General Assembly hears concerns about Pennsylvania joining RGGI

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Pennsylvania business leaders warned lawmakers on Tuesday that the state’s economy would take it on the chin from the effect of higher power costs if it decides to enlist in the Regional Greenhouse Gas Initiative (RGGI) as a means of countering climate change.

The economic impact would ripple throughout the Pennsylvania economy in the form of job losses, hits to small businesses and major industries, and even the commonwealth’s position as one of the largest exporters of electricity to neighboring states, speakers testified at a June 23 hearing of the Pennsylvania Senate Environmental Resources and Energy Committee.

“RGGI is a flawed proposal and is not sound public policy,” said Carl A. Marrara, vice president of Governmental Affairs for the Pennsylvania Manufacturers’ Association, who added that the move to join RGGI, which is supported by Gov. Tom Wolf, would have “dire economic impacts” on the entire state.

Pennsylvania is on its way to becoming the tenth state in the RGGI, a consortium of states in the Northeast and Mid-Atlantic regions that joined forces in 2014 to reduce carbon dioxide (CO2) emissions that drive global warming. The states in RGGI basically establish a carbon tax through a system where energy companies cap carbon emissions from power plants, while emitters have to buy allowances or credits for their share of pollution generated.

Citing the COVID-19 pandemic, Wolf earlier this week gave the Department of Environmental Protection an additional six weeks to develop a rulemaking package that would usher Pennsylvania onto the RGGI roster. “Addressing the global climate crisis is one of the most important and critical challenges we face,” Wolf said in a written statement. “Even as we continue working to mitigate the spread of COVID-19, we cannot neglect our responsibility and our efforts to combat climate change.”

Marrara and other industry opponents of the idea, however, let the Senate committee know that they viewed the benefits of RGGI’s strategy to be dubious at best and unlikely to create meaningful environmental benefits for Pennsylvania or to moderate an anticipated loss of jobs and higher energy costs. They also urged the legislature to assert itself in the RGGI debate in order to protect their constituents.

“The issue at hand is whether or not a government program, that will undoubtedly add substantial costs to Pennsylvania’s electricity consumers, is the best mechanism to achieve the cleanest, healthiest, and most sustainable environment possible,” Marrara said. “You’ll find that the answer to this question is clearly that RGGI does not accomplish this goal, but will negatively impact Pennsylvania’s economy in a punishing way.”

Rachel Gleason, executive director of the Pennsylvania Coal Association, told the committee that joining RGGI might reduce direct carbon dioxide emissions in Pennsylvania, but it also had the potential of increasing emissions in neighboring Ohio and West Virginia, which are not bound by RGGI’s restrictions. “It’s a great talking point, but it doesn’t actually reduce CO2,” she said. “It shifts it to other states.”

Since electricity is a major expense for manufacturers, the speakers predicted that factories could relocate to states where lower-cost power was available. The potential closing of coal mines could also affect Pennsylvania’s steel industry since mines that produce one type of coal for power plants also dig up the metallurgical-grade coal used to make coke, which is an integral ingredient in steelmaking. “The steel industry will be impacted as that feedstock becomes more difficult to acquire,” Marrara said.

Along with major industries, reducing coal power in Pennsylvania would hamper small businesses that would also be squeezed by higher electric bills. “Higher energy costs stack up along each step of the supply chain,” said Rebecca Oyler, legislative director for the National Federation of Independent Business.

Oyler called the projected hikes in power prices a “hidden tax” that would further squeeze the already tight margins that small companies operate under. “Energy costs are currently lower in Pennsylvania than in every other RGGI state,” she said. “This will be a critical advantage as Pennsylvania’s small businesses seek to recover from the COVID-19 crisis.”

Moreover, lower overall electricity prices in Pennsylvania have also made the state an attractive source of power for the current RGGI states. Pennsylvania is one of the top power exporters in the nation; however, Oyler and other witnesses predicted that increases in wholesale power prices in the state would open the window to exports from West Virginia and Ohio, which RGGI states were likely to take advantage of. “History has shown us that if non-RGGI electricity is available, states within RGGI will use it,” said Vince Brisini, director of Environmental Affairs for Olympus Power, LLC.

Looking forward, the coal industry itself urged the Senate panel to place more value on coal’s niche in the state’s energy portfolio. Gleason told the committee that renewable power was still not the preeminent source of generation in Pennsylvania and the rest of the PJM Interconnection service territory, and continued technological innovation was pointing the way to cleaner coal power plants. “The shuttering of coal and some natural gas plants in our state only leads to encouraging and strengthening fossil fuel electric power generation in non-RGGI PJM states,” she said.