Senator Yaw Responds to Governor’s Budget Address, RGGI

Responding to Governor Tom Wolf’s budget address today, State Sen. Gene Yaw (R-23), Chairman of the Senate Environmental Resources & Energy Committee, announced his intention to hold a series of public hearings in Harrisburg and around the Commonwealth to hear from impacted plant owners and labor forces, host communities and other stakeholders, like local governments and fuel suppliers, and to solicit input on legislation like Senate Bill 950 (Sen. Pittman) and House Bill 2025 (Rep. Struzzi) that would underscore the General Assembly’s exclusive legislative authority to impose a carbon tax on any type of industrial emissions:

Today, Governor Wolf doubled down on his scheme to join the Regional Greenhouse Gas Initiative (RGGI), which if not prevented by the General Assembly or the courts, will lead to a discriminatory and job killing tax on all coal and gas fired electric generation plants in the Commonwealth.

The Senate Environmental Resources & Energy Committee will host a series of public hearings in Harrisburg and throughout Pennsylvania to force the Wolf Administration to answer the hard questions about the immediate and irreparable harm triggered by the RGGI carbon tax. The first hearing will take place in Harrisburg on March 18, 2020.

Late last fall, the Senate Committee held an informational meeting and heard from PJM market expert who offered the following:

  • Pennsylvania coal-fired generation plants would likely be forced to bid into the PJM Energy Market at $26/MWh, up from a pre-RGGI $20/MWh price – an unsustainable tax of nearly 30 percent per MWh.
  • Pennsylvania gas-fired generation plants would have to increase their bids from $18/MWh to $20/MWh – an uncompetitive tax of nearly 10 percent per MWh.

In his budget address, the Governor promised to “raise hundreds of millions of dollars … to make our air cleaner.” This statement is terribly misleading and fails to account for the enormous risks to Pennsylvania’s economy and communities in the event of a RGGI carbon tax.

According to several of the largest coal plant owners and their largely union labor forces, the 30 percent per MWh RGGI tax on coal plants will likely trigger the immediate closing of those facilities. In addition, older, less efficient gas plants will struggle to compete with newer, more efficient gas plants. Since 2016, Pennsylvania has benefitted from more than $14 billion in capital investments in these new and efficient gas plants. But, where will the next $15 billion in new gas plants be invested? In Pennsylvania? Where those plants will have to pay a 10 percent per MWh tax? Or in neighboring West Virginia or Ohio?

And what happens to the Governor’s promised “hundreds of millions of dollars” from the RGGI tax when more than one-half of carbon emissions are eliminated as a result of the coal plant closures?

As I stated at the press conference to announce the introduction of Senate Bill 950 and House Bill 2025, Pennsylvania has nothing in common with the other RGGI states. Pennsylvania is blessed with an abundance of coal and natural gas resources, and as a result, possesses one of the most diverse, reliable and low-cost electric generation resources in the country, if not the world.

Indeed, not only do we have little in common with the other RGGI states, we are in great conflict with RGGI states like New York and New Jersey, which have banned new pipelines that would allow our abundant, low cost Marcellus Shale gas to flow to large markets like New York City and Boston whose ratepayers currently have to rely on foreign imports to supply their gas needs.

The above questions, and many more, suggest the enormous policy implications of a RGGI carbon tax; exactly the sort of balance of actual risks and perceived benefits that the people of Pennsylvania elected the General Assembly to perform, not the Executive Branch.

 

CONTACT:
Nick TroutmanDirector, Senate Environmental Resources & Energy Committee; Communications
Office of State Senator Gene Yaw (R-23)
T: (717) 787-3280