.) 4 In short, climate change requires a heavy reliance on the advice of science. Other energy policy goals rely on other expertise. Energy security, for example, leans on the advice of defense strategists. The goal of energy security is to decrease the energy dominance of certain rogue states. These states use their energy dominance to advance their anti-American political agendas.5 This was the energy policy goal of the Bush Administration. In service of this goal, President Bush formed a task force of senior government representatives, headed by Vice President Cheney.6 It was military experts like Vice President Cheney that developed the energy plan, not scientists. When the goals of an energy policy are determined by agendas other than science, the results tend to be politicized. For example, the federal Renewable Fuels Standard (RFS) permits corn ethanol to constitute a large amount of the RFS's biofuels mandate. Why does corn-based ethanol receive such individualized treatment in the RFS? Because senators from cornproducing states command a great deal of power in the U.S. Senate. 7 They demanded that the Clean Air Act itself preserve at least some place for corn-based ethanol (even though Brazilian sugar cane is a more potent fuel source). 8 Climate Change Will Negatively Impact More People Than Other Pressing Energy Policy Concerns. Climate change is a global problem - it will negatively impact everyone, though in different ways. Melting sea ice in the Arctic will change the ocean currents, making Europe a very cold place.9 Elsewhere, it will submerge small islands and ravage food supply in the United States. 10 Climate change thus presents a challenge that everyone can understand and appreciate. Energy security concerns, by contrast, necessarily entail controversial political judgments. These policy judgements are often zero-sum trade-offs. For example, President Bush's task force recommended that the United States help states along the Caspian Sea develop natural gas resources.11 That policy would wean those countries off Russia, but it might turn them into new energy oligarchies. Thus, even from the perspective of energy security, building a home-grown supply of natural gas in the Caspian states may not serve the goal. Endorsing these energy security plans depends on your perspective. They may help the United States, but they may hurt the interests of other countries. Climate change does not suffer the same problem because the vast majority of humankind stands to gain by avoiding climate change. Renewable Energy Programs Serve the Goal of Climate Change Avoidance. Renewable energy programs serve the goals of climate change in two ways. 12 First, supporting renewable energy creates a politically influential constituency in support of emission reductions. 2 of 14

Second, it eases the economy toward a place where it can accept tougher emission reductions in the future. While renewable energy alone cannot solve climate change, it can change the political and technological realities to do so. 13 Renewable Energy Programs Build a Constituency in Support of Greenhouse Gas Reductions. Politicians respond to political pressure from constituents. 14 While money certainly influences the decisions of politicians, so too do votes. State and local politicians respond even more acutely to the pleas of constituents, particularly those that employ large numbers of people in the district.15 Fossil fuel industries already sport well-greased political lobbying machines. And these industries oppose efforts to reduce greenhouse gas emissions. For example, the American Petroleum Institute prominently states its policy goals on its website: it opposes taxes, opposes EPA regulations to regulate greenhouse gases, and supports the Keystone XL Pipeline. 16 Industry lobbying groups like API exert tremendous political pressure, both on politicians and on their own members. Although API purportedly represents all of its members, these members are themselves a diverse group. Some companies may actually benefit from greenhouse gas regulation, because they have already positioned their businesses to thrive in a green economy. But they cannot devote enough resources to publicly oppose the API's lobbying agenda. 17 Thus, the current power structure in Washington (and in the states) silences pro-emission reduction players from the discussion. These dissenting oil and gas companies can join with renewable energy companies to form a proemission reduction coalition. Historically, the renewable energy companies have been far less influential politically. First, they speak for only a small fraction of U.S. electricity generators. 