The compact, known as the Regional Greenhouse Gas Initiative, or RGGI, will apply to 58 power plants across Pennsylvania, mostly coal and gas burning, that accounted for 75 million metric tons of carbon into the atmosphere in 2017, according to the most recent state data. That’s roughly a third of the state’s total annual carbon emissions.
It was approved in a 3-2 vote by the Independent Regulatory Review Commission on Wednesday, which has a final say on all state regulations, after hearing nearly six hours of testimony.
Before the policy is enacted, the Republican-controlled state Legislature could still attempt to overrule Democratic Gov. Tom Wolf on the measure. And legal challenges appear likely.
“I don’t think anyone would be willing to bet that there won’t be court actions on either side, depending on what the final result is,” the panel’s chairperson, George Bedwick, said.
However, environmental groups still cheered the approval, saying that it would be the most important action the state has taken to date to tackle climate change.
“We hope that polluters and their political allies stop attempting to put up roadblocks to participating in this program and get on the bandwagon in support of strong policies that will reduce our carbon footprint to solve the climate crisis,” PennEnvironment Executive Director David Masur said in a statement.
According to state estimates, entering RGGI — pronounced “Reggie” — will drive down electricity generators’ annual emissions by a fourth by 2030, preventing the release of at least 97 million tons of carbon. Eleven northeastern and mid-Atlantic states already participate in the program.
The rule will require plant owners to purchase a credit for each ton of carbon they release each year. At the most recent auction, they averaged almost $8 per ton of carbon.
Those credits are purchased at auction every year, and fewer credits are offered each time, gradually lowering the amount of carbon that can be legally released.
Revenue from the auction is then split among the states, who can spend it on environmental and energy initiatives.
The Pennsylvania Department of Environmental Protection, which would administer the program, projects it will receive $187 million in revenue in the first auction, which could be as soon as 2022. Those revenues will decline over time as carbon emissions fall.
Pennsylvania would enter the initiative under a 1960 state air pollution law, as well as the federal Clean Air Act, which allows state and federal agencies regulate greenhouse gas emissions.
Research has split on if RGGI reduces carbon emissions. Similar programs have been used to fight acid rain by reducing sulfur emissions, though such market-based programs may sometimes only redistribute pollution, rather than eliminate it entirely.
But proponents say the program, by putting a price on carbon, forces plant owners to consider the impact of carbon emissions while making investment decisions.
Allen Landis, executive director of the DEP’s Energy Development Authority, told the board that the program would level the playing fields between carbon intensive energy sources that don’t pay for the price of their pollution, and renewable energy.
“RGGI is based on the basic economic principle that a polluter should pay for the cost of their pollution. However, in Pennsylvania right now, the cost of greenhouse gas pollution is borne by all of us,” Landis said. “And that can no longer continue.”
Climate change is driven by the release and concentration of carbon dioxide and other heat-retaining gases in the atmosphere.
According to a state climate assessment, average annual temperatures are expected to increase by almost 6 degrees Fahrenheit by 2050 due to the rising global temperatures. The state will also see increased precipitation, leading to more flooding and landslides, and more extreme weather events.
The program is also a centerpiece of Wolf’s second term agenda. In a statement Wednesday, as he also managed the fallout from a tropical storm remnant drenching Pennsylvania, Wolf called climate change “one of the most critical issues we face.”
The initiative, he added, was a “historic, proactive and progressive approach that will have significant positive environmental, public health and economic impacts. ”
On the way to having the state join the regional compact, Wolf has faced vocal opposition from both his usual foes and allies.
Opponents of the measure include the plant owners, business groups, as well as Republican and Democratic lawmakers representing fossil fuel producing areas.
They’ve argued that RGGI’s revenues amount to a tax, not a fee, because “the proceeds of the auctions are enormous, and they are grossly disproportionate to the cost” of administering the program, Anthony Holtzman, an attorney representing coal and gas power plant owners, told the regulatory board Wednesday.
As a tax, it should be approved by the General Assembly, rather than by unelected boards, he argued.
The initiative is also opposed by much of organized labor, including the politically influential building trade unions, who represent power plant workers, as well as the construction workers who build and service fossil fuel infrastructure.
Wolf has backed legislation that would use RGGI’s revenues to help transition workers and communities away from fossil fuel jobs. Even without the initiative, high-paying jobs mining and burning coal for power have been disappearing due to market forces.
“In those plants, in those communities, those workers are not going to get any help from anybody for any transition. Whereas if we do what we are doing here in Pennsylvania, and we succeed, Pennsylvania will have the funds to actually address the needs of transitioning workers,” Wolf said in June.
But union leaders from across the state said that the promised opportunities from a green energy revolution had yet to come to fruition, and that the potential economic damage to communities linked to fossil fuels could not be ignored.
In submitted testimony, the Philadelphia Building Trades Council wrote that the initiative will “eliminate thousands of current and future jobs, and the alleged job creation promised … will largely be low-paying, non-union jobs.”
Opponents also argued that rather than eliminating carbon emissions, the policy will just drive emitters over the border into Ohio and West Virginia. The DEP acknowledged this, but argued the policy would still be a net reduction in carbon.
The vote marks the end of a nearly two-year-long process for the cap and trade proposal to become law. Wolf first proposed entering the initiative in October 2019, and started the regulatory gears with the sweep of his pen.
With the commission’s vote, the rule will now be reviewed by the state attorney general’s office before it takes effect.
The General Assembly also could pass a resolution disapproving of the initiative. But blocking it from becoming law will require a two-thirds majority in the House and Senate to overcome Wolf, who could veto the legislation.
Wolf has never had a veto overridden since taking office in 2015. But a bill blocking RGGI passed last year fell just a few votes shy of a two-thirds majority.
There also could be a legal challenge to the initiative. Both former House Speaker Mike Turzai (R-Allegheny) and his successor, Speaker Bryan Cutler (R-Lancaster) have floated using the courts to block RGGI.
“When it comes to separation of powers issues, we have to have any of those resources at our disposal,” Cutler told the Capital-Star in November 2019.
Regardless of the initiative’s uncertain future, public polling has shown bipartisan support for some climate action.
According to a June 2020 Pew Research Center poll, a little more than two-thirds of Americans thought that the federal government should do more to tackle climate change. That includes 80 percent who favored tougher emissions standards for power plants.
Stephen Caruso is a reporter for the Pennsylvania Capital-Star, where this story first appeared.