At the end of April, Pennsylvania Governor Tom Wolf’s administration ﬁnalized a regulation that allows the commonwealth to join the Regional Greenhouse Gas Initiative (RGGI), fulﬁlling a promise he made with a 2019 Executive Order to take part in the environmental initiative. Pennsylvania will now implement a carbon-pricing policy that would impose a cost for emitting carbon dioxide (CO2) from power plants that burn fossil fuels. Coal interests, including power plant owners, mine operators and organized labor, have already brought a lawsuit, claiming the regulation is unlawful. They contend the regulation imposes a tax without the approval of Pennsylvania’s legislature.
The Pennsylvania Department of Environmental Protection’s (PA-DEP) CO2 Budget Trading Program allowed the commonwealth to enter RGGI, which is an environmental initiative that includes 11 mostly northeastern states that began in 2009 to reduce greenhouse gas emissions from the power sector. The RGGI caps CO2 emissions from electric power plants and that cap decreases year over year to reduce overall carbon emissions. Pennsylvania’s mandate, according to the Associated Press, would have an outsized impact on the program, increasing it by approximately 40%.
Under the program, power plants must acquire CO2 allowances equal to the amount of CO2 they emit. And while each state has its own allowance budget, the only firm cap is the regional one. A quarterly auction sets the price for the purchase of allowances to ensure transparency. PA-DEP issued a statement saying it will now determine the number of allowances for carbon pollution required for each power plant. Power plants must start accounting for their CO2 emissions starting on July 1, 2022.
This might be a short-lived victory for a divisive governor. He is term limited with only seven more months in office. The program, as it stands now, would not have passed Pennsylvania’s Republican controlled legislature and a Republican successor would likely overturn the policy. It has already become a rallying point for the candidates hoping to replace him.
The future of PA-DEP’s CO2 Budget Trading Program is unclear. It is certainly facing implementation challenges and more lawsuits will likely be brought. The Pennsylvania Supreme Court would probably lean left. It could also hurt Pennsylvania’s Attorney General Josh Shapiro’s run for governor, if he embraces RGGI.
While the policy would raise costs, it’s unclear if it would actually reduce greenhouse gas emissions. If left in place though, it will shift business and jobs, and the emissions that go with them, to neighboring states like Ohio and West Virginia.