18 Second, they do not yet view themselves as a coalition with a unified mission. When Solyndra went bankrupt, other renewable energy companies (even other solar companies) said, "That's got nothing to do with us."19 They did not appreciate the fact that Solyndra's collapse damaged the credibility of the renewable energy industry as a whole. Promoting renewable energy helps these companies grow and organize effective lobbying groups. With time, these lobbying groups can counter the domineering influence of API. For example, the North Carolina state legislature considered killing its renewable energy standards. But before the vote, renewable energy companies stormed the offices of the state legislature. The legislators backed down after learning that these renewable energy companies employ significant numbers of people in their districts. 20 The North Carolina story exemplifies how renewable energy programs can create emission reduction constituencies where they would otherwise not exist. Some states like California and the Northeastern states already embraced comprehensive climate-change solutions like cap-andtrade programs. But some state governors remain opposed to such measures (like Governor Christie).21 States like North Carolina and New Jersey have still embraced renewable energy 3 of 14

programs, despite their opposition to comprehensive solutions. Renewable Energy Programs Prepare State Economies for Comprehensive Solutions in the Future. Promoting renewable energy can also build a platform for more aggressive emission reductions in the future. This premise consists of three parts. First, state governments cannot reduce emissions too quickly without shocking their economy. The economy must first be primed to endure a paradigm shift in infrastructure. 22 Power generators and vehicles that run on fossil fuels will need to be replaced. This process will take time. Second, increasing the demand for renewable energy improves technology. Greater demand for renewable energy encourages more project developers to participate in the market. These market participants will compete to supply renewable energy. To compete, market participants will demand better technologies to generate renewable energy at low cost. These technologies will allow states to adopt comprehensive programs in the future. 23 Third, success in renewable energy programs will inspire hope and dispel cynicism for greater emission reductions in the future. Many Americans still reject the need to reduce greenhouse gas emissions. They argue that any move toward reducing emissions will hurt our economy and cost jobs.24 This negative attitude is largely a consequence of two failed attempts to comprehensively reduce U.S. carbon emissions. First, the United States embarrassed itself at the Kyoto Protocol negotiations. Second, the U.S. Senate failed to pass the American Clean Energy and Security Act, better known as the Waxman-Markey bill. Both failures set back U.S. consensus on the need to reduce greenhouse gas emissions. U.S. representatives entered the Kyoto negotiations ready to sign a binding international treaty to reduce U.S. emissions by 7 percent below 1990 levels. But any international treaty requires ratification by the U.S. Senate. The U.S. Senate specified that it would only ratify the treaty if developing countries submitted to binding commitments as well. Despite this order, the U.S. representatives devised and negotiated a cap-and-trade program that did not include developing countries. The U.S. representatives signed the Protocol, but did not submit it to the U.S. Senate for ratification. They knew that the U.S. Senate would not sign the Protocol. 25 The United States embarrassed itself by signing a treaty that it knew it could not ratify. And it embarrassed other countries as well. Other participants like the European Union accepted the cap-and-trade program only because it knew the United States backed it too. But when the United States pulled out, it left the European Union alone to defend the program. 26 The failure to ratify also set back U.S. consensus on the need to reduce greenhouse gas emissions. People became discouraged about the whole enterprise. They had much hope entering the negotiations. But once they discovered that China, the world's largest emitter, would 4 of 14

