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Gov. Tom Wolf shares wish list for state’s potential proceeds from Regional Greenhouse Gas Initiative

  • Jun 15, 2021 10:42 am GMT
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Patriot-News

Opening a new front in the fight to place Pennsylvania in the multi-state Regional Greenhouse Gas Initiative, Gov. Tom Wolf and Democratic legislative allies laid out a vision Monday of what the state could do with $250 million-plus annually expected from the future sale of allowances to energy companies for each ton of greenhouse gases they create while powering Pennsylvania.

The three-pronged approach proposes new investments aimed at:

RGGI, based on current prices for the emission allowances, is expected to net about $250 to $300 million a year for Pennsylvania.

It’s a financial sweetener that - RGGI backers hope - gives the administration a new way to try to win some legislative buy-in for a program which, to date, has run into fierce opposition from the Republican-controlled majorities in the state House and Senate, not to mention a variety of business and industry groups.

Wolf believes he can join the regional cap-and-trade program by executive action, without legislative approval, and he expects to do so by the start of 2022. But he has acknowledged the General Assembly has an important say in allocation of the proceeds.

Under the plan introduced Monday, half of Pennsylvania’s future RGGI proceeds would be used to continue the attack on greenhouse gas emissions that most scientists agree are changing the world’s climate through the state’s Clean Air Fund. That’s a special fund that receives fees, fines and penalties related to state and federal clean air laws, which Pennsylvania’s Department of Environmental Protection enforces.

DEP Secretary Patrick McDonnell noted the administration has executive authorization to spend those dollars on projects like weatherization for low-income households; rebates and incentives to promote consumer use of high-efficiency appliances and lighting; or grants and loans to help business upgrade to industrial processes and community solar projects.

All are designed to lower emissions and increase electric efficiency, which has additional benefits for the state as a whole.

“The more you’re knocking the peaks off of the hottest days of the year, the cheaper electricity is for everyone,” McDonnell said.

Supporters said the proposed Energy Communities Trust Fund, which would account for 37.5 percent of RGGI auction proceeds, would bring direct supports to communities rooted in the fossil fuel present, to help them deal with the fallouts that many feel are inevitably coming, whether Pennsylvania joins the regional initiative or not.

For example, while natural gas production from the state’s Marcellus Shale deposits has boomed, the number of conventional coal-fired power plants in Pennsylvania has dropped from 23 in 2004 to six, and the owner of one of those last six announced just last week it will close the Cheswick Generating Station in Springdale, Allegheny County, by Sept. 15.

The Energy Communities Trust Fund could be tapped to help newly-unemployed workers pay for retraining, help communities position themselves to attract new businesses, and provide subsidies to help the local governments or school districts ride out any short-term drops in property tax revenue.

The final set of funds, accounting for 12.5 percent of the total pool, would be reserved for an Environmental Justice Communities Trust Fund, to help identified neighborhoods recover from long-term effects of pollution or other environmental degradation attributable to the construction of high-use transportation corridors, landfills, or other by-products of modern-day society.

Without legislative approval of the new trust funds, however, all RGGI proceeds would flow into the Clean Air Fund, severely limiting the state’s ability to help those affected by the economic transitions.

Not everyone, of course, is ready to concede Pennsylvania’s entry into RGGI.

Begun in 2008, the initiative, spoken as ‘Reggie,” is the Eastern Seaboard’s primary regional answer to climate change.

The system is really a confederation of 10 states that have agreed to play by the same marketplace rules in operating a cap-and-trade program where energy companies are essentially required to pay for the emission of greenhouse gases from their power plants.

The states do that through a system of allowances, or credits, that are allocated based on baseline pollution levels, and then set to steadily decline over time, like a game of economic musical chairs. The credits are sold at quarterly auctions, giving energy generators the choice of either paying more for a shrinking supply of allowances, or taking other steps to reduce their emissions to so that they don’t have buy as many in the first place.

If you’re from western Pennsylvania, where the last coal-fired power plants - and the coal mines that keep them stoked - still are among the big regional employers, RGGI sounds like some form of economically-assisted suicide.

“A good amount of our economy is based on the coal industry, on the fossil fuel industry,” said state Rep. Jim Struzzi, a Republican from Indiana County who feels like he’s at ground zero with two coal-fired electric generation plants in his district alone.

