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Pennsylvania Governor’s Cap-and-Trade Scheme is All Pain and No Gain

December 9, 2019

Pennsylvania Gov. Tom Wolf’s executive order to bring the Keystone State into the Regional Greenhouse Gas Initiative is easily the most economically harmful act he has taken in his two terms as chief executive of the state.

Pennsylvania Gov. Tom Wolf’s executive order imposing a cap-and-trade system on carbon dioxide emissions is easily the most harmful act he has taken in his two terms as chief executive of the state. As one of the most liberal governors in the nation, his progressive impulses have, until now, been constrained by the Republican-controlled House and Senate.

His move to bring the Keystone State into the Regional Greenhouse Gas Initiative (RGGI) and impose an economically crippling carbon dioxide credit trading scheme is an attempted end-run around the legislature, implementing a de facto energy tax on fossil fuels without legislative approval.

Wolf on October 3 signed an executive order to begin the process of adding Pennsylvania to RGGI, a coalition of northeastern states comprising the so-called “first mandatory market-based program in the United States to reduce greenhouse gas emissions.”

It is now up to the state’s Department of Environmental Protection to draft the proposed regulations and then go through up to two years of a public comment period. News reports say the legislature does not have veto power over the regulation, but one can expect legislators to disagree vociferously with this claim.

Intends to Increase Prices

The overall goal of RGGI’s carbon dioxide cap-and-trade system is to reduce carbon dioxide emissions by making electricity derived from fossil fuels more expensive and, hence, making renewable energy more competitive.

If Pennsylvania joins RGGI, it will enter an existing market through which electricity providers purchase “emission allowances” to offset their carbon dioxide emissions. The market rate for purchasing these carbon offsets through RGGI is $5.20 per ton of carbon dioxide emitted. The most recent statewide data (2016) from the U.S. Energy Information Administration (EIA) shows Pennsylvania energy producers emitted 82 million metric tons of carbon dioxide in 2015, which would have generated about $426 million in revenues from carbon emission fees.

As RGGI is supposed to operate, states within the carbon dioxide permit trading regime are to “invest” this money into “energy efficiency, renewable energy, and other consumer-benefit programs” such as subsidies for wind and solar projects, home and office weatherizing, and expanding public transportation programs in the largest urban areas.

The nearly half-billion dollars in costs would not be absorbed by the power generators but would be passed on to consumers in the form of increased energy costs. Not only would this make Pennsylvania a more expensive place to live, it would also render the state less competitive for energy-intensive businesses compared to neighboring Ohio and West Virginia and other locales with no plans to inflate electricity costs artificially through carbon dioxide taxes or cap-and-trade schemes.

Painful Costs

A 2017 review of RGGI’s effects found member states experienced a 12 percent reduction in goods production and a 34 percent drop in production of energy-intensive goods, attributed primarily to a 64 percent increase in electricity prices in RGGI states between 2007 and 2015.

Additionally, the study shows the cost of wind and solar power has averaged two to three times the megawatt-hour rate of existing conventional fuel sources. Consequently, if, as expected, Pennsylvania’s membership in RGGI results in greater use of renewable energy, it will increase energy costs to the state’s businesses and consumers.

Negligible Benefits

An important but overlooked fact Wolf should have accounted for before imposing RGGI membership on Pennsylvania is just how small an effect such a reduction in the state’s carbon dioxide emissions would have on future temperature changes.

The overarching goal of reducing greenhouse gas emissions is to lower the future temperature of the Earth, yet, using calculations from the National Center for Atmospheric Research, eliminating all of Pennsylvania’s carbon dioxide emissions from coal and natural gas-fired sources would prevent only an immeasurable 0.001 degree Fahrenheit in warming by the year 2050.

This miniscule effect, a reduction in temperature measured in thousandths of a degree, can in no way justify the lost jobs, income, and well-being that will most likely result from Wolf’s RGGI mandate. The governor would infringe on the freedoms of people and make them significantly poorer for virtually no reduction in global temperature.

The legislature, the business community, and all right-thinking citizens should oppose Wolf’s economically crippling proposal.

Gregory Wrightstone (gwrightstone@gwrightstone.com) is a geologist and author of Inconvenient Facts: The Science That Al Gore Doesn’t Want You to Know.

Author
Gregory Wrightstone is a geologist who has been investigating the Earth’s processes for more than 35 years.
info@inconvenientfacts.org @GWrightstone

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