not participate, some gave up on solving the problem. 27 Failing to pass a nation-wide cap-and-trade program domestically had the same effect. Hopes were high for a climate change solution once leaders of both chambers of Congress and the President supported the idea of a cap-and-trade program. Representatives Ed Markey and Henry Waxman introduced a bill in the U.S. House of Representatives to create such a program. But while the bill passed the U.S. House, it failed to pass the U.S. Senate. Again, hopes for a comprehensive solution to climate change were dashed. 28 The lesson from both the Kyoto negotiations and the Waxman-Markey bill is to start slow. Today, the U.S. public and its elected officials cannot stomach a nation-wide, comprehensive solution to climate change. The only available solution is to take meaningful steps that would change that consensus. To warm people to the idea of a comprehensive solution, state governments can support renewable energy. Renewable energy creates jobs and need not impose significant costs. First, renewable energy programs can be designed to create jobs in-state. New Jersey's Solar Renewable Energy Certificate (SREC) program helps solar companies sell power to New Jersey. But to be eligible to buy SRECs, the solar company must operate inside New Jersey serving New Jersey customers.29 New Jersey is one of many states that impose geographic limitations on its program.30 This design feature of the SREC program keeps and creates green jobs in the state. 31 Green jobs, in turn, will build the foundation of support necessary to undertake more aggressive emission-reducing measures in the future. While some legal experts suggest that these in-state preferences violate the dormant commerce clause of the U.S. Constitution, no one has yet challenged them in court. 32 States like New Jersey may strengthen their case if they limit eligibility on the basis of interconnection to a New Jersey distribution grid, rather than physical location in New Jersey. That rule should at least make the law neutral between in-state companies and out-of-state competitors. Renewable energy will also challenge perceptions of the costs to reduce greenhouse gas emissions. Regulated entities and their lobbyists persistently claim that environmental regulations are too expensive.33 They threaten to move their energy-intensive manufacturing out of the state or even out of the country that imposes expensive environmental regulations. These claims frighten governments who rely on the jobs and industry for revenue. But regulated entities routinely overstate the actual cost of regulatory compliance. Once regulations take effect, the regulated entities often find far cheaper ways to comply. The costs are often cheaper by orders of several magnitudes. One clear example of this phenomenon is the Montreal Protocol. The Montreal Protocol tackled a major environmental threat: the depletion of the ozone layer caused by atmospheric emissions of industrial chemicals called chloroflorocarbons (CFCs). As negotiations for the Protocol were 5 of 14

heating up, EPA commissioned a study from RAND to determine the costs associated with reducing CFCs. The RAND study based its findings on the technologies available before the Montreal Protocol was ratified. But when EPA studied the matter after the Montreal Protocol was ratified, EPA found that the RAND study grossly overstated the costs. 34 Costs had changed dramatically after the adoption of the protocol. Once the protocol was adopted, it became clear to the industry that CFC regulation was here to stay. That realization spurred industry to develop new technologies. These technological innovations changed the cost evaluations almost overnight. 35 Renewable energy policies can engender the same effect. Critics of comprehensive emission reduction policies argue that renewables are too expensive. They say renewable energy still relies heavily on tax credits to remain profitable. 36 This criticism fails to account for the possibility that technology will change. RPS policies drive further technological innovation in renewables. Mandating large-scale deployment of wind and solar farms will spur innovation and improve renewables' profitability. New technology lowered the price of solar cells by 40 percent in 2011.37 Some people who are otherwise opposed to comprehensive solutions embrace renewable energy. Governor Christie campaigned very aggressively on a belief in the value of renewable energy. 38 He made good on his campaign promises by preserving the SREC program last year. 39 And yet he pulled his state out of the Regional Greenhouse Gas Initiative (RGGI), the nation's first mandatory cap on greenhouse gas emissions.40 Why, then, does he support renewable energy? Because, as he says, renewables create jobs in-state. 41 New Jersey's program has other benefits. Propelling New Jersey as a leader in renewable energy (or any industry, for that matter) inspires confidence in the state's economic future. "It chang[es] the perception of New Jersey as a place where you can do business, develop, and grow," said Lee Solomon, former President of the New Jersey Board of Public Utilities. 42 To be clear, renewable energy alone will not solve climate change. To solve climate change, governments have to eventually put a price on carbon. 43 But a price on carbon will not happen without a shift in political consensus. Renewable energy programs like those in New Jersey can begin that process.

