DV Journal

Gov. Josh Shapiro is appealing the Commonwealth Court’s recent decision striking down Pennsylvania’s bid to join the Regional Greenhouse Gas Initiative (RGGI).

The court said Gov. Tom Wolf (D) created an “invalid tax” in 2022 when he issued an executive order pushing the state into the RGGI without legislative approval. It is a multi-state carbon cap-and-trade plan designed to reduce carbon emissions by forcing energy producers to buy credits to generate electricity. Entering the compact was a top priority for Wolf, who vetoed a bill that would have required the state’s legislature to approve entering the RGGI.

“As I have said since January, Gov. Shapiro had the ability to rescind the $600 million RGGI energy tax, but he chose not to,” said Rep. Seth Grove (R-York), chairman of the House Appropriations Committee. “This cap-and-trade RGGI tax scheme will result in job losses in Pennsylvania while at the same time raising the price of energy. It’s a lose/lose for Pennsylvania. Shapiro must be doing this to appease his radical leftist base or attempt to score political points nationally because it doesn’t benefit Pennsylvanians.”

Shapiro’s office said he is appealing the decision to protect the principle of executive authority.

“The Commonwealth Court’s decision on RGGI – put in place by the prior administration – was limited to questions of executive authority, and our administration must appeal in order to protect that important authority for this Administration and all future governors,” said Shapiro’s spokesman Manuel Bonder.

“The governor stands ready and willing to implement the recommendations of the RGGI Working Group, and he would sign legislation replacing RGGI with a Pennsylvania-based or PJM-wide cap-and-invest program, as they proposed.

“Should legislative leaders choose to engage in constructive dialogue, the governor is confident we can agree on a stronger alternative to RGGI. If they take their ball and go home, they will be making a choice not to advance commonsense energy policy that protects jobs, the environment, and consumers in Pennsylvania,” Bonder added.

“We urge Republican and Democratic leadership to join us at the productive table the Governor has set with labor, environmental advocates, energy producers, and consumer advocates to further a commonsense energy policy that moves our Commonwealth forward. Now is the time for action. Inaction is not an acceptable alternative,” Bonder concluded.

But Grove was skeptical.

“Keep taxes on energy producers low and keep taxes on energy consumers lower. If he can’t agree to this, we know where his priorities lie,” said Grove.

Critics privately told DVJournal they don’t believe Shapiro’s decision to announce the move late on the Tuesday before the long Thanksgiving holiday weekend was a coincidence.

“He ran as a moderate, but he doesn’t want to govern that way,” one political insider said.

Free market groups have also condemned Shapiro’s move.

“Shapiro’s decision to appeal the Commonwealth Court’s ruling on RGGI is a massive mistake,” said Commonwealth Foundation Senior Vice President Nathan Benefield. “The move threatens the well-being of working families and raises enormous questions about Shapiro’s governing priorities. Right before Thanksgiving, Shapiro proclaimed his desire to fight for the unilateral authority to raise electricity taxes. It’s a move that could burden Pennsylvanians with higher taxes and electricity bills and undermine the reliability of our electrical grid.”

Americans for Prosperity (AFP) Pennsylvania Deputy State Director Emily Greene posted on social media that she was disappointed because it seemingly ignored higher energy costs. She said thousands of Pennsylvanians see larger energy bills as their top reasons to “turn out to vote” in 2024.

Energy and manufacturing groups panned Shapiro’s suit, as well. The Oil & Gas Workers Association accused Shapiro of breaking his campaign promises. It also called RGGI “jobs-killing” for the Keystone State. Pennsylvania Manufacturers posted a gif of Marlon Brando from “The Godfather” with the quote, “I’m gonna make him an offer he can’t refuse.”

Power, PA Jobs Alliance, took the criticism a step further by saying Shapiro’s decision was troubling and also “anti-worker, anti-family energy policy” that mimics Wolf.

“This message also shakes industry confidence and is a bar to new investment in reliable fossil-fueled assets and the maintenance and expansion of generation-related jobs in the Commonwealth of Pennsylvania,” the group said in a statement. It also criticized Shapiro for prodding the legislature because of its ongoing budget stalemate. “The result, of course, is that taxpayers will continue to bear the tremendous costs of this litigation, and Pennsylvania’s workers and families will have to continue to live with the uncertainty surrounding the ongoing, existential threat of the RGGI carbon tax.”

