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Pennsylvania Lawmakers Move to Block Governor’s RGGI Plan

January 8, 2020

Legislators in Pennsylvania are trying to block Governor Tom Wolf's plan to have the state join the Northeast Regional Greenhouse Gas Initiative.

Pennsylvania Gov. Tom Wolf’s plan to have his state join the Regional Greenhouse Gas Initiative (RGGI) is encountering stiff resistance in the state’s General Assembly, where bills have been introduced to require legislative approval for the momentous step.

RGGI is an association of nine northeastern and mid-Atlantic states that implemented the first mandatory interstate cap-and-trade program in the United States to reduce greenhouse gas emissions.

RGGI sets carbon-dioxide emission caps and then forces businesses that cannot reduce their emissions below RGGI’s limits to purchase “credits” from others that have not used their full allowances. Over time, the RGGI system would force the replacement of fossil-fuel-generated electricity with power produced by sources that do not emit carbon dioxide.

Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont are currently in the RGGI.

Launched by Executive Order

Wolf, a Democrat, signed an executive order on October 3, 2019 directing the state Department of Environmental Protection (DEP) to draft regulations establishing the cap-and-trade program under its existing authority to regulate air emissions, to allow Pennsylvania eventually to join RGGI.

Resistance to Wolf’s unilateral move is being spearheaded by House Speaker Mike Turzai (R-Marshall), who developed a two-step strategy to thwart Wolf’s plan.

First, Turzai says he will shepherd legislation requiring the legislative approval of RGGI membership through both chambers of the Republican-controlled general assembly. Second, if Wolf vetoes those bills, as Turzai suspects he will, he will sue the governor, Turzai says.

Those opposed to Pennsylvania joining RGGI say Wolf lacks the authority for such a unilateral action because the fees imposed on power plants for their emissions are taxes, which require legislative approval.

The Wolf administration counters it has authority under the state’s Pollution Control Act to impose fees on carbon-dioxide emissions just as it has in regulating traditional pollutants.

Not a Typical RGGI State

Seven of the nine RGGI states are in the top 10 in the continental United States for highest electricity prices. Two RGGI states—Delaware and Maryland—currently have electricity prices modestly lower than the national average.

As states add more renewable power to their grids to replace fossil-fuel-generated electricity, their energy prices rise, and research suggests RGGI membership is part of the reason for higher energy prices within RGGI.

RGGI membership would hit Pennsylvania’s economy especially hard because, unlike other RGGI states, Pennsylvania is a major producer of natural gas and still has a vibrant, if somewhat diminished, coal sector. With RGGI targeting emissions from fossil fuels, Pennsylvania would bear a heavier regulatory burden than the other, less-industrialized RGGI states.

The state’s DEP has identified 68 facilities—mostly coal-and gas-fired power plants, along with eight waste coal plants and four large industrial complexes—that would fall under the RGGI carbon dioxide emission restrictions and thus be forced into the cap-and-trade program.

Limited Benefits, Higher Costs

It is unclear whether the RGGI cap-and-trade system has had any appreciable effect in reducing carbon dioxide emissions overall. Reductions within RGGI are no greater than the national trend, concluded David T. Stevenson, policy director for the Caesar Rodney Institute, in a 2018 report.

“[A]djusting for the increases in the amount of power imported by the RGGI states, reduced economic growth in RGGI states, and [the] loss of energy intensive industries in the RGGI states from high electricity rates, … emissions reductions are consistent with national trend changes caused by new EPA power plant regulations and lower natural gas prices,” Stevenson wrote.

RGGI raises consumer costs for no benefits, says Tirza Duren, a policy analyst with the Commonwealth Foundation.

“No matter how you measure success, RGGI has failed,” said Duren. “While it hasn’t reduced emissions, it has reduced energy-intensive production by 34 percent in states that have adopted it.

“According to current auction prices, the plan could add an additional $412 million a year to Pennsylvanians’ energy bills,” Duren said. “For the poorest residents, who already spend more than a quarter of their income on energy, that increase takes away from other essentials like food, housing, and transportation.”

PA Emissions Already Declining

In 2018, Pennsylvania’s DEP determined the state’s carbon dioxide emissions declined substantially between 2000 and 2015, with 2013 being the only year in which emissions rose.

The decline in emissions in RGGI states is not an overall emissions decline but represents “leakage,” says Stevenson.

“Pennsylvania’s carbon dioxide emissions fell the same amount per capita as the RGGI states’, without participating in the RGGI program, after adjusting for leakage,” said Stevenson. “Leakage is RGGI’s euphemism for shifting emissions elsewhere by exporting good-paying manufacturing jobs and electric generation to other states like Pennsylvania.

“Pennsylvania’s oil and gas extraction grew 37-fold between 2007 and 2017, fueling a 14 percent growth in goods production even as electric generation was 49 percent higher than demand,” Stevenson said. “By contrast, RGGI states saw oil and gas production fall 99 percent and goods production fall 10 percent. Wolf’s plan for Pennsylvania to follow RGGI states down the same failing path would spell disaster for the state.”

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with the Committee for a Constructive Tomorrow.

Internet Info

Lindsey Stroud, “Research & Commentary: Gov. Wolf’s Unilateral Move to Join RGGI Is Regressive, Will Increase Energy Prices in Pennsylvania,” The Heartland Institute, November 21, 2019: https://www.heartland.org/publications-resources/publications/research--commentary-gov-wolfs-unilateral-move-to-join-rggi-is-regressive-will-increase-energy-prices-in-pennsylvania

Official Connections:

Gov. Tom Wolf: https://www.governor.pa.gov/; https://www.governor.pa.gov/contact/

Pennsylvania state Rep. Mike Turzai (R-Marshall): http://www.repturzai.com/; http://www.repturzai.com/contact

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org