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Part II: Design of Renewable Energy Programs Renewable energy programs can revolutionize the political and technological realities of climate change policy, as discussed. But those benefits will only transpire if policy-makers design effective and efficient renewable energy programs. The ideal program must succeed in six criteria: (1) protect ratepayers, (2) insulate money from politics, (3) create jobs, (4) protect the reliability of the electric grid, (5) facilitate private lending, and (6) build in flexibility for program modifications. Electric utilities serving New Jersey must comply with the state's RPS. The RPS law requires that 20 percent of New Jersey's electricity come from "Class One" renewable sources by 2020. The RPS includes a dedicated set-aside for solar power, the nation's largest solar commitment relative to population and electricity consumption. 44 Electric utilities can satisfy their solar requirement by purchasing SRECs. Under the SREC program, a solar installation earns an SREC for generating 1,000 kilowatt-hours of electricity. Solar project owners can then sell their SRECs to electric utilities on the SREC Tracking System.45 If electric utilities fail to buy enough SRECs (or they did not generate their own solar power), they must pay a penalty. In New Jersey's scheme, the penalty for noncompliance is very high. 46 Utilities therefore have a strong incentive to buy SRECs (even at a high price) to be in compliance.47 (1) Renewable Energy Programs Must Protect Ratepayers from High Compliance Costs. Renewable energy programs like New Jersey's SREC program do not shield ratepayers from the cost of compliance. But state utility commissions should soften the blow through the ratemaking process. Utilities selling electricity to New Jersey have raised rates for New Jersey ratepayers. But the rate increase has been small because of financing tools 48 and technological innovations. PSE&G, an electric utility, estimates that its solar program costs customers an extra 30 cents per month on their utility bills. 49 But the company cushioned the blow by amortizing the cost of the program over 20 years. Lower natural gas prices and a recent drop in the price of solar photovoltaic systems have helped too.50 Rates may soon begin to rise because a popular federal program ended in 2011. The Treasury 1603 grant program gave energy projects a 30 percent "grant in lieu of tax credit" if they installed solar panels. Many solar start-ups have little to no federal tax burden, so a federal tax credit would have been unavailing. But a grant for 30 percent of the project was a boost for the project's profitability.51 Although the popular tax program ended in 2011, many solar projects coming on-line now took 7 of 14

advantage before the program's demise. Any future projects may have to charge more in rates to cover the shortfall left behind by the federal program. State utility commissions can limit the impact of RPS programs on ratepayers. When a utility chooses to buy an SREC (rather than generating the solar power on its own), and pass through its costs to ratepayers, state utility commissions should ask why. They should ask if the utility could have produced solar energy for less money than the cost of buying SRECs. They should also ask whether energy efficiency strategies could have created more savings. Utilities are often loathe to invest in areas that they believe are outside of their core business. They see themselves as a "pipes and wires" company, not as an entrepreneur in solar generation.52 For example, utilities in RGGI's footprint often choose to buy carbon allowances rather than invest in energy efficiency. This is a paradox, because energy efficiency is often costefficient even without RGGI's price signal on carbon. 53 State utility commissions can cut through this cultural barrier. By inquiring into the utility's decision to buy SRECs, state utility commissions can keep rates down. Many states concerned about the potential rate impacts of an RPS have instituted cost caps which limit the exposure of ratepayers to higher costs associated with RPS implementation. In general, if a cost cap is reached, suppliers are exempted from further compliance requirements. 