The RGGI Discussion in PA Is Getting Real

A year after Governor Wolf directed the Pennsylvania Department of Environmental Protection (DEP) to cut carbon dioxide pollution from power plants, and following extensive stakeholder outreach and many presentations by DEP staff, Pennsylvania is about to take a major toward a carbon limits regulation and participation in the Regional Greenhouse Gas Initiative (RGGI).

On September 15, the Environmental Quality Board (EQB)—the body that promulgates environmental regulations for the DEP—will vote on whether the DEP's draft RGGI-compatible cap-and-invest regulation should advance into the state's formal rulemaking process. If the EQB votes yes, the DEP will start that process with a public comment period this fall. 

This blog, the first of three that NRDC will post about the DEP's cap-and-invest proposal before September 15, summarizes the DEP's draft rule, explains what's at stake at the EQB meeting, and revisits why Pennsylvania needs carbon limits for its power sector. The  subsequent blogs will discuss 1) RGGI's record and the projected impacts of Pennsylvania's participation, and 2) the status of climate policy discussions in the General Assembly.

The DEP's Draft Regulation

The DEP's draft regulation (titled "Annex A" at this stage) is available on the DEP's RGGI webpage, along with a Preamble, an Executive Summary, and a Regulatory Analysis Form.

The Annex is 85 pages long (and the Executive Summary 5 pages), but here is the essence:

• The DEP is proposing a "CO2 Budget Trading Program" to require reductions in carbon dioxide pollution from power plants from 2022 to 2030.
• The legal basis for the program is the state’s Air Pollution Control Act (APCA), which gives the DEP broad authority to regulate air pollution, including carbon dioxide emissions. 
• The proposed regulation would establish a limit or "budget" for carbon emissions from power plants over 25 megawatts in size. The budget would decline at a rate of 3 percent per year, from 78 million tons in 2022 to just under 61 million tons in 2030. 
• As a rule, power plants that emit carbon dioxide (mainly, plants that burn coal and gas) would have to buy one "allowance" for each ton of emissions. Waste coal plants, however, would receive allowances free of charge in consideration of the fact that they "provide an environmental benefit of reducing the amount of waste coal piles in this Commonwealth," and co-generation plants that produce heat as well as power would not have to buy allowances for emissions associated with heat and power used at "co-located facilities."
• Allowances would be sold at quarterly auctions, and the proceeds of the auctions would be deposited in the Clean Air Fund, a special fund under the APCA that the DEP uses in eliminating air pollution. Between auctions, power plant owners could trade allowances on secondary markets.
• The DEP's "CO2 budget trading program" could be linked to RGGI or implemented on a Pennsylvania-only basis. In the former case, which is the default, the declining budget described above would be combined with the budgets of other RGGI states to form a "cap" on emissions across the RGGI region. With a Pennsylvania-only approach, the state budget would itself be the cap.  

While the draft regulation and supporting documents contain a host of additional details, the gist is this: (1) a declining limit on emissions, (2) a requirement for polluting power plants to pay for their emissions, (3) the investment of proceeds from auctions of emission allowances, and (4) a market for trading allowances. In short, a "cap and invest" system that guarantees emission reductions from power plants and invests in further clean air measures that will provide benefits to Pennsylvanians.

The EQB Vote on September 15

The EQB is an odd body. Established in 1970, it is the only state agency in Pennsylvania that promulgates regulations for a different agency. Generally, agencies promulgate their own regulations.

The reasons for this peculiarity are not clear. Possibly the General Assembly, historically skeptical of environmental regulation, simply wanted to limit the DEP's power. In any case, the EQB consists of 20 members, of whom 11 lead state agencies (including the DEP Secretary, who serves as the EQB chair), 5 are members of the DEP's Citizens Advisory Council, and 4 are members of the General Assembly. It has the power (among other things) to "formulate, adopt and promulgate such rules and regulations as may be determined by the board for the proper performance of the work of the department."

On September 15, the EQB will vote on whether to start a formal rulemaking process for the DEP's proposed regulation. Under that process, which is governed by the Regulatory Review Act, a yes vote will send the DEP’s draft regulation (Annex A) and its Executive Summary and Preamble to the Pennsylvania Bulletin (by way of the Attorney General) for publication and the announcement of a public comment period. The DEP has recommended a 60-day comment period, plus at least 5 public hearings.

Pennsylvania Needs Carbon Limits on Power Plants 

As the DEP has developed its proposed carbon limits program since last October, the idea of Pennsylvania's participating in RGGI has been disconcertingly controversial. Disconcertingly not because there aren't hard questions to be answered – there are. For example, members of labor unions with good-paying jobs in coal plants are understandably concerned about the fate of their jobs, if loath to acknowledge that gas-fired power plants are rapidly eliminating those jobs with or without RGGI. (The DEP is asking for comments on how to implement RGGI in ways that would support the transition of coal workers and communities in a just and equitable manner and address equity and environmental justice concerns in this Commonwealth.) 

What's been disconcerting is that so many RGGI opponents would rather use these hard questions as rhetorical weapons for political theater rather than to actually do the hard work necessary to address them through policy proposals—e.g., through a legislative plan for RGGI like Senate Bill 15. And that so many opponents refuse to acknowledge RGGI's well-documented benefits, and the benefits it would have for Pennsylvania.

As my colleague Bruce Ho has discussed, numerous studies since 2009 have confirmed the program's benefits for the environment, public health, jobs, and the economy. Most recently, two new studies showed that by lowering harmful particulate pollution, RGGI has helped avoid asthma attacks, pre-term births, and cases of low birth weight and autism spectrum in kids—health benefits quantified at up to $350 million—and that RGGI-funded investments in energy efficiency and other clean energy measures in 2018 alone will save families more than $2 billion on their energy bills in the years ahead. These are benefits that Pennsylvania’s neighbors in RGGI are already realizing; under the DEP’s proposed regulation, the Commonwealth would as well.

And of course, RGGI will ensure continuing reductions of climate-harming carbon pollution from power plants. Burning more and more gas for power will not.

RGGI isn't all Pennsylvania needs to address power plant pollution. As my colleague Amanda Levin and I have discussed, the Commonwealth must also raise its renewable energy targets and scale up energy efficiency to rapidly decarbonize its power sector. But RGGI would be a huge step forward and is the policy on the table now—or will be, when the EQB votes on September 15.