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By David McPeak, Staff Writer
Earlier this month, Gov. Tom Wolf signed Executive Order 2019-07 directing the Pennsylvania Department of Environmental Protection (DEP) to develop a proposal for new rules to “abate, control, or limit carbon dioxide emissions from fossil-fuel-fired electric power generators.”[1]
The executive order directs the DEP to join the Regional Green House Gas Initiative (RGGI).[2] RGGI is the first mandatory market-based program in the United States to reduce greenhouse gas emissions from the power sector, and is a cooperative among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. In essence, RGGI is a cap-and-trade program that sets limits and prices for CO2 emissions resulting from electricity generation and requires utilities to purchase allowances for those emissions at auction.[3]
The Pennsylvania General Assembly is currently questioning the legal authority to enter into such an agreement through executive action. The Wolf Administration contends the action is authorized under the Air Pollution Control Act of 1960.[4] However, the statute language authorizes the DEP, where appropriate, to “formulate interstate air pollution control compacts or agreements for the submission thereof to the General Assembly.”[5] “This language requires and anticipates that while DEP may formulate an agreement, such an agreement may not be entered into without submission to the General Assembly for approval” according to Energy Committee Chairman Daryl Metcalfe (R, Butler).[6]
While the legality of the RGGI executive order seems to be headed toward a political battle between the legislature and the Wolf Administration, the reasons for not joining RGGI during the initial implementation still provide relevant questions. In 2005, the Rendell Administration chose to “participate as an observer.”[7] Dan Desmond, then Deputy Secretary of the DEP said “the potential harm to the state’s economy was a factor in Pennsylvania’s decision not to join.”[8] In 2005, the RGGI states’ proposed reductions represented less than a quarter of a percent of total U.S. carbon-dioxide emissions and was viewed by critics as an attempt to embarrass the Bush Administration, which had just refused to join the international Kyoto Protocol to reduce emissions.[9]
The narrow focus of RGGI leads to questions on the programs overall effect on emissions reduction. Pennsylvania has realized similar results in overall CO2 reductions without being part of the multi-state cap-and-trade regime on electricity generation. According to U.S. Energy Information Administration (EIA) statistics between 2005 and 2017, Pennsylvania reduced its overall CO2 emissions by 22.8%, compared to New York at 22.7%, and Massachusetts at 21.3%.[10] In terms of actual CO2 reductions during this period, Ohio led the nation, followed closely by Pennsylvania with the highest over-all reductions of 67.8 and 64.7 million metric tons respectively.[11]
Pennsylvania differs from the other RGGI states as it is the second largest energy producer and exporter in the country, with an economy more dependent on energy-intense industrial production.[12]The New York economy by comparison is oriented toward low energy-consuming activities (e.g., financial markets).[13] Consequently, New York accounted for about 6% of the U.S. population in 2016, but it consumed only 1% of the country’s industrial energy.[14]
The main driver of RGGI states’ CO2 reductions has been the reduction of coal used to generate electricity. Massachusetts has nearly eliminated electricity derived from coal generated within the state, while currently producing two-thirds of its electricity from imported natural gas.[15] Deliveries of natural gas from the Marcellus Shale of Pennsylvania have increased significantly in recent years.[16] Since enacting RGGI, natural gas consumption increased 11%.[17] Electricity imports, for which the CO2 emissions are attributed to the state where the electricity was generated, or what RGGI refers to as “leakage” have increased 37%.[18]
“Leakage” refers to the notion that utilities would import more power from non-participating states, thereby negating some of the reductions, and was another concern for the Rendell administration back in 2005.[19]According to RGGI data, leakage, whether referring to imported electricity from non-RGGI states, or electricity generated from fossil fuels in plants producing less than 25 mega-watt hours, increased 35.4% between 2014 and 2016 compared to the average between 2006 and 2008.[20]
The EIA notes the issue of leakage when determining total carbon emissions of a state. To the extent that fuels are used in one state to generate electricity consumed in another state, emissions are attributed to the state in which the electricity is generated and fuels are combusted.[21] Attributing emissions to the state consuming the electricity, rather than the state where it is generated, would yield different results.[22] Likewise, the CO2 emissions from feed stock uses of fossil fuels such as natural gas used to produce plastics for exported consumer goods are allocated to the states where the petrochemicals are produced.[23]
Indeed, RGGI reductions claimed in the administrations executive order would look much different if those states claimed the emissions resulting from imported electricity and products manufactured with fossil fuels. [24]
These facts create a unique set of questions for the administration and legislature; for instance, under RGGI, would consumers and businesses be paying for the carbon emissions associated with electricity generated in Pennsylvania, but exported to other states? Would Pennsylvania’s participation in RGGI actually reduce CO2 emissions, or provide an incentive for production to move to states or countries with less stringent regulations, relying on coal to power their manufacturing bases and consequently leading to an overall increase in global CO2 emissions?