54 This legislative approach solves the ratepayer issue more cleanly than does the administrative solution discussed above. (2) Renewable Energy Programs Must Insulate Money from Politics. SREC programs like New Jersey's insulates money from political interference. Under the program, solar generators receive money directly from utilities via the purchase and sale of SRECs. But other programs first funnel the money through the governor's office. While in the governor's office, the money can be redirected to other places. RGGI demonstrates how politics can interfere with renewable energy programs. Under RGGI, electric generators may only emit greenhouse gases if they first buy carbon allowances on an auction. The auction proceeds fill state-controlled funds intended to pay for renewable energy and energy efficiency programs. But three states in RGGI's footprint raided their RGGI funds to plug holes in their budget deficits: New York, New Jersey, and New Hampshire. 55 Environmental groups were outraged, but they could do nothing about it. 56 RGGI thus creates a honeypot for state governors, while the SREC program shields the money from politics. (3) Renewable Energy Programs Must be Tailored to Create In-State Jobs. New Jersey's SREC program is tailored to create in-state jobs by requiring all SRECs to be generated in-state.57 The SREC program has put laid-off construction workers to work installing solar panels.58 New Jersey is now an active marketplace for electrical engineers and smart grid 8 of 14

systems experts.59 While these are all fine accomplishments, some believe that the industry has not created enough jobs. Manufacturing of solar components still largely takes place elsewhere, like in China. 60 New Jersey's unemployment rate remains 1.4 percentage points above the national average. 61 While requiring in-state solar generation creates some jobs, the state should complement renewable energy programs with energy efficiency programs. For example, RGGI allows governors to direct funds toward energy efficiency programs as well as renewable energy programs. Dr. Susan Tierney (Managing Principal at the Analysis Group) argues that energy efficiency projects for RGGI states brings more money back into the states. 62 Energy efficiency projects like home weatherization create in-state jobs because they are done largely by in-state contractors. And because energy efficiency reduces electricity demand, Dr. Tierney argues that utilities will consequently buy less out-of-state power. 63 The effect of energy efficiency projects is to return more money and investment to the state. (4) Renewable Energy Programs Must Protect the Reliability of the Electric Grid. Policy-makers must design renewable energy programs to ensure the reliability of the grid . State utility commissions can address reliability concerns by formally working with the North American Electric Reliability Corporation (NERC). Renewables pose a challenge for grid reliability. An electric grid depends on a reliable source of power to meet the grid's minute-by-minute energy needs. 64 Renewable energy sources like solar panels cannot provide this reliable service. The sun does not shine every day, even in sunny Arizona.65 With more renewables connecting to the grid, a cloudy day could interrupt service. Utility operators in New Jersey worry that the SREC program could soon flood the distribution grid with more solar energy than the grid could handle. Fred Lynk, strategy and planning manager at PSE&G, says solar installed capacity must stay below 15 percent. 66 Because electrical power was scheduled ahead of expected demand, New Jersey might have already overcommitted itself to too many solar panels. 