As for the Shapiro administration’s portrayal of the appeal as an attempt to hold onto executive power and bring the state legislature together to come up with an RGGI solution, Benefield scoffed on social media. “If the governor just wanted to work with the legislature, there’s no need to sue for executive authority.”

I’ve sounded the alarm over the Regional Greenhouse Gas Initiative (RGGI) in many public settings over the past several months. This undertaking, an executive fiat ordered by Gov. Tom Wolf, will impact the life and wallet of virtually every Pennsylvanian and deliver almost nothing in terms of improved air quality.

At the outset, the stated purpose of RGGI is to reduce greenhouse gases. In theory, this works through an auction that is open to power producers and industrial plants in 12 states that buy “credits” to offset the excess emissions their facilities generate. The proceeds from the auction sales are then distributed to various government programs, the majority of which have nothing to do with the environment.

The current RGGI states include Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia. They will control the amount of credits Pennsylvania can sell at auction and, as an inevitable consequence, will dictate many decisions affecting our environment and economy.

In reality, RGGI forces Pennsylvania to undermine its own position as a top energy producer and hand over economic control to a collection of states that bear little resemblance to us. This is troubling when we consider that New England would prefer to buy natural gas from Russia rather than permit the construction of a pipeline that would connect their region to Pennsylvania’s plentiful supply.

Eight RGGI states report some of the highest electricity rates in the nation. In some RGGI states, residents pay double the rates paid by Pennsylvanians. According to a study done by PJM, the operator of the 13-state power grid which controls the flow of our electricity, RGGI will cause an 18 percent increase in rates – nine times larger than the spike the Department of Environment Protection (DEP) claims will occur through 2030.

DEP hails the projected 2 percent reduction in rates seen in other states as proof that RGGI works. This is misleading, at best, when we consider that those residents pay 50 percent to 75 percent more for electricity compared to Pennsylvanians. A 2 percent decrease when rates are nearly twice as high translates into a negligible savings – if at all – in Pennsylvania.

In 2019, the state predicted that clearing prices for the credits bought at auction would not rise above $3 per ton. RGGI’s most recent auction, completed on Dec. 1, set a clearing price of $13 per ton – more than four times the rate DEP forecasted and a 40 percent increase over the Sept. 8 auction clearing price alone. At current prices, the Wolf RGGI scheme translates to an approximately $750 million annual tax on Pennsylvania consumers.

It gets worse. According to DEP’s own modeling, 90.1 percent of the emissions reduced in Pennsylvania will be offset by increased pollution from non-RGGI states in our electric grid. A similar report by Penn State University shows that 86 percent of the electric capacity lost in Pennsylvania under RGGI will be replaced by increased coal-fired generation in neighboring non-participating states.

Make no mistake, RGGI depends on continued pollution. Without it, there would be no need for credits. With no need for credits, there is no market and thus no one would need to participate in RGGI’s auctions. So, rather than curbing environmental air pollution, RGGI depends on continuing it.

Some estimates forecast that in the first decade of RGGI, the reduction in carbon dioxide emissions will be less than 1 percent. This is despite the fact that, due to state-of-the art technology, CO2 emissions in Pennsylvania from fossil fuel generation have already been reduced by 38 percent since 2002 – more than all RGGI states combined.

A DEP presentation on July 22, 2020 indicated that great improvements had been achieved in ambient air quality in Pennsylvania. How did this great news in July become such a problem that only RGGI could fix just a few months later? The answer is politics.

RGGI targets coal-fired electric generation plants and the thousands of skilled trade jobs these facilities support. States, and even countries, with far fewer environmental controls in place than those in Pennsylvania, will absorb those jobs. Why would we close highly regulated Pennsylvania electric plants and send that generation capacity and those opportunities elsewhere?

No matter how its viewed, RGGI is not good for the environment or the economy of Pennsylvania.

RGGI supporters conveniently ignore that RGGI will leave thousands unemployed, skyrocket electricity bills for everyone – including our most vulnerable populations – and serve as an unauthorized carbon tax implemented without legislative approval. It’s just another way that the current Administration wants to bypass our government’s fundamental checks and balances to further policy goals that harm the very residents they mean to help.

In its simplest terms, RGGI fails miserably in accomplishing its only stated purpose.

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