“The real kick in the gut I guess is that even by DEP’s own modeling, if RGGI is implemented it would only create a 2 percent reduction in carbon emissions, I believe it’s by the year 2050. And yet we’re talking billions (in economic impact) almost immediately.

“So to offer these communities a trust fund that they believe will be $300 million is simply a small pittance when you look at the big picture economic impacts... From my perspective, and that of I think a lot of my colleagues who are really starting to take a look at this now, it makes zero sense. It would be devastating for this entire Commonwealth.

”There’s got to be a better way to do what’s right for the climate, to do what’s right for the environment, than taking away existing jobs,” Struzzi said.

(Underscoring the depth of that legislative opposition, the state Senate voted 35-15 Monday evening, with six Democratic ‘yes’ votes, to pass a bill that would require General Assembly approval of any entry into a multi-state program, like RGGI, that could impose a carbon tax. That, on this day, was a veto-proof majority that significantly ratchets up the stakes for later consideration of Senate Bill 119 in the state House.

The six Democrats reflected a blend of members from the southwestern part of the state, where Pennsylvania’s coal industry is concentrated, and labor-sensitive members who were acknowledging several major unions’ opposition to the Pennsylvania’s entry into the regional cap-and-trade program.)

DEP’s modeling actually projects a 25.5 percent cut in annual power plant carbon dioxide emissions by 2030, which proponents of the program say is essential if Pennsylvania is going to have a chance to meet the Wolf Administration long-range commitment, working off a 2005 baseline, to cut overall carbon dioxide emissions in Pennsylvania by 26 percent by 2025, and 80 percent by 2050.

Some of the state’s largest industrial energy consumers have pushed back on that, asserting that because some of Pennsylvania’s now-costlier power production could shift to Ohio, West Virginia and other non-RGGI states, the actual emissions drop across the regional power grid that Pennsylvania belongs to will be far smaller, and not worth the economic costs.

DEP’s updated models, however, show only small changes in employment and gross state product long-term, with job losses in resource extraction offset by gains in construction of clean and renewable power production and the manufacturing to support it.

Electric bills for consumers could be up by as much as $1.92, (for users of oil or gas heat) to $2.70 per month (for users of electric heat) by 2028, but are projected to track back to near “business-as-usual” by 2030.

“When you’re putting more energy efficiency on the grid... you’re actually depressing some of those prices,” McDonnell said during an interview with PennLive earlier this year. “So at the same time you have the carbon price you also have pressures going the other way which ultimately means that it (the cost of RGGI) has about levelled out.”

With climate projections showing Pennsylvania on-track for a six-degree increase in average temperatures by 2050, Wolf said Monday that the perils of doing nothing are worse than any risks that come with taking necessary action.

“I think with the Cheswick situation we have a great example of what’s going to happen,” Wolf said.

“Let’s look at Ohio (where’s Cheswick’s owners will also close a second coal-fired plant this year). They’re not doing anything with RGGI. They’re not doing anything to create funds for the transition. Those coal plants are going to go out of business. They’re going to retire. And all those jobs are going to be lost, all those communities are going to be devastated, and there’s going to be nothing,” Wolf said.

“That’s what we’ve done in the past. That has not been a really good idea.... So we can ignore that. We can close our eyes, close our ears and say: ‘It’s just not happening. I hate this. I hate this. It’s doing terrible things to communities and workers who have done so much to provide our electricity.’ Or we can do something like RGGI. And that is, find funds to say, we understand that you are facing a real transition here. We want to do something. We want to do something concrete.

“It’s hundreds of millions of dollars... and much of it is coming - because Pennsylvania is an energy exporter - much of that will come from fees that are paid by people that don’t even live in Pennsylvania. How can we be against this?” Wolf asked.

The proposed budget for the RGGI proceeds is not tied to the state’s general fund spending plan, which must be ironed out this month. The Wolf administration would like to see the new trust funds authorized by next year, so that when and if the state holds its first auction, the proceeds can be disbursed accordingly.

©2021 Advance Local Media LLC. Visit pennlive.com. Distributed by Tribune Content Agency, LLC.

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