67 State utility commissions like New Jersey's Board of Public Utilities (BPU) handle reliability issues for New Jersey's distribution grid. It does not formally work with NERC. NERC is a quasi-governmental body that develops reliability standards for the bulk power system in North America.68 NERC's definition of "bulk power system" specifically excludes "facilities used in the local distribution of electric energy." 69 Therefore, NERC does not have a formal role in protecting the reliability of distribution grids. BPU should collaborate with NERC on protecting the reliability of New Jersey's distribution grid. NERC has developed superior expertise in grid reliability issues. NERC has worked with transmission system owners on reliability issues since the 1960s. 70 BPU and other state utility commissions should seek the advice and expertise of NERC to address reliability challenges 9 of 14

posed by an increased reliance on solar energy. (5) Renewable Energy Programs Should Facilitate Private Lending. Solar project developers often rely on outside financing. But solar developers have a hard time securing private debt in the SREC system. That is because banks look for committed, long-term revenue when determining creditworthiness. 71 SREC contracts were typically short-term (about three to five years). Short-term contracts are typical for liquid, restructured energy markets like New Jersey's. All of the states offering SREC programs today are restructured. 72 In New Jersey, BPU required the state's four investor-owned utilities to offer long-term SREC contracts—between 10 and 15 years.73 The longer contracts offer solar project developers the creditworthiness they needed to secure private financing. (6) Renewable Energy Programs Should Build In Flexibility to Adapt to Market Changes. Renewable energy programs like New Jersey's SREC program rely on market forces. Solar generators must sell the SRECs they earn at a price that covers their installation costs. The price is determined by basic supply and demand forces. While SREC programs rely on market forces, other programs guarantee a return on investment. European countries tend to prefer feed-in tariff programs over SREC programs. Feed-in tariff programs place a legal obligation on utilities to purchase electricity from renewable energy generators at a guaranteed rate for a determined length of time. 74 Solar generators therefore know how much they will make from their investment. States must therefore design SREC programs to avoid market collapses. An ideal SREC program allows the state utility commission to modify either supply or demand in the SREC market. Without this built-in monitoring ability, SREC markets rely on state legislatures to fix the market. New Jersey's SREC program nearly collapsed last year because of over-supply. Demand for SRECs remained constant because utilities needed to avoid the $693 noncompliance penalty. 75 Early into the program, in 2010, there were so few eligible solar generators to supply power. As a result, utilities were willing to pay close to $675 per kilowatt-hour to avoid the $693 penalty. This astronomically high price attracted solar project owners from all over the country to quickly build in New Jersey. Even average homeowners rushed to install solar panels on their homes to earn SRECs.76 But by 2011, SRECs plummeted in value once supply overtook demand. 77 The price dropped from a high of about $650 during most of 2011 to below $150 by May 2012. 78 The SREC market appeared headed for a crash, but BPU could not fix it administratively. It took an act of the state legislature to save the SREC program. Last summer, both houses of the state legislature passed (without debate) a bill to accelerate RPS requirements by four years. 79 Accelerating the RPS requirements generated some extra demand to meet the over-supply. 10 of 14

Republican Governor Chris Christie quickly signed the bill. 80 Conclusion Renewable energy programs can help states avoid climate change. But state legislatures must design them to mitigate adverse affects and allow for flexibility. The laws should task state utility commissions with more tools to facilitate compliance.

