Pennsylvania Lawmakers Pass Bill Requiring Legislative Approval to Join Regional Carbon Market

The Pennsylvania Senate on Sept. 9 voted in favor of a bill that would require legislative approval before the state can impose a carbon tax or join a multi-state carbon-trading program. The House of Representatives approved the legislation in July. The move comes ahead of a Sept. 15 meeting of the state’s Environmental Quality Board regarding a proposed rule for participating in the Regional Greenhouse Gas Initiative, or RGGI, a 10-state compact that established the nation’s first mandatory emissions trading program.

The rationale behind the legislation is that joining the regional carbon market would force all of the state’s remaining coal-fired power plants to close, jeopardizing thousands of jobs and millions in tax revenues. Since, the state deregulated its power market, 19 coal-fired power plants have or are planned to close or switch to natural gas, according to a statement from the sponsors of the bills. Coal-fired generation consumes nearly one-fifth of the state’s bituminous coal production, an employer base that provides nearly $7 billion in total economic output.

As Pennsylvania is one of the top net exporters of electricity and the third largest coal-producing state in the nation, the bill explains that a measure to control or limit emissions could have long-lasting impacts on the economy, and lead to electricity imports from out-of-state fossil fuel plants, thereby canceling out any emission reductions.

Democratic Governor Tom Wolf signed an executive order in October 2019, directing the Department of Environmental Quality to develop regulations to join the initiative, which puts a limit on carbon emissions from the power sector. The department is required to present a final proposal to the Environmental Quality Board by Sept. 15. The order was amended in June, providing a six-week extension of the July 31 deadline set last year.

RGGI’s latest quarterly carbon auction held earlier this month sold out of allowances, with clearing prices reaching the highest since the December 2015 auction. The auction generated about $110.4 million, bringing the total proceeds to nearly $3.66 billion. RGGI’s market-based approach sets an annually declining limit on carbon emissions and allows polluters to buy or sell permits. RGGI now has 10 member states following the re-entry of New Jersey which began participating in the auctions since March after almost a decade. Virginia is set to join the compact following the enactment of the Clean Economy Act earlier this year, setting the state on the path to carbon-free power, and companion legislation establishing a cap-and-trade program to reduce emissions from power plants.