Because CO2 emissions related to manufacturing and electricity generation for export are attributed to the states that produce them, it seems that under RGGI, Pennsylvania electricity consumers would be on the hook for carbon emissions related to the consumer activities in other states.
[1] Michael Riccardi, Wolf Commits PA to Carbon Emissions Reductions in Step With Regional Coalition. The Legal Intelligencer, Oct 4 2019, https://www.law.com/thelegalintelligencer/2019/10/04/wolf-commits-pa-to-carbon-emissions-reductions-in-step-with-regional-coalition/
[2] Commonwealth Leadership in Addressing Climate Change Through Electric Sector Emissions Reductions, Pa. Exec. Order No. 2019-07 (Oct. 3, 2019), https://www.oa.pa.gov/Policies/eo/Documents/2019-07.pdf
[4] Exec. Order No. 2019-07
[5] 35 Pa. Stat. Ann. § 4004 (LexisNexis, Lexis Advance through 2019 Regular Session Act 72; P.S. documents are current through 2019 Regular Session Act 72)
[6] Governor ‘Cries Wolf’ on Executive Authority to Initiate Economy-Crashing RGGI Regulations Without Legislative Approval, Oct 3 2019, http://www.repmetcalfe.com/News/15341/Press-Releases/Governor-‘Cries-Wolf’-on-Executive-Authority-to-Initiate-Economy-Crashing-RGGI-Regulations-Without-Legislative-Approval-
[7] Tom Avril. 9 States Ready to Fight Pollution on Their Own, Phil. Inquirer, Dec. 12, 2005 at A01. https://advance.lexis.com/api/permalink/ad971859-886c-4e94-89f1-2b1adb812126/?context=1000516
[8] Id.
[9] Id.
[10] Energy-Related Carbon Dioxide Emissions by State, 2005-2016 https://www.eia.gov/environment/emissions/state/analysis/pdf/table2.pdf
[11] Energy-Related Carbon Dioxide Emissions by State, 2005-2016 https://www.eia.gov/environment/emissions/state/analysis/
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id.
[17] State Energy Data System (SEDS): 1960-2017 (complete), Energy consumption by source. https://www.eia.gov/state/seds/seds-data-complete.php?sid=US#StatisticsIndicators
[18] Primary Energy Consumption Estimates, Selected Years, 1960-2017, Massachusetts, Table CT2 https://www.eia.gov/state/seds/sep_use/total/pdf/use_MA.pdf
[19] Tom Avril, supra.
[20] CO2 Emissions From Electricity Generation and Imports in the Regional Greenhouse Gas Initiative: 2016 Monitoring Report, 4 https://www.rggi.org/sites/default/files/Uploads/Electricity-Monitoring-Reports/2016_Elec_Monitoring_Report.pdf
[21] Energy-Related Carbon Dioxide Emissions by State, 2005-2016, supra.
[22] Id.
[23] Id.
[24] 2019-07 supra.
