Independent Analysis Concludes RGGI Carbon Tax Could Increase Pennsylvania Electricity Costs 3.8x More Than Wolf’s Projections

HARRISBURG – Impartial analysis from the Independent Fiscal Office (IFO) projects the Regional Greenhouse Gas Initiative (RGGI) could nearly quadruple new electricity costs for consumers, Sens. Gene Yaw (R-23) and John Yudichak (I-14) said today.

The IFO, revered across state government for its nonpartisan examination of budgetary policy, reviewed the administration’s outdated RGGI modeling and presented its findings to a joint hearing of the Senate Environmental Resources and Energy Committee and the Community Economic and Recreational Development Committee on Tuesday.

Among the many shocking details of the report, IFO Director Matthew Knittel said Pennsylvania energy generators could spend upwards of $781 million annually on emissions credits at the RGGI auctions – nearly four times the amount anticipated by the administration’s taxpayer-funded analysis used to justify our participation in RGGI in 2020. The IFO also warned members that “those costs would be pushed through to final customers.”

“Thoughtful, independent testimony from a diverse group of experts in government, business, and organized labor confirms the many concerns legislators have raised about the administration’s unilateral and unconstitutional decision to push Pennsylvania into the Regional Greenhouse Gas Initiative without legislative action,” said Yudichak.

This $781 million represents a carbon tax on electricity generation that will have a direct impact on electricity rates for residential, commercial and industrial customers. This will be particularly harmful to low and fixed income households already smothered by energy poverty and runaway inflation, Yaw said.

“The IFO’s findings confirm my worst fears about the administration’s hasty push to join RGGI,” Yaw said. “The cost of this program will cripple our economy at a time when we can least afford it.”

“Growing evidence from economists and environmental scientists suggest that RGGI will devastate Pennsylvania’s energy industry, dramatically increase energy costs for every consumer and produce no material gains in reducing greenhouse gas emissions,” Yudichak said.

Yaw and Yudichak sent a letter to the IFO last month requesting an audit of the modeling completed by ICF International and used by the Department of Environmental Protection to tout RGGI’s supposed economic and environmental benefits.

When Gov. Tom Wolf signed the 2019 executive order that would force Pennsylvania into the regional carbon tax program, auction clearing prices – the amount energy producers pay to buy “credits” to offset their emissions – would only be $3.24 per short ton in 2022. At that time, taxpayer-funded analysts insisted prices would stay under $4 through 2030.

The auction clearing price set on Dec. 1, however, exceeded $13 per short ton, more than four times what the department estimated and 40% above the Sept. 8 clearing price alone.

The IFO said this spike in clearing prices casts doubt on every projection the former analysis made. For example, net generation from coal and natural gas – two sources of carbon emissions targeted by RGGI – will likely grow 16%, not the flat rate assumed by ICF, to account for increased demand.

IFO analysis also concluded that emissions reductions between 2008 and 2020 for the 10 RGGI states were comparable to non-participating states – a fact that unravels the entire premise for joining the program in the first place, Yaw said.

“This is disastrous policy built on delusions of grandeur, and we must do everything we can to prevent Pennsylvania from diving headfirst off this proverbial cliff,” Yaw said.

The hearing also included perspectives from Pennsylvania’s business, labor and educational experts. Full video of the hearing and testimony from each of the participants can be found on the Senate Environmental Resources and Energy Committee’s website.


Nick Troutman (Yaw)
Scot Pitzer (Yudichak)

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