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1 Most States Have Renewable Portfolio Standards, U.S. ENERGY INFORMATION ADMINISTRATION, http://www.eia.gov/ todayinenergy/detail.cfm?id=4850 (last visited May 20, 2013). 2 New Jersey – Incentives/Policies for Renewables & Efficiency , DATABASE OF STATE INCENTIVES FOR RENEWABLES & EFFICIENCY, http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NJ05R&re=0&ee=0 (last visited May 20, 2013). 3 Thomas E. Lovejoy, The Climate Change Endgame, N.Y. TIMES, Jan. 21, 2013, http://www.nytimes.com/2013/01/22/ opinion/global/the-climate-change-endgame.html. 4 President Jimmy Carter – Report to the Nation on Energy, YOUTUBE, http://www.youtube.com/watch? v=MmlcLNA8Zhc. 5 Michael Klare, Bush-Cheney Energy Strategy: Procuring the Rest of the World's Oil, FOREIGN POLICY IN FOCUS, 11, Jan. 2004. 6 Id. at 8. 7 Brent Yacobucci, Energy and Minerals Section Research Manager, Congressional Research Service, Lecture Held at N.Y.U. School of Law (Apr. 12, 2013). 8 Id. 9 Jody Freeman, Visiting Professor, N.Y.U. School of Law, Lecture Held at N.Y.U. School of Law (Apr. 19, 2013). 10 Sharon Burke, Assistant Secretary of Defense, Operational Energy Plans and Programs, Lecture Held at N.Y.U. School of Law (Apr. 16, 2013). 11 Michael Klare at 9. 12 This Article does not address the question of what energy sources should be eligible as renewable. Such a discussion is beyond the scope of this Article. 13 Governments must also support aggressive energy efficiency standards too. 14 Dale Bryk, Director, Senior Attorney, Energy & Transportation Program, Natural Resources Defense Council, Lecture Held at N.Y.U. School of Law (Mar. 29, 2013) [hereinafter Dale Bryk lecture]. 15 Id. 16 AMERICAN PETROLEUM INSTITUTE, http://www.api.org/environment-health-and-safety/climate-change/regulation (last visited May 21, 2013). 17 Dale Bryk lecture. 18 Frequently Asked Questions, U.S. ENERGY INFORMATION ADMINISTRATION, http://www.eia.gov/tools/ faqs/faq.cfm? id=92&t=4 (last visited May 21, 2013). 19 Dale Bryk lecture. 20 Id. 21 Christopher Baxter, Gov. Christie Announces N.J. Pulling Out of Regional Environmental Initiative, STAR LEDGER, May 26, 2011, http://www.nj.com/politics/index.ssf/2011/05/gov_christie_to_announce_nj_pu.html. 22 This Article discusses the role of natural gas in the green economy in Part II. 23 New Jersey Master Energy Plan, Oct. 2008, http://www.state.nj.us/emp/docs/pdf/081022_emp.pdf. 24 See Justin Gillis, Heat-Trapping Gas Passes Milestone, Raising Fears, N.Y. TIMES (May 10, 2013) http://www.nytimes. com/2013/05/11/science/earth/carbon-dioxide-level-passes-long-feared-milestone.htmlpagewanted=all&src=ISMR _AP_LO_MST_FB. 25 Trevor Houser, Visiting Fellow, Peterson Institute for International Economics, Lecture Held at N.Y.U. School of Law (Apr. 30, 2013). 26 Id. 27 Id. 28 Id. 29 How to Participate, NEW JERSEY'S CLEAN ENERGY PROGRAM , http://www.njcleanenergy.com/renewableenergy/programs/srec-registration-program/how-participate (last visited May 21, 2013). 30 K.S. Cory & B.G. Swezey, Renewable Portfolio Standards in the States: Balancing Goals and Implementation Strategies, NATIONAL RENEWABLE ENERGY LABORATORY, (Dec. 2007) at 7. 31 C.f. Nathanial Gronewold, N.J. Harvests but Finds Green Jobs Elusive, N.Y. TIMES, Oct. 19, 2009, http://www. nytimes.com/gwire/2009/10/19/19greenwire-nj-harvests-sun-but-finds-green-jobs-elusive-90531.html?pagewanted=all. Green jobs are addressed in greater detail in Part II. 32 K.S. Cory & B.G. Swezey at 9. 33 See note 16. 34 RICHARD L. REVESZ AND MICHAEL LIVERMORE, RETAKING RATIONALITY: HOW COST-BENEFIT ANALYSIS CAN BETTER PROTECT THE ENVIRONMENT AND OUR HEALTH 131-34 (2008). 35 Id. 36 Chi-Jen Yang, et. al., Wind Power: Barriers and Policy Solutions, 8-9, NICHOLAS SCHOOL OF THE ENVIRONMENT AT DUKE UNIVERSITY, Nov. 2008, http://www.nicholas.duke.edu/ccpp/wind_web.pdf.

