DV Journal

As Gov. Josh Shapiro appears ready to push Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI), a timely report is demonstrating just how much the state benefits from fossil fuel-related employment—and how much it stands to potentially lose if hardline environmentalist policies come to pass.

During his campaign for governor last year, Shapiro said he doubted the benefits of entering the RGGI compact. But his first budget includes about $600 million in revenue from the RGGI carbon fees on power plants. Plans for Pennsylvania to join the 12-state cap-and-trade compact are currently tied up in court.

Now a new report adds additional information about the impact the RGGI decision could have on the state’s economy.

The analysis, conducted by consulting firm PwC for the American Petroleum Institute, found the fossil fuel industry has an “exceptionally large direct impact” on Pennsylvania’s economy.

In recent years, the state has long been known as a mega-producer of fossil fuels, particularly natural gas. PwC’s analysis said the state retains “vast oil and natural gas deposits  … that have led to substantial upstream and downstream operations.”

Around 93,000 Pennsylvanians work in jobs “directly attributable to the oil and natural gas industry.” When the analysis was expanded to “direct, indirect, and induced impacts,” fossil fuel’s importance to the state economy was even larger. Regarding “total employment attributable to the oil and natural gas industry,” the researchers found that Pennsylvania enjoys 424,000 jobs it would otherwise not record.

The state further boasts a “total labor income impact” of $29 billion and a “total value added impact” of over $40 billion.

Stephanie Wissman, executive director of API Pennsylvania, told DVJournal that the state’s natural gas and oil industry “is vital to our economy and supports hundreds of thousands of jobs that are simply irreplaceable.”

“Pennsylvania is the second-largest natural gas producer in the nation, behind only Texas, thanks to the significant investments made here and a dedicated, well-trained workforce,” she said.

The Keystone State is the only northeastern state with a bounty of natural gas. The RGGI program is meant to move Pennsylvania rapidly toward green energy infrastructure by imposing caps on regional CO2 generation by power plants, driving up costs.

At a state Senate appropriations meeting in February, Montgomery County Sen. Tracy Pennycuick asked Independent Fiscal Office Director Matthew Knittel what effect RGGI would have on state job development. “Like other levies on energy, I would assume that those costs would be passed forward to the ultimate consumers of the energy,” he said.

According to Gordon Tomb, a senior fellow at the Commonwealth Foundation, the program could severely hamper Pennsylvania’s economy due to excessive energy prices and job losses.

“Pennsylvania’s economic losses resulting from RGGI have been projected to be 22,000 jobs and $7.7 billion,” he said. “The promise of RGGI’s supporters to provide a net gain of economic benefits with higher electricity costs and unreliable energy sources defies common sense and basic laws of economics.”

“What the climate industrial complex mostly offers in the way of benefits are government handouts in the form of lucrative subsidies to politically favored ‘green’ energy firms and paltry welfare payments for paying energy bills or insulating homes,” he argued.

“The latter are crumbs compared to the wages of family-sustaining jobs at power plants and in the manufacturing industries that require affordable and reliable energy supplies.”

Tomb pointed to a study from the UC Berkeley Labor Center last month, which examined the effects of a Marathon refinery plant closure in Contra Costa County, Calif. The study found that nearly 18 months after the closure, roughly 25 percent of the laid-off workers were still unemployed to some degree. Those who found work, meanwhile, did so “at the cost of lower wages and worse working conditions.”

Grim unemployment numbers aren’t the only potential outcome of RGGI. A nonpartisan Independent Fiscal Office review earlier this year projected that the program would cost Pennsylvania billions in the coming years.

Advocates for Pennsylvania entering RGGI say it is necessary to fight climate change and transition the state’s economy.

Not all the projections of RGGI are negative. They point to a report from the Analysis Group this month that found in the states where it was implemented, RGGI has generated “net economic benefits,” including $669 million of “total economic activity” in 2018-2020.

Robert Routh, a public policy and regulatory attorney with Philadelphia’s Clear Air Council, told DVJournal that fossil fuel employment contractions have occurred in Pennsylvania independent of RGGI.

“All the remaining large, conventional coal-fired plants in the Commonwealth have already committed to retiring or to cease burning coal by 2028, and that’s without having been subject to RGGI compliance obligations,” he said.

Routh pointed to modeling from the state Department of Environmental Protection, which “projected that RGGI participation will result in a net increase of over 30,000 jobs in-state by 2030.”

