Pennsylvania could speed its pace cutting carbon emissions, raise new revenue and boost the state’s use of renewable fuels by completing its planned enrollment in the Regional Greenhouse Gas Initiative, an agreement by 12 states to curb emissions from power plants, according to a new analysis.
The study, published this week by energy specialists at the University of Pennsylvania’s Kleinman Center for Energy Policy, and Resources for the Future, a research nonprofit, concluded that by joining RGGI, Pennsylvania would by 2030 curb emissions by 80 percent from 2020 levels, compared with a cut of about 50 percent if it stayed outside the current bloc of 11 other northeastern and mid-Atlantic states. The state has already cut emissions since 2014, largely by switching its power plants to natural gas from coal, the report said.
Participation in RGGI would also drive down the state’s use of coal and natural gas while stimulating the production of electricity from renewable sources such as wind and solar, the report said, in conclusions based on modeling.
It projected that the state would increase its revenues by between $101 million and $148 million in 2030 as a result of selling RGGI’s carbon “allowances” to power generators, and that around 70 percent of that revenue would come from other states in the bloc buying the allowances.
And it said all the gains would be achieved with only a minor increase in retail electricity prices or even a small decline.
Under RGGI’s “cap-and-invest” design, participating states agree to set a cap on emissions from their power sectors that declines about 3 percent each year. Power generators must buy “allowances” at periodic auctions for each ton of carbon they will emit above the cap, with proceeds going to the states to assist in their transition to clean energy, with emissions dropping in a predictable way.
Pennsylvania formally joined RGGI in April 2022 in accordance with an executive order from former Gov. Tom Wolf, a Democrat, issued the day after a bill to reject state membership failed in the state Senate. But Wolf’s order was followed by two lawsuits by coal and gas interests opposing the plan. The suits resulted in a court order blocking implementation of the order until the Commonwealth Court, which adjudicates disputes involving state government agencies, decides on the constitutionality of the order. That decision remains pending.
If the court rules against the challenges, and membership is approved by the new Democratic governor, Josh Shapiro, Pennsylvania would become the 12th active member of RGGI. Since other member states began issuing carbon allowances to power generators in 2008, the bloc has cut emissions by more than 50 percent, twice as fast as the United States as a whole, and has generated some $6 billion for state revenues, most of which has been spent on clean-energy projects, RGGI said in a statement on its website.
This week’s analysis was written in light of new drivers of world energy supply and demand, including Russia’s invasion of Ukraine, which has increased demand for Pennsylvania’s abundant supplies of natural gas, and the U.S. Inflation Reduction Act of 2022, which provides unprecedented government support for the development of renewable fuels.
Despite the projected benefits of RGGI membership, it would likely have little effect on the state’s upstream oil and gas industry because some three-quarters of Pennsylvania’s natural gas is exported overseas or elsewhere in the United States, rather than burned in in-state power plants, the report said.
“The main drivers of its gas demand will continue to be the demand for natural gas plant liquids, the speed of electrification in the United States, and the global demand for liquefied natural gas whether Pennsylvania joins RGGI or not,” it said.
Opponents of Wolf’s executive order, including Republican lawmakers, three Democratic state senators and coal and gas interests, argued that he did not have the authority to impose what they say is a tax rather than a fee on power generators, and that any decision to raise taxes lies with the legislature rather than the executive. They also argued that the cost for power generators to buy the allowances would be passed on to consumers, resulting in higher domestic electricity bills.
Critics from the state’s Republican caucus quoted an earlier study from Pennsylvania State University’s Center for Energy and Law Policy, which concluded that RGGI membership would result in retail electricity bills going up by 7.8 percent a year from 2022 to 2030.
“That translates into devastating bills for low-income residents who already spend about 15 percent of their household…
Read More: New Study Bolsters Case for Pennsylvania to Join Regional Greenhouse Gas