On Jan. 14, 2021, the PA Chamber filed comments with the Environmental Quality Board regarding the Wolf administration’s proposed regulation for Pennsylvania to join the Regional Greenhouse Gas Initiative, a cap-and-trade program for power plants. The PA Chamber’s comments expanded upon previous statements and legislative testimony highlighting our concerns, including with respect to “leakage,” and urging a thorough cost-benefit analysis. The PA Chamber also notes that a changing climate will present significant challenges, and addressing those challenges will require a private sector that is equipped and empowered to develop new technologies and innovate.
The PA Chamber’s comments note that market-based programs can be more efficient than command-and-control approaches, but costs must not exceed benefits and flexibility with respect to compliance. Preserving Pennsylvania’s role as a net-exporter of power is also paramount.
Pennsylvania exports more electricity, proportionally, than any other state in PJM or RGGI. Competitive markets have also resulted in significant reductions in PJM energy market prices, point source emissions of criteria pollutants, and ambient concentrations of criteria pollutants. Electricity prices in Pennsylvania are lower than those of RGGI states. As cost-effectiveness of low- and zero-carbon resources improves, markets are showing a preference for these resources as well.
The PA Chamber is very concerned about potential leakage, or shift in generation to PJM states that are not participating in RGGI. The PA Department of Environmental Protection’s modeling forecasts a substantial amount of leakage to states with higher carbon intensities than Pennsylvania. The PA Chamber’s comments note that the rulemaking’s cost-benefit analysis does not account for these shifted emissions and may overstate the value of reductions from NAAQS criteria pollutants.
The PA Chamber encouraged the final rule to afford greater flexibility to combined heat and power systems by incorporating federal definitions of non-EGU facilities, as well as greater flexibility with respect to compliance obligations. This type of more efficient technology has been used to improve sustainability and the competitiveness of manufacturers, health systems and universities.
The comments also note that the proposed rule’s regulatory analysis documents fall short of various Regulatory Review Act requirements. In addition, given that RGGI states may adjust the program’s goals and model rule this year, the PA Chamber encourages an off-ramp or safety valve in the state’s final rule to hedge against unexpected or undesired outcomes, such as duplication of obligations from federal or regional energy policies, the state losing its status as a net exporter, or significant cost increases. The PA Chamber also noted some RGGI states have taken action to worsen the operating climate in Pennsylvania through various regulatory proceedings.
The Wolf administration has pledged to finalize the rule before the end of 2021 in order to have Pennsylvania join RGGI by Jan. 1, 2022. Significant work remains to be done on the administration’s part to meet that deadline, including additional review by various DEP advisory committees, developing a thorough comment-and-response document that addresses all timely filed comments, and final review and approval by the Environmental Quality Board, the Independent Regulatory Review Commission and the Office of Attorney General.