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Lawsuit filed over Regional Greenhouse Gas Initiative

Print | Comments () Posted by Beth Daley January 31, 2009 07:05 AM

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A lawsuit has been brought against the Regional Greenhouse Gas Initiative, the nation’s first mandatory market-based effort to reduce carbon dioxide emissions from Northeastern power plants.

Indeck Energy Services Inc. is challenging New York state's authority to join the 10-state pact, known as RGGI, without legislative approval. The lawsuit was first reported by the New York Times Green Inc. blog earlier this week.

The company says it will lose millions of dollars that other power generators won’t under the program, which creates a cost for emitting carbon dioxide. While most power plants will be able to eventually pass those carbon costs onto customers, Indeck says it will not able to do so at a natural gas plant it owns in Corinth, New York because they are locked in a long term fixed price contract. The company also says participating RGGI states needed an act of Congress to develop the compact.

“We support the intent of the RGGI program to reduce greenhouse gas emissions and to mitigate the effects of global warming,” said Indeck president Gerald F. DeNotto in a press release. But, he added “The regulations arbitrarily discriminate against a few electric generators that are bound by long term fixed price contracts. We made our case during the stakeholder process, in written testimony and in meetings with state officials. No changes were made. Regretfully, there was no choice but to file this lawsuit.”

New York officials told the Green Inc. blog it RGGI was legal. And in response to the Indeck suit, a suite of environmental and energy groups issued a press release also saying the company’s argument was invalid. They said Indeck’s claims were addressed during the nearly two-year public process of finalizing RGGI regulations.

"At every step of the way for the Regional Greenhouse Gas Initiative, power plants have tried to slow down this process and this is one more example," said David Gahl, of Environmental Advocates of New York. "New York State has responded to these concerns and now it's time to get with the program.”

While Indeck owns a biomass plant in New Hampshire, it isn’t subject to the same long term price contracts as their New York facility. New England environmentalists say while they are still examining the issue, it does not appear any power plants in New England are affected by the same issue Indeck is raising.

RGGI is designed to cap power plant emissions in 2009 and then gradually reduce them by 10 percent over the next decade. Power plants will have to buy emission allowances from states for every ton of carbon dioxide they emit, with plants that emit larger amounts having to buy more allowances than cleaner ones.

The number of available allowances will decrease as the overall cap is lowered, raising their price and encouraging plants to invest in clean technologies to avoid the higher cost of polluting.