The Biggest Pennsylvania Energy Stories of 2019, Part II

Part of NRDC's Year-End Series Reviewing 2019 Climate & Clean Energy Developments

This is second blog in a three-part series. Part I of the series is here; Part III is here


DEP Releases New Climate Action Plan

On April 29 the Pennsylvania Department of Environmental Protection released its fourth Climate Action Plan. As I discussed here, the Climate Change Act of 2008 requires the DEP to assess the impacts of climate change on Pennsylvania, recommend strategies to mitigate those impacts, and evaluate the strategies' benefits, costs, and economic opportunities.

This year's plan found that in 2015, Pennsylvania's net emissions of carbon dioxide, methane, and other greenhouse gases were equivalent to 257 million metric tons of carbon dioxide. That's significantly less than the 291 net tons emitted in 2005, mostly due to the replacement of coal plants with gas plants and more energy efficiency; however, the plan found that if the state continues with its current policies, emissions will rise again, reaching about 280 million tons in 2050. The plan recommends 19 strategies (and 100 specific actions) that Pennsylvania can use to cut emissions – and,importantly, to adapt to the impacts of climate change that are unavoidable. This was the first DEP Climate Action Plan to discuss adaptation, a reflection of the fact that the state is already feeling the effects of climate change, mostly in the form of flooding. 

One striking statistic from the plan: since 2006, PennDOT alone has spent over $190 million on flood repair and recovery efforts. To see what parts of Pennsylvania have filed the most claims under FEMA's National Flood Insurance Program (a decent proxy for where flooding has been worst), see this blog by my colleague – and Hershey native – Anna Weber.

House Republicans Roll Out "Energize Pennsylvania" 

Tax subsidies for fossil fuels are a U.S. and a Pennsylvania tradition. Arguably, there was a time when such subsidies made sense for economic development and national security (i.e., when we lacked the renewable power technologies we have today and knew less about climate change). That time is long past, but subsidies continued to be proposed by policymakers. Exhibit A in Pennsylvania this year is "Energize Pennsylvania."

Billed by House Republicans as a "pro-growth, pro-jobs legislative package that will create jobs and redevelop infrastructure with no new fees or taxes," Energize (House Bills 1100 - 1106) is mostly a fossil fuel wish-list. The flagship bill, House Bill 1100, would create a tax credit of 5 cents for every .13368 cubic feet of methane used to manufacture the petrochemicals ammonia, urea, and methanol. According to the Pennsylvania Department of Revenue, this means a subsidy of $26.5 million per year, per plant. The goal is to entice fertilizer manufacturers to set up shop in northeastern Pennsylvania, in the same way that a $1.7 billion tax credit in Act 85 of 2012 convinced Shell to build its ethylene cracker in Beaver County. 

HB 1100 would be a gift both to petrochemical manufacturers and the state's fracking industry (which, with gas prices low and the markets for gas-fired power and liquefied natural gas nearing saturation, is desperate for new markets). In a world of accelerating climate change, Pennsylvania should instead be investing in renewables jobs, as two "30 x 30" bills to amend to Alternative Energy Portfolio Standards Act (SB 600 and HB 1195 would do), and job-creating energy efficiency.


Nuclear Subsidy Push Ends, For Now

By May, it was clear that House Bill 11 or Senate Bill 510 had little to no chance of passing in the General Assembly. So on May 9, Exelon Corporation confirmed that it would close of the Three Mile Island nuclear plant in September. Thus ended the 2019 campaign for nuclear subsidies in Pennsylvania. However, depending on how quickly the state implements a carbon-limit regulation and joins RGGI, we may see another push for nuclear subsidies in 2020 or 2021. That's because as long as gas prices remain low and coal- and gas-fired power plants can emit carbon pollution for free, Pennsylvania's four remaining nuclear plants will continue to face economical challenges. (Low gas prices will also continue to drive coal plants out of business, with or without a price on carbon).

NRDC's issue brief, Transitioning Away from Uneconomical Nuclear Plants, offers a guide for the development of a subsidy package consistent with a transition to a clean energy economy.  The principles expressed there weren't reflected in HB 11 and SB 510.We're hopeful that they will be in any new legislation.


