Governor issues executive order to join carbon “cap-and-trade” program; senators criticize potential economic impacts
KAYLEE LINDENMUTH / SENTINEL FILE PHOTO - The Schuylkill Energy Resources plant in Yatesville is seen from the Turkey Run section of Shenandoah.
By Kaylee Lindenmuth | [email protected]
HARRISBURG, Dauphin County – An executive order by Governor Tom Wolf to join the Regional Greenhouse Gas Initiative, which sets a cap on CO2 emissions for electrical generators and requires they purchase a credit or “allowance” for each ton of CO2 emitted, is meeting opposition from state senators, including Senator David G. Argall (R-Rush Township).
The governor announced the executive order today, instructing the PA Department of Environmental Production to join the RGGI.
“Climate change is the most critical environmental threat confronting the world, and power generation is one of the biggest contributors to greenhouse gas emissions,” said Wolf in a media release. “Given the urgency of the climate crisis facing Pennsylvania and the entire planet, the commonwealth must continue to take concrete, economically sound and immediate steps to reduce emissions. Joining RGGI will give us that opportunity to better protect the health and safety of our citizens.”
The executive order requires that, by July 31, 2020, DEP develop and present a rulemaking package to abate, control, or limit carbon dioxide emissions from fossil-fuel-fired electric power generators.
The rulemaking, the executive order says, should “Include a robust public outreach effort working with the business community, energy producers, energy suppliers, organized labor, environmental groups, and others to ensure that the development and implementation of this program results in reduced emissions, economic gains, and consumer savings; Establish a carbon dioxide budget consistent in stringency to that established in the RGGI participating states; Provide for the annual or more frequent auction of carbon dioxide emissions allowances through a market-based mechanism; and be sufficiently consistent with the RGGI Model Rule such that allowances may be traded with holders of allowances from other states.
According to the media release, states participating in the RGGI — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont — have agreed, either through regulation or legislation, to implement a regional cap-and-trade program involving CO2 emitting power plants.
“In order to show compliance with the cap, power plants must purchase a credit or ‘allowance,’ for each ton of CO2, they emit. These purchases are made at quarterly auctions conducted by RGGI,” the media release said. “The most recent RGGI auction held September 4th resulted in an allowance price of $5.20 per ton. The proceeds from the auctions are allocated back to the participating states in proportion to the amount of carbon subject to regulation in each state.”
Locally, three coal refuse-fired power plants operate — Schuylkill Energy Resources in Yatesville, near Shenandoah, and the Gilberton Power Company and Wheelabrator, both near Morea — and Argall questioned Wolf’s support of such facilities.
“Governor Wolf recently sent a letter to Washington in support of the struggling coal refuse industry and the need for federal legislation to assist the operations of these plants, and now he flipped his stance to tax their operations,” said Argall.
“I support efforts to reduce greenhouse gas emissions, but it is worth noting that, since RGGI began trading allowances in 2009, the current nine RGGI states have reduced carbon emissions by 17%, while Pennsylvania has reduced carbon emissions by 28%. This was accomplished all without government mandate and at great savings to consumers.”
Senator Gene Yaw, R-Lycoming County.
Argall, along with Senator Joe Pittman (R-Indiana County) and Senator Gene Yaw (R-Lycoming County) said in a Co-Sponsorship Memorandum on Sept. 17, 2019, that “a carbon tax is a major energy and fiscal policy initiative, and if such a tax is to be imposed on Pennsylvania employers, we believe it should be approved by the General Assembly.”
The trio raised concerns then that, if the Commonwealth joined the RGGI, the remaining coal fired power plants in the state “would be forced to close instead of paying hundreds of millions in additional taxes.”
“These closures would lead to the direct elimination of thousands of family sustaining jobs across the Commonwealth and millions in local and state tax revenues,” the trio said. “Beyond the closure of coal-fired [power plants], joining RGGI or implementing any other form of a carbon tax would lead to the closure of every coal refuse-fired [power plant]. Burning coal refuse for energy production provides significant environmental benefits long recognized by this General Assembly and contributes $615 million annually to our state’s economy.”
“Ultimately, with the loss of Pennsylvania’s coal and coal refuse EGUs – nearly one-quarter of our total electric generation capacity – the burden of a carbon tax on power generation would be paid entirely by Pennsylvania’s natural gas-fired EGUs making natural gas-fired EGUs in the Commonwealth less competitive with plants in neighboring states driving investment in natural gas electric generation to other states,” the memorandum continued.
Yaw raised concerns in a media release issued today as well.
“There are a lot of unanswered questions as to what entering RGGI would entail for the citizens of Pennsylvania,” said Yaw. “Perhaps the most important is ‘cost.’ How is this going to impact industry? We have numerous gas fired power plants, as well as coal. What is the impact going to be on the petrochemical cracker plant in Beaver County? I support efforts to reduce greenhouse gas emissions, but it is worth noting that, since RGGI began trading allowances in 2009, the current nine RGGI states have reduced carbon emissions by 17%, while Pennsylvania has reduced carbon emissions by 28%. This was accomplished all without government mandate and at great savings to consumers.”
Patrick McDonnell, DEP secretary, though, was optimistic about the program.
“This initiative represents a unique opportunity for Pennsylvania to become a leader in combatting climate change and grow our economy by partnering with neighboring states,” said McDonnell. “As a major electricity producer, Pennsylvania has a significant opportunity to reduce emissions and demonstrate its commitment to addressing climate change through a program with a proven track record.”
“We are seeing the immediate and devastating impact of climate change right here in Pennsylvania, with more intense rain storms leading to flooding occurring outside flood zones, and dry conditions that can increase the threat of fire in our wooded areas,” said Randy Padfield, director of the Pennsylvania Emergency Management Agency. “Combatting climate change demands cooperation among many state agencies but also a proactive approach, and joining RGGI will help reduce carbon emissions, which will, in turn, reduce the threat of weather-related natural disasters.”
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