Pennsylvania’s Entry Into RGGI Stalls
Although Pennsylvania officially became a member of the Regional Greenhouse Gas Initiative (RGGI) in April of 2022, we have been unable to participate in any of the quarterly auctions because it has been tied up in legal proceedings. Meanwhile, our new Governor has equivocated on RGGI and states that he will set up a task force to investigate how to proceed.
The Regional Greenhouse Gas Initiative is a means to restrict carbon dioxide emissions by power plants. It consists of 12 member states, with Pennsylvania being the 12th, where fossil-fuel-fired power plants pay for allowances for every ton of carbon dioxide they emit. There is a cap on how many allowances there can be, with that cap decreasing every year. The payments make it more expensive for power plants that emit more carbon dioxide to make electricity. The cap means that a steady reduction in carbon dioxide results across all the states.
The money from those allowances can then be used for climate change mitigation such as renewable energy, energy efficiency, and support for electric vehicles. Furthermore, if the RGGI Investments Act is passed by the state legislature, that spending can be expanded to help train fossil fuel workers for clean energy jobs as well as support for environmental justice communities. Pennsylvania would have gained around $200 million per auction. Already, by not participating due to lawsuits, Pennsylvania has lost nearly $1 billion and has failed to reduce carbon emissions.
To understand the current status of Pennsylvania’s participation in RGGI, you have to know some of the history of how we got here. Unlike most states which approved RGGI through legislation, Pennsylvania started the process of joining RGGI through an executive order from then Governor Tom Wolf in October of 2019. Since then, RGGI has been approved by all regulatory committees and has followed the required rulemaking process. The state legislature has tried to stop RGGI, but ultimately never got enough votes to override Governor Wolf.
Once Pennsylvania officially entered RGGI in April of 2022, lawsuits were filed to stop RGGI. The Commonwealth Court imposed an injunction, preventing Pennsylvania from participating in RGGI auctions until all legal matters are resolved.
The litigants in the court cases are fossil fuel interests (fossil fuel companies and unions) and Republican state legislators. Their main arguments are as follows:
Tax v. Regulatory Fee (the court believes this is a substantive argument)
Air Pollution Control Act (Whether or not APCA authorizes the Department of Environmental Protection (DEP) to regulate CO2, the court says DEP can regulate CO2)
Public Hearing Requirement (the hearings were held virtually in 2020, the court says DEP satisfied the public hearing requirement and that the hearings were not required to be in person and in fact they had record numbers of participation)
The one argument that the court thinks holds water is the Tax versus Fee. If it is ruled that it is a tax, that means it would need to be approved by the state legislature (which won’t happen any time soon as there are too many anti-RGGI legislators in Harrisburg). The tax argument is that the money collected is larger than the administrative costs for the RGGI program. The fee argument is that this money will be used to help mitigate the damage done by fossil fuel corporations and in fact, is just a small percentage of the actual cost of the harm that has been done. Additionally, companies wouldn’t have to pay the fee if they lower their emissions enough, and they can trade their credits on auction, which wouldn’t be possible with a tax.
Governor Shapiro is concerned that RGGI won’t deliver the greenhouse reductions that it promises, and he is concerned about its effect on jobs and electricity bills. His plan is to set up a task force to research how RGGI would affect Pennsylvania as well as alternates to RGGI that would reduce greenhouse gasses (in other words, he's kicking the can down the road in case he doesn't have to make a decision because the courts have decided for him).
If the RGGI Investments Act is passed, then the spending of the RGGI funds can be spent on job training and worker transition as well, which will counter any job losses and in fact set our workers up for good paying sustainable jobs of the future. It is estimated that RGGI will create 30,000 jobs in Pennsylvania and add almost $2 billion to our economy. It is also estimated that Pennsylvania’s participation in RGGI will reduce carbon dioxide emissions 31% from 2019 levels by 2030. In terms of electricity bills, the cost that RGGI imposes is a small part of Pennsylvanian’s electric bills, as outlined in Four Facts about Electricity Costs and RGGI in Pennsylvania, which digs into the details of how RGGI will affect electricity bills. Electricity prices from renewable energy are more stable, as the cost is known up front, and the fuel source (wind, sun, water) is free. Fossil fuel prices are more volatile and can be affected by international events such as war. If RGGI funds are invested in energy efficiency projects, particularly for low-income families, it can reduce their monthly bills. In fact, in existing RGGI states, their electric bills have dropped by 5.7%.
The fate of RGGI lies in 2 hands. 1) The courts, currently the Commonwealth Court, but no matter which way they decide, it will be appealed and will end up in the State Supreme Court; and in 2) Governor Shapiro’s hands. He could end Pennsylvania’s participation in RGGI with a stroke of a pen through executive action. It was started by executive action, so it could also end that way. It will take time for the RGGI lawsuits to make their way through the court system, and in the meantime, Pennsylvanians are missing out on the many benefits that fellow RGGI states are experiencing.