Media Tags: Energy

On July 28, the House Environmental Resources and Energy (ERE) Committee convened to vote on sending a letter expressing disapproval of the Wolf administration’s proposed regulation joining the Regional Greenhouse Gas Initiative (RGGI), a regional cap-and-trade program for power plants. The letter will be sent to the Independent Regulatory Review Commission (IRRC), who along with the standing committees in the House and Senate and the Office of Attorney General, will review the regulation for final publication under the state’s Regulatory Review Act. The Environmental Quality Board (EQB), the rulemaking board which promulgates DEP’s regulations, advanced the rule on a 15-4 vote earlier in July. The IRRC is expected to vote on the rule on September 1.

The PA Chamber has continually expressed support for a balanced energy and environmental policy, recognized the impact of greenhouse gas emissions on climate change and the potential for market-based approaches to be more efficient than command-and-control regulatory schemes. On the other hand, the PA Chamber has also expressed the need for the state to meaningfully account for the potential for leakage (or the shift in power generation to non-RGGI states within the 13-state grid where our state is the number one power producer), clearly and plainly state costs and benefits and protect our manufacturing sector.

Legislation is also pending in the General Assembly to require legislative approval to join multi-state carbon trading programs like RGGI. SB 119 passed the Senate by a vote of 35-15 on June 14, 2021 and has been referred to the House Environmental Resources and Energy Committee.  If neither this legislation nor disapproval resolutions – both of which are subject to gubernatorial veto – are enacted into law, Pennsylvania will join RGGI the quarter following the publication of the final rule in the Pennsylvania Bulletin

On July 13, by a 15-4 vote, the Environmental Quality Board advanced the final-form version of a regulation that would join Pennsylvania with the Regional Greenhouse Gas Initiative, or RGGI. The final regulation will next be evaluated by the Independent Regulatory Review Commission (IRRC) and the Office of Attorney General, and the standing environmental committees in the state House and Senate. IRRC may take the final regulation up at their next scheduled meeting on Sept. 1. Under the state’s Regulatory Review Act, the standing committees have a limited time to advance disapproval resolutions, which must be presented to the Governor for enactment and whose potential veto may be overcome with a two-thirds vote in both chambers.

The draft final rulemaking looked only slightly different than the version published for comment last December, a docket in which the PA Chamber submitted extensive comments. Dismayingly, the final regulation contains none of the suggestions offered by PA Chamber, including any effective measures to control for leakage, clear delineation between power generation facilities and CHP facilities or codified conditions which can inform the future withdrawal or rescission of the regulation by a different administration. Such a safety valve may very well have been useful should RGGI states agree that the mutual goals of the program (securing a 30% reduction in GHG emissions by 2030) need to be made more stringent – perhaps in alignment with President Biden’s call for a national reduction 50% reduction by 2030.

In its comment letter, the PA Chamber raised several questions about the need for a more robust cost-and-benefit analysis in the proposal, including an explicit delineation of costs to commercial and industrial customers. In its proposals, DEP blended in the hypothetical values of various spending plans from program revenues, including bill offsets, against the program’s cost.

Should the rule win approval by IRRC and the Attorney General and withstand disapproval resolutions from the legislature, it will be final upon publication in the Pennsylvania Bulletin. Effective Jan. 1, 2022 fossil-fuel power plants and some combined-heat and power facilities will be required to obtain a CO₂ allowance from RGGI’s quarterly auctions or a secondary market. Pennsylvania’s initial budget allowance will start at 78 million short tons of CO₂. The final-form regulation does contemplate the potential for PA to not be in RGGI until spring or summer 2022, given remaining procedural hurdles.