Without a charged phone battery, many of us wouldn’t wake up on time. We couldn’t have a hot breakfast without an outlet or stove, or drive to work without gas in the tank. In other words, life would come to a halt — East Coasters remember the Derecho Blackout and Hurricane Sandy with a shudder, because they reminded us how dependent we are on “the grid.”
But in between the power outages, we forget: our morning coffee, our well-lit office, and our temperature-controlled living room with Netflix all depend on energy. Many Pennsylvanians not only forget about the industry that makes our lives possible — they villainize it.
Last fall, Gov. Tom Wolf issued an executive order for Pennsylvania to join the Regional Greenhouse Gas Initiative (RGGI), a cooperative effort including New England and Mid-Atlantic states. The plan is for the Commonwealth to officially join by mid 2020. Additionally, Pennsylvania signed a declaration of intent to join the yet-to-be-developed Transportation Climate Initiative (TCI).
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Both of these programs follow roughly the same cap-and-trade framework, which places limits — caps — on CO2 emissions (either on electricity production or transportation). Then, the state generates revenue by auctioning allowances to entities who can use or trade them.
Pennsylvania, which is one of the greatest energy producers in the country, has made massive strides in efficiency. Energy-related CO2 emissions were reduced by almost 23 percent from 2005 to 2016.
The same period also saw a reduction in per capita emissions, all while maintaining Pennsylvania’s position as an energy powerhouse and the largest electricity exporter of all the states. That’s because we increased our natural gas production — we made our energy cleaner without joining any regional compacts.
In the states that did join, RGGI failed to achieve carbon reductions — but energy costs still went up. Electricity prices rose 64 percent more in RGGI states than elsewhere. Because TCI is closely modeled after RGGI, it is sure to cause the same economic damage.
Instead of apologizing for producing electricity, Pennsylvania should celebrate its energy sector.
For some, increased energy costs would be a nuisance, but for many in Pennsylvania, the effects would be unbearable. One such example is Iris, a single mom in Philadelphia who struggles to pay bills while balancing her disability and surviving on a fixed income. Her story was featured in The Philadelphia Inquirer when out-of-control utility bills threatened her ability to care for her daughter and maintain their home.
Any utility increase — like those resulting from RGGI — would significantly financially burden Iris, her daughter and similar families. And Iris is no anomaly: 10 percent of U.S. households admit to keeping their homes at unsafe temperatures to reduce energy bills.
According to the Home Energy Affordability Gap (HEAG) report, energy is considered affordable when it costs 6 percent of household income. But in Pennsylvania, over 1 million households spend beyond that amount. For Pennsylvanians in the lowest income group, over a fourth of total household income went toward energy bills.
A federal program called Low-Income Home Energy Assistance Program (LIHEAP) seeks to reduce the energy burden, but there is a gap between those who can afford their own energy and those who qualify for LIHEAP, leaving thousands without assistance. Increasing costs through RGGI will only ensure that even more Pennsylvanians struggle to keep their homes lit and warm.
Any way you look at it, RGGI and the related TCI programs are all cost and no gain. The lack of emission reduction is purchased with revenues that make life more costly for people like Iris who can least afford it.
Instead of apologizing for producing electricity, Pennsylvania should celebrate its energy sector and its potential to provide relief for working families. After all, energy makes possible what we all take for granted.
Tirzah Duren is a senior policy analyst at the Commonwealth Foundation. Follow her on Twitter at @tzduren.
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One thought on “Tirzah Duren: Cap-and-trade programs will increase energy costs for Pa. consumers”
“In the states that did join, RGGI failed to achieve carbon reductions — but energy costs still went up. Electricity prices rose 64 percent more in RGGI states than elsewhere. Because TCI is closely modeled after RGGI, it is sure to cause the same economic damage.” That’s not true on multiple levels. Rather than dig up some alternative research to prove your statement is not true I will use the very Cato Institute analysis to show it’s not true.
Per the Cato Institute analysis prices were higher 19.5% elsewhere (Table 1) and there was a 100% higher carbon dioxide reduction (Table 6) in RGGI states compared to elsewhere. Cato is like, ugh what are we going to do? They came up with bogus sample sizes to explain away the price drops and won a gold medal in the data gymnastics to explain away the 100% higher carbon dioxide reduction.
Also, the 64% is kind of bogus, “a relatively small change can appear as a relatively large percent.” You know who I got that quote from? The very same Cato Institute analysis only they used that line to explain something that didn’t favor their conclusion instead of something that made their conclusion bogus. Pretty hypocritical. Do you know how much the 64% increase amounts to? Over ten years your monthly utility bill would have increased $3/month, assuming your annual bill is $2,000. (The math is all highly questionable because Cato uses revenue of the utility company not the charge to the consumer but since I’m proving that Cato is a bunch of liars, I’ll use their same logic against them). Oh and the 64% was in Cato’s comparative analysis, not elsewhere so you didn’t read that correctly.
As for the non-reduction, Cato lists one example and says that’s representation of the entire process. Sure. Whatever. They then take national averages, national rates, and national trends and apply that to the RGGI, but the RGGI region has its own averages, rates, trends, etc. They go around in circles on this. Make a couple of claims but never bear out those claims with empirical or mathematical support.