Part of NRDC's Year-End Series Reviewing 2019 Climate & Clean Energy Developments
2019 started out with a bang in Pennsylvania: on January 8, 2019, Governor Tom Wolf signed an Executive Order establishing statewide greenhouse gas reduction goals. And though it's ending with bad news—approval by FERC of changes to the PJM Interconnection's "capacity market" that will force Pennsylvanians to pay higher electricity bills for more fossil-fuel power—overall, 2019 was an encouraging year in the Keystone State. This blog, the first in a three-part series reviewing the year's major energy developments, covers January through March. Part II covers April through August and Part III covers September through December.
Governor Wolf Signs Executive Order on Climate Action
Wolf's Executive Order 2019-01 does two things. First, it states that Pennsylvania "shall strive" to cut greenhouse gas emissions by 26 percent (from 2005 levels) in 2025, and by 80 percent in 2050. Second, it establishes performance goals for Pennsylvania executive agencies concerning energy efficiency, electric vehicles, and renewable energy purchases. The Order also establishes a "GreenGov Council" to help agencies meet these goals and to "encourage the incorporation of environmentally sustainable practices into the Commonwealth government's policy, planning, operations, procurement, and regulatory functions...."
Reaching the 2025 goal should be relatively easy because emissions from Pennsylvania's large electric power sector have dropped by one-third since 2005 as gas power plants have replaced coal plants. Reaching the 2050 goal will be much harder, in large part because of the build-out of gas plants, which are now replacing non-emitting nuclear plants and could be huge greenhouse gas emitters for decades. Pennsylvania will have to cut current emissions by more than 70 percent. Reaching "net zero" emissions (as the science says is necessary, to keep the impacts of climate change manageable) will be harder still. Strive we must.
Severance Tax, Take Eleven: "Restore Pennsylvania"
In 2009 Governor Rendell proposed the first shale-era severance tax in Pennsylvania—the only major gas-producing state without such a tax – and legislation to establish one has been proposed every year since. Governor Wolf announced his fifth severance tax proposal—"Restore Pennsylvania"—on January 31, and legislation to codify it was introduced in June. Under Restore Pennsylvania, the state would issue $4.5 billion in bonds, making the money available for eleven categories of infrastructure and capital projects, from high speed internet to flood control to "business development." The bonds would then be paid down over 20 years with revenue from a modest severance tax ranging from $0.091 to $0.157 per thousand cubic feet of gas, depending on the market price of gas. The current gas well impact fee would remain in place.
While the Restore legislation enjoys broad bipartisan support, it won't pass because House Speaker Mike Turzai will not allow it to come to a vote.
You can debate—and Pennsylvania environmentalists do—the wisdom of an infrastructure package that depends on 20 years of fracking as we careen toward climate crisis. But from a fiscal perspective, it's hard to see Pennsylvania's failure to enact a severance tax to date as anything but a missed opportunity. (And a boon to gas company shareholders). Texas—the only U.S. state that fracks more gas than Pennsylvania—produced 7,847,102 million cubic feet of gas (mmcf) in 2017. Its gas severance tax raised almost $1 billion in revenue that year. By contrast, Pennsylvania produced 6,210,673 mmcf of gas and its impact fee brought in a little over $200 million. That's about 79% of Texas's production versus less than 25% of its production tax revenue, if you're counting. Not a bad return on your investments in the General Assembly, if you're the gas industry.
The Push for Nuclear Subsidies Begins
No Pennsylvania energy story was bigger in 2019 than the push—ultimately unsuccessful—for legislation to subsidize Pennsylvania's increasingly uneconomical nuclear power plants. Leaders of the nuclear energy caucus started the campaign on February 4th with co-sponsor memoranda for legislation to add nuclear power to Pennsylvania's Alternative Energy Portfolio Standards Act.
I laid out NRDC's position on subsidies in a letter to the General Assembly posted as a blog on February 1. The blog summarizes NRDC's issue brief, Transitioning Away from Uneconomical Nuclear Plants, articulating "best practices" for state subsidies, and arguing that Pennsylvania should seek an orderly transition from nuclear that ensures affordable electricity for consumers and economic opportunity for communities and workers that currently depend on nuclear plants. The state should transition rapidly to a low-carbon power system based on renewable energy and energy efficiency.
I also posted a blog about Pennsylvania's 1996 Electricity Generation Customer Choice and Competition Act, the law that "restructured" the state's power sector and effectively turned over power planning to the PJM Interconnection and its electricity markets. Understanding these markets is critical to understanding the problems facing Pennsylvania's nuclear plants.
DEP Releases Pennsylvania Electric Vehicle Roadmap
Since 2016, the DEP's Energy Programs Office has been working with stakeholders in the Drive Electric Pennsylvania coalition to increase the acceptance and adoption of electric vehicles (EVs) in Pennsylvania. On February, the DEP released a Pennsylvania Electric Vehicle Roadmap that it prepared with the coalition. The Roadmap takes a holistic look at the current state of EVs in Pennsylvania, sets strategies to support further EV integration of and remove barriers to integration, and discusses the potential benefits and impacts of these vehicles on the Commonwealth, including the reduction of greenhouse gas emissions.
As Part III of this blog will discuss, one of the strategies discussed in the report—a transportation electrification directive for utilities—is currently advancing in the General Assembly as Senate Bill 596, the Clean Transportation Infrastructure Act.
Nuclear Subsidy Legislation Is Introduced
Some two weeks before the 40th anniversary of the partial meltdown of the Three Mile Island plant in Middletown, Pennsylvania, State Representative Thomas Mehaffie introduced House Bill 11. My blog about the legislation is here; I also presented testimony about it to the House Consumer Affairs Committee in April and discussed the policy issues in a PBS documentary, Three Mile Island: the New Nuclear Dilemma). The Senate counterpart to HB 11, Senate Bill 510, was introduced a few weeks later.
At the press event for HB 11, Representative Mehaffie was joined by members of the Central Pennsylvania Building and Construction Trades, and of members from locals of the Boilermakers and Ironworkers unions. Their presence underscored the number and quality of unionized jobs at Three Mile Island and Pennsylvania's other nuclear plants, and the threat to these jobs from highly automated combined-cycle gas power plants burning historically cheap (for now) fracked gas. The gas plants also threaten coal plants. The Regional Greenhouse Gas Initiative (RGGI), which will be discussed in Part III of this blog, would help the nuclear plants. It wouldn't help the coal plants—but would give the state a new source of funds to help coal workers who will lose their jobs due to gas with or without RGGI.