Wolf’s RGGI fixation will slow Pennsylvania recovery
Governor Tom Wolf’s timing for imposing a new energy tax could hardly be worse. Pennsylvania’s economy is trying to recover from the brutal effects of the pandemic. Yet Wolf’s fixation on joining the Regional Greenhouse Gas Initiative (RGGI) ignores that the policy will increase families’ energy bills and cripple local businesses.
Wolf has tried — without lawmaker approval — to bully the new tax since the middle of the pandemic. In January, the governor vetoed a state Senate bill to reverse his unilateral effort to join the multistate accord that penalizes fossil fuel companies. This month he sued in Commonwealth Court to force the tax into effect immediately.
But there is a good reason why the legislator insists on shared decision-making. Although RGGI claims to encourage green energy sources like wind and solar, the tax simply outsources our fossil fuel needs to other states.
RGGI will not stop climate change; it will only increase energy prices and challenge the reliability of our electricity grid. For countries like Germany and England – overly dependent on wind and solar – the past year has taken its toll on power generation. Closer to home, more than 200 people died last February in Texas when power outages caused by a cold spell shut down natural gas generators and rendered wind turbines inoperable.
In Delaware, RGGI costs imposed on power plants have increased the percentage of electricity generated in the state to 33% this year, from 78% a decade ago, according to David Stevenson of the Caesar Rodney Institute. The owner of Delaware’s last coal plant has announced that the plant can no longer cover overhead costs and plans to close it this year. Natural gas plants face similar pressures.
“By 2023 (electricity generation in the state) could be close to zero,” Stevenson said. “That means lost jobs, lost state and local tax revenue, higher electricity rates and possibly less power reliability.” Meanwhile, power plants in non-RGGI states are recovering lost generation.
Pennsylvania is the leading exporter of electricity among the states, a rare example of economic leadership now under threat. Our Commonwealth can ill afford another tax on job creators, especially in the industry that supports our fragile economy as we recover from the pandemic. Lost electricity sales resulting from RGGI would cost the state $2 billion a year, according to Stevenson. It estimates a loss of 1,400 jobs in power generation alone and electricity rate increases over the first nine years of hundreds of dollars for households and hundreds of thousands for manufacturers. The actual figures would partly depend on the price of carbon allowances, which has increased.
Meanwhile, competitors from Pennsylvania are going the opposite way in terms of energy. The governors of Connecticut and Massachusetts have walked away from a cap and trade program governing the auto industry. And newly inaugurated Virginia Governor Glenn Youngkin issued an order removing his state from the RGGI to reduce electricity costs for homes and businesses.
Pennsylvania needs that kind of positive leadership. Instead, Wolf’s fixation on RGGI is already creating economic anxiety and lost jobs in the Pittsburgh area. “There has been an exodus of workers over the past two years due to the uncertainty of future operations,” said Aric Baker, a member of the International Brotherhood of Electrical Workers at one of the factories slated for closure in 2028. “If someone is 30 years old and working in the factory, they are probably looking for another job.
The Keystone plant in Armstrong County and two other coal plants in nearby Indiana County directly employ 550 people and support about 8,100 jobs, according to Power PA Jobs Alliance, a coalition of labor and industry groups. It’s no wonder some Democrats with constituents in the coal and power industries are siding with Republicans in opposing RGGI despite the Governor’s reported tactics of extorting lawmakers into support the carbon tax.
“In my home in Greene County, the coal mining industry represents four of our top five employers,” Democratic state Rep. Pam Snyder said in testimony against RGGI. “One in three jobs in Greene County is in the coal industry. As a former county commissioner, I know firsthand that 27 cents of every dollar paid to Greene County in taxes comes directly from the coal industry. in the mineral value tax.
Opponents of RGGI will seek more allies like Snyder as they resist the governor’s heavy hand.
Gordon Tomb is a senior fellow at the Commonwealth Foundation, a Pennsylvania-based free market think tank.