When former Gov. Tom Wolf agreed to put Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI) without involving the Legislature, it was a violation of the Pennsylvania Constitution, the Pennsylvania Commonwealth Court said in a Wednesday decision that prevents the state from joining the plan.
But the possibility of joining RGGI is not dead yet. There are murmurs in the Capitol in Harrisburg that the decision may be appealed.
RGGI is a cap-and-trade program between member states aimed at reducing carbon dioxide (CO2) emissions from the power sector by 30 percent by 2030.
In the plan, power companies are given a cap on carbon emissions. Power companies are then required to buy CO2 allowance permits to continue producing each ton above the emission level, or innovate ways to produce fewer emissions. This will greatly increase the cost of producing energy.
Power generators producing less than the cap may auction off the extra CO2 allowance permits to those producing too much. The number of allowed emissions would incrementally reduce the number of CO2 allowance permits allocated.
The auction is handled through RGGI, a nonprofit organization that administrates the cap and trade program among partner states. Current RGGI member states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia. Pennsylvania would be the largest energy-producing state to join, and the concern has been that RGGI would kill energy jobs, put power companies out of business, and jack up the cost of power for all Pennsylvanians.
State Senate Republicans argued that the Department of Environmental Protection (DEP) and the Environmental Quality Board (EQB) imposed a tax on energy companies when entering RGGI, which is unconstitutional.
Moving Money
Both DEP and EQB stand to net a huge windfall of cash with RGGI in place.“It is undisputed that DEP and EQB anticipate significant monetary benefits from participating in the auctions,” court papers say. Auction proceeds are to be deposited into the state’s Clean Air Fund, which is used to reduce air pollution.
From 2016 to 2021, the Pennsylvania Clean Air Fund maintained a yearly balance between $20 million to $25 million. The fund spent about $1 million more than it took in some years. But with the RGGI auction proceeds, the estimated receipts for the 2022–2023 budget year exceed $443 million, court papers say.
“There is no cited authority under which DEP and EQB may obtain or retain the auction proceeds for Pennsylvania allowances that are purchased by non-Pennsylvania covered sources, which are not subject to DEP’s and EQB’s regulatory authority, and which are not tethered to CO2 emissions in Pennsylvania,” the decision said. “We grant Senate intervenors’ [complaint] asserting that the rulemaking is an invalid tax; we declare that the rulemaking is void; and we enjoin the secretary from enforcing its provisions.”
State Republicans issued numerous statements reacting to the court’s decision.
“The Commonwealth Court decision confirms what we have known for some time—which is the tax known as RGGI is unconstitutional,“ Senate President Pro Tempore Kim Ward said. “One of Pennsylvania’s greatest assets is our ability to produce energy, which is being held hostage by flawed public policy resulting in higher electricity rates for our citizens. Gov. Shapiro should drop the RGGI lawsuit and work with us to unleash Pennsylvania’s energy potential by working together to develop a responsible energy policy for the people we represent.”
Ms. Ward added that a strong energy policy is key to national security and that Pennsylvania is well-positioned to help America become energy independent and less reliant on energy sources from unpredictable nations that don’t share America’s values.
Other Republicans Praise Decision
Gov. Josh Shapiro’s RGGI Working Group has not endorsed the program, and Mr. Shapiro has been tight-lipped about his approach to the plan.Pennsylvania House Republican Leader Bryan Cutler applauded the decision in a statement.
“The unlawful entrance into RGGI by the prior administration was a slap in the face to Pennsylvanians who continue to deal with rising energy prices and increasing inflation,” Mr. Cutler said. “I encourage the Shapiro administration, which has thus far refused to completely embrace RGGI and its associated energy tax, to not appeal today’s Commonwealth Court decision and give Pennsylvanians the certainty that this program will not add to the increasing costs they face.”
State Rep. Martin Causer, Republican chairman of the House Environmental Resources and Energy Committee, said every other state that chose to join RGGI did so as the result of legislative action.
“RGGI would have crushed our energy industry, leading to a drop in our energy supply and a substantial increase in costs for consumers. Now we have the opportunity to realize the full potential of the industry in the Commonwealth,” Mr. Causer said in a statement.
The Pennsylvania Chamber of Business and Industry filed an amicus brief in opposition to RGGI along with the Pennsylvania Manufacturers Association, Industrial Energy Consumers of Pennsylvania, Pennsylvania Energy Consumer Alliance, and the National Federation of Independent Business.
