What carbon pricing means — and costs — in Pennsylvania

(The Center Square) — Carbon pricing means little to the average utility customer, polling suggests, despite the policy’s direct connection to air quality, jobs, and energy costs.

The term describes a regulatory framework that charges power producers for the pollution they create. Implementation — or lack thereof — differs from state to state, but the goal remains the same: lower greenhouse gas emissions, reduce impact on the climate, and incentivize a transition to renewable energy.

On the East Coast, a pool of generators from eleven states buy “credits” that cap how many tons of carbon dioxide they can release into the atmosphere. Producers that exceed their cap can buy credits from others in the pool, but the total amount available will decline each year until zeroing out in 2040.

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That auction is called the Regional Greenhouse Gas Initiative, or RGGI, and it’s the program at the center of rhetoric in Harrisburg pitting environmental sanctity against economic security. Since 2009, the regional compact has collectively reduced greenhouse gas emissions 50 percent faster than the rest of the country, according to RGGI Inc, and returned $6 billion back to its member states.

In Gov. Josh Shapiro’s first budget proposal, he’s counting on more than $600 million in revenue from the program to support investments in public assistance programs, tax credits, career incentives, and public education.

But many view Pennsylvania’s membership as nothing short of a seismic shift. As the nation’s second-largest natural gas producer and leading energy exporter, embracing regulations meant to accelerate the transition away from fossil fuels alarms an unlikely coalition — natural gas developers, legislative Republicans, and labor unions — about the economic impact of carbon “taxing.”

The American Petroleum Institute said the state’s natural gas and oil reserves generate a $75 billion share of Pennsylvania’s GDP and support more than 93,000 jobs directly. More broadly, energy production underpins 423,000 workers statewide and an accompanying $40.3 billion in labor income.

But it’s also a prime target for reducing Pennsylvania’s carbon footprint and tackling climate change. The Department of Environmental Protection says modeling shows joining the Regional Greenhouse Gas Initiative will slash carbon dioxide emissions as much as 225 million tons by 2030.

In a new report from the Kleinman Center for Energy Policy at the University of Pennsylvania, researchers concluded that RGGI participation will reduce the state’s electricity sector emissions by 84 percent in 2030, compared to roughly 52 percent without.

This can be achieved without raising utility bills or decimating energy exports, according to the report. Researchers say wind and solar generation will soften the impact of lost natural gas production, and retail electricity prices will actually decline 0.6 percent by the time the Regional Greenhouse Gas Initiative cap zeroes out in 2040.

For critics, however, the modeling defies logic. Air pollution doesn’t respect geographical borders, they say, so non-participating neighbors like Ohio and West Virginia will still release carbon dioxide into the air, unfettered and unregulated — not to mention the atmospheric contributions from the rest of the world.

Natural gas plants, they add, are largely responsible for lowered emissions across the region, so taxing them and other legacy generators into extinction will raise consumer prices and destabilize the power grid.

Carbon pricing means little to the average utility customer, polling suggests, despite the policy’s direct connection to air quality, jobs, and energy costs.

And yet, despite the passionate debate on both sides, just fourteen percent of residents have ever heard of RGGI, let alone formed an opinion about it. The revelation came from polling conducted by the Bullfinch Group earlier this year.

The Commonwealth Foundation bankrolled the survey, which asked 600 registered voters how optimistic they feel about their economic futures. Nearly half of respondents said they believe they’ll “be worse off” in one year.

Some 59 percent said rising costs concerned them the most regarding energy policy, while just sixteen percent worried about climate impacts.

The findings contradict polling released by Climate Nexus in 2020, in which 72 percent of the 659 respondents support joining the Regional Greenhouse Gas Initiative and 46 percent describe climate change as a serious or “somewhat” serious problem.

The Bullfinch polling also found that 47 percent support “greenhouse gas emission taxes.” The same percentage of respondents, however, said they were unwilling to pay higher electricity rates to cover the cost of “green” energy technology and implementation.

An analysis from the Independent Fiscal Office released in 2022 found that the amount power producers were anticipated to spend buying credits had nearly quadrupled since the DEP’s first wave of modeling in 2019.

Critics say the findings validate their concerns about pricing volatility and say the auction amounts to a tax on generators that will trickle down to utility companies and ratepayers. They also claim entering the program via executive order, rather than legislative approval, violates the state constitution.

Legal challenges on these grounds and more mean Pennsylvania’s participation has been stalled while the court deliberates.

This piece was originally published in The Center Square. Read the original article here.

Christen joins The Center Square as its Pennsylvania News Editor and brings with her more than a decade of experience covering state and national policy issues from all angles. She’s a Pennsylvania State University alumna and has been published in the The Washington Examiner, the Pittsburgh Post-Gazette, RealClear and Broad + Liberty, among others.

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