Pennsylvania Senate puts forth bill to withdraw from Regional Greenhouse Gas Initiative

Pennsylvania State Senator Gene Yaw has introduced legislation to repeal the Regional Greenhouse Gas Initiative carbon dioxide cap-and-invest program, saying that it would increase power rates for consumers, cut energy and manufacturing jobs and lead to the closure of Pennsylvania power plants.

"For four years, Pennsylvania taxpayers have footed the bill for this unconstitutional, unilateral decision," Senator Yaw, a Republican, said in a Feb. 5 statement.

"RGGI is wrong for Pennsylvania, and it is time to repeal this regulation and focus on putting forth commonsense, environmentally responsible energy policy that recognizes and champions Pennsylvania as an energy producer," Yaw said.

Participation in RGGI has been hotly contested in Pennsylvania in recent years between the state's Democrat governors and Republican legislators.

in October 2019, Governor Tom Wolf entered Pennsylvania into RGGI through an executive order. Despite objections from the General Assembly, the Department of Environmental Protection and the Environmental Quality Board enacted a rulemaking for a carbon dioxide budget trading program in Pennsylvania that resulted in what opponents call a carbon tax on power generation.

In 2023, the Commonwealth Court determined that RGGI is a tax that has been imposed in violation of the state's constitution and that Pennsylvania may only participate in RGGI through legislation enacted by the General Assembly and not through rulemaking by DEP and EQB, according to a Feb. 2 memo from Senator Yaw's office.

"Unfortunately, this ruling has been appealed to the Pennsylvania Supreme Court, and that appeal remains pending," Yaw said.

The appeals asked the state's highest court to find that the senators did not have standing to challenge the RGGI regulation, and that the allowances should be considered fees imposed by state regulatory agencies, not taxes.

Within the RGGI states, fossil fuel-fired power generators with a capacity of 25 MW or more are required to hold allowances equal to their CO2 emissions over a three-year control period. States can reinvest the proceeds from CO2 allowance auctions in consumer benefit programs for things like energy efficiency improvements and accelerating renewable energy deployment.

Coal-fired power plant closures

Since Pennsylvania's entrance into RGGI was announced, 19 coal-fired power generating units have or are in the process of closing or converting to natural gas, Yaw said in the memo, adding that if the "threat of a carbon tax" by joining RGGI continues, the remaining coal-fired generating units "would be forced to close instead of paying hundreds of millions in additional taxes."

Yaw said lawmakers recently heard testimonies from the energy industry concerned with the rate of transition from thermal base load energy sources to so-called "clean energy."

Ohio and Pennsylvania lawmakers questioned PJM Interconnection power market experts on Feb. 1 about potential reliability concerns stemming from a supply-demand mismatch in which thermal power plants are being retired faster than their capacity is being replaced, with experts pointing to competitive power market rule changes as possible solutions.

PJM, the regional grid operator that covers Pennsylvania, is experiencing an increase in power demand of 1.7%/year, with demand increasing while supply is decreasing, Asim Haque, senior vice president for state and member services for PJM, said testimony referenced by Yaw.

Given current power market fundamentals, there will be a mismatch in supply and demand, and while it is hard to say when, PJM is concerned about such a mismatch occurring later this decade, Haque said.