Last Tuesday, PA Chamber Director of Government Affairs Kevin Sunday testified before a joint hearing of the PA Senate Environmental Resources and Energy and the Community, Economic and Recreational Committees about the economic impacts of the state’s entry into the Regional Greenhouse Gas Initiative. While recognizing market-based approaches can be more efficient in reducing emissions, the final rulemaking did not address the Chamber’s concerns regarding transparency of costs, addressing leakage and protecting the state’s industrial base. As such, the PA Chamber does not support Pennsylvania’s entry into RGGI, a multi-state compact designed to enact a carbon tax on energy producers. Sunday’s full testimony, which notes the substantial progress on emissions Pennsylvania has already achieved without participating in RGGI. can be found on the PA Chamber website.

At the hearing, Sunday reported that over the past several decades, Pennsylvania’s power generation sector had maintained a pole position in the energy exports among all states while also reducing greenhouse gas emissions more than any other state except Ohio.

“Our emissions intensity evaluated on the basis of emissions per unit of power produced has fallen by 35 percent since 2007, although the volume of our electricity exports to neighboring states, many of them current RGGI participants, has increased by 40 percent,” Sunday testified. “Pennsylvania has actually reduced its greenhouse gas emissions more than RGGI states combined, and more than twice as much on a proportional basis.”

Independent Fiscal Office Executive Director Matthew Knittel also testified that his office reviewed the administration’s outdated RGGI modeling. Knittel said Pennsylvania energy generators could spend upwards of $781 million annually on emissions credits at the RGGI auctions – nearly four times the amount anticipated by the administration’s taxpayer-funded analysis to justify our participation in RGGI in 2020. The IFO also warned members that “those costs would be pushed through to final customers.”

“This $781 million represents a carbon tax on electricity generation that will have a direct impact on electricity rates for residential, commercial and industrial customers. This will be particularly harmful to low- and fixed-income households already smothered by energy poverty and runaway inflation,” said State Sen. Gene Yaw, R-Lycoming, Chairman of the Environmental Resources and Energy. “The IFO’s findings confirm my worst fears about the administration’s hasty push to join RGGI. The cost of this program will cripple our economy at a time when we can least afford it.”

A day earlier, the PA House Environmental Resources and Energy Committee approved S.B. 119, which would prohibit the Pennsylvania Department of Environmental Protection from joining RGGI – or any similar pact — without legislative approval. The bill, supported by the PA Chamber, is now before the full House for a vote.

Similarly, the PA House also passed H.B. 637 last week 126-72, which, like S.B. 119 would require legislative approval to enter RGGI but would also spend $250 million of federal American Rescue Plan funding on advanced energy projects. The PA Chamber was neutral on H.B. 637 due to the prevailing wage language included in the bill.

Governor Tom Wolf has indicated that he will veto the bills. It’s important to note that every state in RGGI joined only after legislative approval.

However, Republicans contend that if the Governor can choose to enter RGGI, the next Governor could choose to exit.

Finally, the PA Senate is expected this week to try to override Governor Wolf’s veto of SCRRR1, which would have voided the final regulation to join PA into RGGI If the override attempt fails, the regulation is expected to be published as final in April, unless the courts intervene.