“That would be driven by growth in the renewable energy and energy efficiency sectors,” he said.

Stephanie Wissman with API said policymakers should focus on permitting reform to ease the market entry burdens for energy producers.

“As global energy demand is projected to increase,” she said, “policies should support American energy and infrastructure development and the millions of skilled workers across the country who produce and deliver the energy that powers our everyday lives.”

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The Covanta trash-to-steam power plant in Chester continues to swirl at the center of a debate over environmentalism and pollution following a contentious conference call with county residents this week.

Officials with the plant spent more than two hours on Tuesday night talking to Chester residents on a Zoom conference. Plant staff spoke on a new $4 million management process they claim will reduce emissions and better protect the surrounding community.

The company plans to install equipment to spray aqueous ammonia inside the plant’s chimneys to reduce Nitrogen Oxide (NOx). The process will cost an additional $1 million per year to operate.

Officials said the ammonia solution used is 19 percent ammonia to water, compared to the household cleaner at 10 percent. It will bind with the NOx so the gas does not reach the atmosphere.

Dom Cammarata, asset manager for the Chester plant, said the facility emits less NOx than similar plants in Plymouth Meeting and Lancaster, which have more up-to-date equipment.

John Scott, director of government relations for Covanta, said Westinghouse built the plant in 1992. Covanta began operating it in 2005. The company has an “environmental justice” policy and works with the county government to reduce emissions and provide various programs for residents and students.

The plans call for a closed tank for the ammonia and a concrete basin surrounding it in case of a leak. The project will begin once the plant has secured Pennsylvania Department of Environmental Protection permits.

Joe Walsh, an environmental scientist with Covanta, said people may have heard about the danger of ammonia gas, but the liquid is safe.

“We are not going that route,” he said. “We have safely used ammonia mixtures at 85 of our plants for many years. I’d say we are very well versed in the safe management of ammonia mixtures.”

Delivery of the ammonia will add about two more trucks a week, he said.

Many residents and others who asked questions during public comment were skeptical about the plan. The Covanta plant has been a political football in Chester for years, with people claiming it contributes to asthma, cancer, and other health issues experienced by local residents.

Proponents argue Covanta provides funds for the cash-strapped town. Covanta pays Chester $5 million annually and additional fees to the city and Delaware County.

One resident wondered why Covanta did not simply install a newer emissions system on the Chester plant. The answer: The plant is old, and the technology to retrofit it does not exist.

Resident Will Richan asked about ash created by the incinerator that ends up in landfills and whether it leaches contaminants into the groundwater.

“On the ash, you refer to it as toxic ash. Ash is not toxic. It’s not hazardous,” Cammarata said. If it were, the company would not be able to send it to a general landfill, he said.

Zulene Mayfield, chair of Chester Residents Concerned for Quality Living, claimed the 18 percent reduction in the NOx emission is a “paltry thing.” She said her group has asked Covanta to lower its emissions for years. She also dismissed the scholarships and other community programs that Covanta provides.

“The whole thing is, we do not want you in our community,” said Mayfield.

Some residents complained about the Zoom format, saying many in Chester lack computers and older people were left out. They called for an in-person meeting.

Leah Kelly, a lawyer with the Environmental Integrity Project in Washington, D.C., said it was wrong to imply that installing the new pollution controls is a “voluntary act.”

Instead, she argued, the EPA has tightened the rules. Nitrogen oxides are a “primary contributor to ozone,” she said. Also, she said the federal EPA standards that Covanta officials say their plant exceeds are outdated.

Eileen Flanagan, with Earth Quaker Action Team, asked the Covanta employees if they would like to live near an incinerator. Cammarata said the plant has about 100 employees. Of those, 20 percent live within five miles of Covanta.

Skip Jones asked if there are differences between emission levels for plants in EPA-designated environmental justice areas and other areas. The Covanta employees could not answer that question but promised to investigate it.

Michael Van Brunt, vice president of environmental permitting and sustainability, said he’d had asthma since childhood. He said research shows NOx could trigger asthma. Other sources of pollution trigger it as well.

The Chester plant serves area municipalities and businesses to provide “landfill-free disposal.” It processes 1.3 million tons of waste yearly, recycles 55 tons of metal, and generates enough electricity to power 48,000 homes.

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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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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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