Philadelphia Energy Solutions Refinery Blows Up

After years of under-investment and self-dealing by its private equity owners, the Philadelphia Energy Solutions refinery blew up in June. The future of the refinery site has become a contentious issue, and the City of Philadelphia – which will play a consulting role when the refinery is auctioned in bankruptcy court this January – is trying to strike a balance between neighbors' desire to be free of industrial pollution and labor's desire to preserve union jobs.

Environmental Entrepreneurs et al. Release 2019 Clean Jobs Report

On June 18, Environmental Entrepreneurs (E2), the Keystone Energy Efficiency Alliance, the Green Building Alliance, the Sustainable Business Network of Greater Philadelphia, and Sustainable Pittsburgh released the 2019 Clean Jobs Pennsylvania report. It showed that in 2018, the Keystone state exceeded 90,000 clean energy jobs for the first time, an increase of almost 60 percent since 2014. The energy efficiency industry remains the largest source of clean energy jobs in Pennsylvania, with more than 68,000, but the state also hit new highs in renewable energy (9,200 jobs) and clean vehicles (7,800). Tens of thousands of more family-sustaining jobs could be created with the right state and local policies and investments.

Environmental Protection Loses in the State Budget, Again

The budget that Governor Wolf proposed on February 5 recommended a general fund appropriation to the Department of Environmental Protection of $138 million. In June, the General Assembly appropriated $132 million. In addition, the Governor and the General Assembly agreed to supplement the DEP's budget with some one-time monies from various "special funds." For details, see this summary by former DEP Secretary Dave Hess. 

It was another chapter in what may be the biggest Pennsylvania environmental story of the last decade, after fracking: the decimation of state funding for the DEP. In 2007, the DEP's budget was 0.75 percent of general fund appropriations; in 2019 it was under 4 percent.. After Governor Wolf's proposed budget was released, PennLive reported that "[h]ad the agency's 2008 budget of $229 million kept pace with inflation, state funding would now be $272.6 million." 

The unsustainable one-time transfers to fund the DEP were reflective of a general trend in Pennsylvania. It is now a norm for state budgets to be "balanced" with "one-time revenues, timing shifts and other temporary savings, reductions and offsets," as the House Appropriations Committee wrote in July,  "The unwillingness of Republican majorities to fully address recurring costs with recurring revenues," the Committee wrote, "means policymakers need to be aware of consequences that may arise from the budget balancing measures...." In fact, Pennsylvania is already severe consequences in a number of areas, including transportation

This year's budget also included $10 million more in tax credits for waste coal power plants (the total subsidy is now $20 million per year) and an expansion of a program to provide grants for "last-mile" gas pipeline projects.


  July and August  

PUC Finalizes Alternative Ratemaking Policy Statement

It got little attention outside Public Utility Commission circles, but on July 11 the PUC finalized a policy statement concerning "alternative ratemaking."  In the electric utility world, ratemaking refers to methods used by utilities and the PUC to determine how customers pay for electricity service (and how much they pay). Alternative ratemaking refers to methods that differ from traditional methods, which evolved during an era of ever-increasing electricity consumption and without regard for environmental and climate considerations. Today, it is critical that utilities have business models that align with clean energy goals, especially increased energy efficiency and "distributed" generation, such as solar photovoltaic panels. The PUC's policy statement – which concluded a three-year proceeding in which NRDC offered testimony and filed analysis and comments – helpfully pushes Pennsylvania's electric and gas utilities in that direction, 

NRDC Releases Two Important Analyses

NRDC published two climate analyses during the summer. The first, Climate Change and Health in Pennsylvania, discusses the various health threats that Pennsylvanians face in a warming world (including more heat-related illnesses, breathing and heart problems, and food and water contamination), and how we should respond to them. Our blog about the report is here, The second analysis, Pennsylvania Needs CO2 Limits - and Strong Renewables Policy Too, summarizes the results of power sector "modeling"  performed for NRDC by consulting firm ICF International. We asked ICF to model the effects of stronger energy efficiency and renewable energy targets in Pennsylvania, and of putting limits and a price on carbon pollution from power plants through the Regional Greenhouse Gas Initiative. The results, which we also distilled into a two-page summary, are that carbon limits are necessary to prevent an increase in emissions, but must be accompanied by stronger renewables goals to ensure that the limits are not met by more coal-to-gas switching, and that stronger energy efficiency programs remain crucial in cutting pollution and lowering energy bills.


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