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UPDATE: Court Stops Wolf Admin From Imposing RGGI Rule

Just one day after the GOP-controlled state legislature failed to stop Gov. Tom Wolf from pushing Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI), a state court has stopped the regulation from taking effect, “pending further order of the court.”

Republicans were delighted.  

“The court’s action is a welcome step in the right direction,” said Sen. Gene Yaw (R-Bradford). “It’s prudent to press pause on RGGI, given the administration’s gross underestimations of how much it will inflate electricity costs for all Pennsylvanians. We need to pursue climate solutions that encourage collaboration with our energy sector, not regressive and unconstitutional taxes meant to destroy it and leave us reliant on foreign oil and gas for decades to come. I look forward to further court action on this matter and continuing our fight to protect Pennsylvania’s economic prosperity.

Before the court’s ruling, Senate Majority Leader Kim Ward (R-Westmoreland) said it was absurd for Pennsylvania to increase taxes on people and the commonwealth’s energy resources when inflation and gas prices are skyrocketing. 

“We are trying to help Pennsylvanians manage through the economic fallout from COVID-19, not to mention the effects of the current state of affairs globally,” said Ward. “Instead, Pennsylvania Democrats voted to increase Pennsylvanians electric bills by 30 percent, eliminate 22,000 homegrown jobs and increase the cost of everyday products with no significant environmental benefit.”

Rep. Tracy Pennycuick (R-Harleysville) said “radical senators” ignored warnings last week from the Pennsylvania Independent Fiscal Office (IFO) that RGGI would increase consumer electricity costs by $800 million.

“If the courts do not stop the RGGI tax, it will become the most regressive tax in Pennsylvania history,” said Pennycuick. “This is the last thing that families and seniors need who are already struggling to make ends meet with historic inflation, including household energy bills and skyrocketing gasoline prices.”

RGGI is a regional carbon cap-and-trade program among mostly-blue northeastern states: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia.

Wolf has been fighting to force Pennsylvania into the compact since 2019 when he issued an executive order directing the state’s entrance into it.

The Senate Environmental Resources and Energy Committee held a hearing last week on the IFO’s warnings about RGGI’s economic harm. Still, Democrats, including Sen. Carolyn Comitta (D-Chester), support RGGI.

“In Pennsylvania, it’s been a years’-long process with more review, comment, and study than any other initiative in memory,” said Comitta. “RGGI has more than a long history of economic success.”

Since 2008, RGGI states cut power sector emissions in half, reduced electricity prices, and outpaced the nation in economic growth, all while creating $4 billion in net economic gains and nearly 50,000 job-years of employment, Comitta asserted.

Committa said RGGI prices “account for a small portion–a sliver, really–of what makes up an electricity bill.”

“While electricity rates are already rising across the country, during the first 10 years that RGGI was in place, rates dropped nearly 6 percent in RGGI states, and in those states, RGGI energy-efficiency investments of $2.8 billion have produced nearly $13.5 billion in consumer energy savings” or a return of nearly $4.80 for every dollar invested.

“Do my colleagues who oppose RGGI have a plan, a new plan to address climate change, rising energy costs, the decline of coal-fired power plants, and impact to their workers and communities? I am not aware of one,” she said.

Comitta also cited a letter from businesses in Pennsylvania that support RGGI, including Nestle, Mars Incorporated, and British Petroleum (BP).

Sen, Katie Muth (D-Montgomery), another committee member, backs RGGI. Muth has long argued that reducing emissions will improve public health.

“Efforts to block Pennsylvania from joining RGGI only put our environment, health, and economic security at risk,” she wrote in a 2020 Op-ed.

But labor and business leaders say jobs are on the line.

Kris Anderson, of the International Brotherhood of Electrical Workers (IBEW) Third District, told the committee there was a “dramatic reduction” in jobs in the electric generation sector in neighboring states that enrolled in RGGI.

“We can be assured that Pennsylvania would suffer a similar fate,” said Anderson. “The Cheswick Power Plant has announced it will cease operations by the end of this month (and) with that announcement, 50 people will lose their job, Forty-two of those workers are IBEW members.”

The National Federation of Independent Business (NFIB) is also concerned.

“Small businesses have been disproportionately impacted by the effects of COVID-19, and many are still struggling,” said Melissa Morgan, assistant state director of NFIB. “Shutdown orders, a lack of workforce, supply chain disruptions, record-high inflation, and a recovering economy have devastated a sizable segment of Pennsylvania’s small businesses.”

“The incidence of price hikes on Main Street is clearly on the rise as owners pass on rising labor and operating costs,” and RGGI would accelerate that, she said.

“Employers continue to operate with minimal staff and higher labor and material costs, all while struggling to reopen to pre-pandemic levels,” said Morgan. “Should small businesses continue to struggle and close their doors in communities across the state, Main Streets will suffer, state and local tax bases will collapse, and more workers will lose their jobs.”

Pennsylvania Manufacturers’ Association (PMA) also testified against RGGI. Carl A. Marrara, vice president of government affairs, warned RGGI would cause industries to relocate.

Marrara said it is “not a stretch” to say supporting RGGI is supporting Russian and Middle Eastern global energy leadership and Chinese steel dumping. He called for a market-based approach.

Yaw supports the litigation from Senate Republicans to “protect Pennsylvania from economic ruin.”

“The Democrats’ delusional support for RGGI will cost 22,000 jobs and ruin real lives without ever making a dent in air quality,” said Yaw. “We cannot allow this administration to squander Pennsylvania’s legacy as an energy leader while simultaneously duping 13 million residents into paying for the state’s economic demise, all under the guise of lowered emissions.”

 

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YAW: RGGI Fails Pennsylvania on its Most Basic Promise

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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