37 Zachary Shahan, High-Efficiency Solar Cells Getting More Efficient, Cheaper , CLEAN TECHNICA, Feb. 17, 2011, http:// cleantechnica.com/2011/02/17/high-efficiency-solar-cells-getting-more-efficient-cheaper/. 38 The Christie Plan – Energy As Industry, YOUTUBE, http://www.youtube.com/watchv=19ITlgulels&feature=player_ embedded. 39 Christie Signs Bill to Boost New Jersey's Solar Industry, REUTERS, Jul. 24, 2012, http://www.reuters.com/ article/2012/07/24/us-newjersey-solar-idUSBRE86N1MK20120724. 40 See note 21. 41 See note 36. But the program has not brought as many green jobs to New Jersey as expected. See notes 56-64 and accompanying text. 42 Nathanial Gronewald, Solar Industry's Boom in N.J. Casts Shadow Over Program That Spurred It , N.Y. TIMES, Aug. 25, 2011, http://www.nytimes.com/gwire/2011/08/25/25greenwire-solar-industrys-boom-in-nj-casts-shadow-over-p52495.html?pagewanted=all. 43 Dale Bryk lecture. 44 NJ Settles on Utility Financing Plan, PUR UTILITY REGULATORY NEWS, Sept. 5, 2008, 3885 PUR Util. Reg. News 1. 45 http://www.njcleanenergy.com/renewable-energy/programs/solar-renewable-energy-certificates-srec/new-jersey-solarrenewable-energy 46 See note 21. It was higher then, but now it is lower. 47 Id. 48 See notes 70-72 and accompanying text. 49 See note 21. 50 Id. 51 1603 Program: Payments for Specified Energy Property in Lieu of Tax Credits , U.S. DEPARTMENT OF THE TREASURY , http://www.treasury.gov/initiatives/recovery/Pages/1603.aspx. 52 Dale Bryk lecture. 53 Jon Creyts, et. al., Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost?, McKinsey & Company, Dec. 2007, available at http://www.mckinsey.com/client_service/sustainability/latest_thinking/reducing_us_greenhouse _gas_emissions. 54 K.S. Cory & B.G. Swezey at 17. 55 Three States Raid Anti-Pollution Funds, ASSOCIATED PRESS, Dec. 20, 2010, http://www.concordmonitor.com/ article/229996/three-states-raid-anti-pollution-funds. 56 Mireya Navarro, Groups Criticize a Proposal to Pull Environmental Funds, N.Y. TIMES, Oct. 18, 2009, http://www. nytimes.com/2009/10/19/nyregion/19rggi.html?_r=0. 57 See note 28. 58 See note 40. 59 Id. 60 Id. 61 Salvador Rizzo, N.J. Unemployment Rate Drops to 9 Percent in March Amid Job Gains , STAR-LEDGER, Apr. 18, 2013, http://www.nj.com/politics/index.ssf/2013/04/nj_unemployment_rate_drops_to.html. 62 Analysis Group's Tierney Discusses RGGI's Move to Scale Back Allowances , ON POINT (Feb. 9, 2012), http://www. eenews.net/tv/videos/1468. 63 Id. 64 Dr. Susan Tierney, Managing Principal, Analysis Group, Lecture Held at N.Y.U. School of Law (Feb. 4, 2013). 65 See Jay Apt, Lester B. Lave, & Sompop Pattanariyankool, A National Renewable Portfolio Standard? Not Practical, ISSUES IN SCIENCE AND TECHNOLOGY , http://www.issues.org/25.1/apt.html. 66 See note 21. 67 Id. 68 About NERC, NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION, http://www.nerc.com/AboutNERC/Pages/ default.aspx. 69 Use of “Bulk Power System” versus “Bulk Electric System” in Reliability Standards , NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION, available at http://www.nerc.com/files/Final_BES_vs%20_BPS_Memo_20120410.pdf. 70 History of NERC, NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION, available at http://www.nerc.com/ AboutNERC/Documents/History_Dec12.pdf. 71 Utility Solar Financing Programs, DATABASE OF STATE INCENTIVES FOR RENEWABLES & EFFICIENCY, available at http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=NJ41F. 72 Stephen Lacey, Are SRECs the Future of U.S. Solar Policy?, SOLAR FUSION CORP., http://solarfusioncorp.blogspot. com/2011/01/are-srecs-future-of-us-solar-policy.html. 73 See note 70. 74 K.S. Cory & B.G. Swezey at 21.

75 New Jersey SREC Market, SREC-TRADE, available at http://srectrade.com/new_jersey_srec.php (last visited May 21, 2013). 76 Rebecca Forand, Solar Panel Investors Upset As SREC Values Drop, SOUTH JERSEY TIMES, Oct. 23, 2011, http://www.nj. com/gloucester-county/index.ssf/2011/10/solar_panel_investors_upset_as.html. 77 Id. 78 Seth Masia, New Jersey Revives its SREC Market, and the Solar Installer Business , AMERICAN SOLAR ENERGY SOCIETY, Jul. 26, 2012, http://www.ases.org/ new-jersey-revives-its-srec-market-and-the-solar-installer-business/. 79 Id. 80 Id.

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