On October 3, PA Governor Wolf issued an executive order announcing that PA will participate in RGGI, the Regional Greenhouse Gas Initiative.
RGGI is a ten-year-old voluntary carbon market involving 9 New England and Mid-Atlantic states. New Jersey will become the 10th state on Jan 1, 2020, VA will join in 2021, and now also PA.
- By participating in RGGI, PA will adopt a framework that requires electric power plants to make annual reductions in their carbon emissions.
- Known as a “cap and trade” program, carbon polluters are required to buy allowances for every ton of carbon they emit. The number of available allowances is limited (the cap) and reduced by 3% each year. Polluters that can reduce their emissions below the allowances they hold can sell (i.e. trade) allowances to other companies with emissions that exceed their allowances.
- Thus “cap and trade” creates incentives for companies to reduce their emissions as much as possible by investing in conservation and efficiency.
- Since RGGI took effect in 2009, emissions from power plants in RGGI states have fallen by 47%, while economic growth in RGGI states was 31% higher than the rest of the country.
- The nine RGGI states have received $3.2 billion since 2009 from the sale of credits, while the average retail price for electricity in those states has dropped by more than 5%.
PA, as the first major fossil fuel producing state to join RGGI, will create its largest expansion.
- 2nd largest natural gas producer (after TX) and 3rd largest coal producer (after WY and WV)
- 4th largest carbon dioxide emitter with more than 33% coming from power plants.
- PA’s emissions from electricity dropped 31% from 2010 to 2016 as natural gas replaced coal, but if natural gas continues to increase and replace nuclear, emissions will rapidly increase.
The opposition has said:
- “Governor Wolf’s Cap and Trade Regulation will send PA energy prices soaring.”
- “Tax payers will pay more every time they flip a switch, make breakfast, charge a phone.”
- “. . . joining (RGGI ) would increase electricity bills by around $412 million a year.”
- “Is there anyone who can say this isn’t going to cause higher energy prices.?”
There is! Forecasts by the research non-profit Resources for the Future and NRDC determined that:
- “prices would not rise or fall more than a half a percent compared with business as usual”
- “the change in electricity prices would be unobservable” even with “significant emissions reductions in PA and (thus in) the US. It’s estimated to be only 34 cents/month.
How to allocate the income from the sale of allowances? PA generates more carbon than all other RGGI states combined. Annual revenues from auctioning allowances are projected to be $350 million, more than the state’s recent budget shortfalls. Deciding how to use that revenue is critically important.
- Most RGGI states invest about 50% in energy efficiency, solar, wind and other renewable energy. This insures while emissions are reduced, the cost of electricity doesn’t increase.
- PA could also use it to fund infrastructure, a just transition for displaced fossil fuel workers, public education, and adequate staffing of critical state government functions such as the DEP.
What else could PA, i.e., Governor Wolf, and legislators do to reduce PA greenhouse gas emissions?
- Increase the renewable portfolio standard from 8% by 2021 to 18% by 2025.
- Pass Community Solar legislation
- Build the electric vehicle refueling infrastructure statewide.
- Improve public transit statewide
- Strengthen regulations to reduce methane emissions from gas extraction and transport.
- Extend carbon markets to the rest of the economy and other greenhouse gases.
Suggestion: E-mail Governor Wolf at https://www.governor.pa.gov/contact/ about your views. In particular, how should PA use the income from the sale of emission allowances?