A bipartisan group of state legislators on Tuesday is seeking approval from the General Assembly before Gov. Tom Wolf’s administration can enter into the Regional Greenhouse Gas Initiative (RGGI), raising concerns that the imposition of a carbon tax on power generation would hurt the state economy.
The governor issued an executive order on Oct. 3 directing the Department of Environmental Protection (DEP) to join RGGI, a collaboration of nine Northeast and Mid-Atlantic states that set a cap on total carbon dioxide (CO2) emissions from electric power generators in their states.
“RGGI requires coal-fired power plants to pay hundreds of millions of dollars in taxes and, as a result, will lead to the direct elimination of thousands of family-sustaining jobs in communities I represent,” Rep. Pam Snyder (D-Greene/Fayette/Washington), said. “This is an extremely unfair tax burden that has clearly not proven to cut carbon emissions in the nine northeastern states that are currently participating in RGGI.”
House Bill 2025 and Senate Bill 950 would require legislative authorization before Pennsylvania can enter into any multi-state program or before the state can impose a carbon tax on employers engaged in electric generation, manufacturing or other industries.
Under the RGGI, for each ton of CO2 emitted power plants must purchase a credit or allowance, and allowances can be traded among power plants. Each allowance represents 2,000 pounds of CO2. At the last RGGI auction in September, allowances cost $5.20 per ton.
“The Regional Greenhouse Gas Initiative has major policy implications, not to mention potentially devastating consequences for our communities,” Rep. Donna Oberlander (R-Clarion/Armstrong/Forest) said during a press conference this week where lawmakers unveiled their legislation. “While the administration is unilaterally moving ahead with participating in this initiative, many of our colleagues have serious reservations about what this means for the areas we represent and the jobs that may be lost.”
The legislators assert that the governor does not have the ability to unilaterally enter RGGI, and their legislation codifies a process that allows DEP to move forward with RGGI. The process includes a public comment period, public hearings, and a proposal submitted to the General Assembly.
Sen. Gene Yaw (R-23), chairman of the Senate Environmental Resources and Energy Committee, stressed that the Legislature must be an active participant in the process.
“The state legislature must be involved in any dialogue that would seek to impose a carbon tax, or similar tax, on in-state employers and citizens,” Yaw said, adding that many questions remain unanswered as to what participation in the RGGI would mean for Pennsylvania residents. “I remain leery in entering into any consortium with New York, New Jersey and Maryland who thumb their nose at Pennsylvania energy and embrace energy from foreign markets,” he said.
Sen. David Argall (R-29), chairman of the Senate Majority Policy Committee, said he recently asked Schuylkill and Berks County residents their views on the governor’s executive order to tax carbon through one of his monthly polls. “Eighty percent of respondents said that they opposed the Governor’s executive order,” Argall said.
Nearly one-quarter of the state’s total electric generation capacity is produced by 19 coal-fired electric generating facilities. The lawmakers said that if coal facilities were forced out of business, Pennsylvania’s natural gas-fired electric generating units would end up paying the carbon tax on power generation. Such a move could result in driving investment in natural gas electric generation to other states, a statement from Pennsylvania Senate Republicans said.
Rep. James Struzzi (R-Indiana) noted that Pennsylvania is already ahead of the carbon dioxide reduction goals established under the governor’s Climate Action Plan. “… Why would we want to jeopardize thousands of Pennsylvania jobs and trigger significantly higher electricity rate increases when the existing competitive market has already achieved these gains?”
“This action would have serious ramifications on Pennsylvania businesses, jobs, energy prices and future economic opportunities that are not being considered by the governor,” said Struzzi, the prime sponsor of the House bill.