Executive order calls for Pennsylvania to join RGGI

Pennsylvania Gov. Tom Wolf (D) on Thursday signed an executive order directing the Pennsylvania Department of Environmental Protection (DEP) to join the Regional Greenhouse Gas Initiative (RGGI), a regional greenhouse gas cap-and-trade market operating in nine Northeast and Mid-Atlantic states.

In January, Wolf signed an executive order setting statewide climate goals that aim to reduce greenhouse gas emissions by 26% by 2025 and by 80% by 2050, compared with 2005 levels.

States participating in RGGI agree, either through regulation or legislation, to set a cap on total CO2 emissions from electric power generators in their states. To comply with the cap, power plants must purchase a credit, or allowance, for each ton of CO2, they emit. The purchases are made at quarterly auctions conducted by RGGI. The most recent RGGI auction, held Sept. 4, resulted in an allowance price of $5.20 per ton. The proceeds from the auctions are allocated back to the participating states in proportion to the amount of CO2 subject to regulation in each state. RGGI states have reduced power sector CO2 emissions by 45% percent since 2005, according to RGGI.

The nine RGGI states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont.

If Pennsylvania is successful in joining RGGI, it would account for about 78 million tons of CO2 emissions, which is a little more than all of the current nine RGGI states combined. At recent prices, that could bring in about $300 million a year to Pennsylvania.

Pennsylvania is the fourth largest producer of CO2 in the nation, emitting nearly 220 million metric tons of CO2 a year with more than a third coming from the electricity sector, according to the Energy Information Administration.

Pennsylvania is a member of the PJM Interconnection and exports nearly a third of the electricity it produces. The cost of RGGI compliance for exported electricity would be paid by electric customers in the states where that electricity is ultimately used.

New Jersey was an original member of RGGI when it began in 2008, but Gov. Chris Christie (R) withdrew from the program in 2012. In January 2018, current New Jersey Gov. Phil Murphy (D) signed an executive order authorizing the state’s return to RGGI. That process is expected to be completed in January 2020.

In April, Virginia’s Air Pollution Control Board adopted rules, paving the way for the state to join RGGI, but in May, Virginia’s participation in RGGI was delayed by at least a year when Gov. Ralph Northam (D) declined to veto language inserted in the state budget by Republican lawmakers that blocked funds needed to join the cap-and-trade program.

Pennsylvania’s participation in RGGI could face similar challenges as the state’s legislature is controlled by Republicans.

Under the executive order, the Department of Environmental Protection has to draft regulations to present to the Environmental Quality Board by July 31, 2020, which would be followed by a public comment period. All else being equal, it could take about two years before Pennsylvania is a functioning member of RGGI.

Wolf’s second term runs through January 2023.