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How RGGI Can Help PA Meet EPA’s New Carbon Emission Reduction Standards

by Lindsay Williamson

The Environmental Protection Agency (EPA) solicited comments on a proposed rule that will limit the greenhouse gas (GHG) emissions that can be released by new and modified fossil-fuel power plants. When the comment period closed on August 8, 2023, over 1.1 million comments had been submitted. According to the EPA, power plants account for at least 25 percent of the greenhouse gas emissions released into the atmosphere, which is nearly twice as much as homes and small business contributions combined.   

In its proposed rule, the EPA found that a technology called carbon capture and storage (CCS) could be used to achieve a 90 percent capture of GHG emissions. CCS involves the capture of carbon emissions from power plants and storing them underground or in the ocean. There are many concerns involved in the use of CCS. The technology is not widely used and will be more expensive for power plants to install than clean energy alternatives such as solar generation. More information about carbon capture and the EPA’s proposed carbon rule can be found here.   

Although the EPA has designated CCS as the best system of emission reduction (BSER), this does not mean it is the only method states can use to achieve 90 percent emission reduction.  States are not required to “compel regulated sources to adopt the particular components of the BSER itself,” which means states are not required to use CCS to achieve the EPA’s emission guidelines. The Regional Greenhouse Gas Initiative is one potential cost-effective method of reaching the EPA’s target.    


What is RGGI? 

Thirteen regional states currently use RGGI to reduce GHG emissions and control the amount of pollution released by power plants. RGGI is a cap-and-trade program that limits the amount of GHG emissions power plants can release. The program was started in 2005 with seven member states: Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York, and Vermont. Massachusetts, Rhode Island, and Maryland joined two years later in 2007 and Virginia joined RGGI in 2020. RGGI has successfully reduced GHG emissions in these states by more than 50 percent. 


How does RGGI work? 

RGGI allows participating states to establish a regional cap on carbon dioxide emissions and each state creates allowances based on its share of the regional cap. Power plants with at least one generator with a capacity of 25 MW are required to purchase allowances to cover their carbon dioxide emissions at quarterly auctions. Each allowance enables the power plant to emit one ton of carbon dioxide. These auctions also allow states to track emission levels from individual power plants and ensure that they are paying for the emissions they create.   

RGGI allows the competitive market to standardize the cost of each allowance power plants purchase. Allowances are distributed to power plants from the highest bidder to the lowest bidder. Once all the allowances are allocated, each power plant pays the same amount for their allowances which is based on the lowest bid from the auction. RGGI rules include safeguards at these auctions to ensure that allowance prices fall within a designated price range to provide market stability.   

RGGI operates in three-year cycles. To remain compliant under RGGI, power plants must purchase enough allowances to cover fifty percent of their emissions for the first two years in a cycle.  Additional allowances are purchased during quarterly auctions or in limited cases from the secondary market. Power plants can roll over any unused allowances and use them during a three-year cycle. In the third year, known as the control period, power plants must surrender all their remaining allowances, including any unused allowances from years one and two. The control period in RGGI creates an incentive for power plants to purchase fewer allowances to prevent surrendering them at the end of the three-year period, and in turn, encourages them to reduce their carbon emissions.   

RGGI creates benefits beyond carbon dioxide reduction. The revenue generated from quarterly auctions is invested back into the community through “energy efficiency, renewable energy, direct energy bill assistance, and other greenhouse gas reduction programs.” RGGI generated $374 million in 2021 alone, with 51 percent of the investment focused on energy efficiency.  States that participate in RGGI are experiencing a double benefit from the program; a reduction in GHG emissions and a revenue source to fund programs to improve their energy sectors. 


What About Pennsylvania? 

On April 23, 2022, Pennsylvania published its CO2 Budget Trading Program allowing the State to participate in the RGGI market. This signaled a commitment from Pennsylvania that it was taking ownership of its responsibility to reduce GHG emissions and address its contribution to climate change. Unfortunately, the polluters from the coal industry and their allies in the legislature challenged the rule and brought an action in State court requesting that the law be declared unconstitutional. As a result of a last-minute injunction, Pennsylvania was forced to pull its allowances from the September 2022 auction and cannot participate in the RGGI auctions until the injunction is lifted or the case is resolved.   

Pennsylvania’s withdrawal from RGGI has been a blow to the State’s commitment to fight climate change but has also had financial repercussions. Over a billion dollars in energy investment funds may have been lost while Pennsylvania awaits a court decision on the constitutionality of RGGI. Participating RGGI states have prevented the release of 4.4 million tons of carbon dioxide, which also creates a reduction in other pollutants such as nitrogen oxide, sulfur oxide, and particulate matter. Citizens of these states have directly benefited from the $1.2 billion in lifetime energy bill savings. While other states are reaping the rewards of RGGI participation, Pennsylvania is being left behind. The absence of state regulation allows power plants in Pennsylvania to continue to pollute the air we breathe without any accountability and without paying a cent.   


RGGI is Right for Pennsylvania? 

Citizens across the State of Pennsylvania are feeling the effects of power plant pollution and paying the price with their health. The Shenango Coke Plant was closed on Neville Island near Pittsburgh in 2016. Coking plants are fueled by coke derived from coal and emit similar pollutants to power plants. A recent study conducted by New York University has shown that the plant’s closure created a 90 percent decrease in sulfur pollution and local residents experienced an immediate 42 percent reduction in emergency room visits. Those visits further declined by 62 percent after the plant was closed for three years. It’s anticipated that additional health benefits including a decrease in asthma cases and cardiovascular disease, will be realized as more time passes since the plant’s closure. With both coking and power plants scattered across the State, even a reduction in pollution emissions from these plants could vastly improve the health of Pennsylvania’s citizens. RGGI could create these reductions with the added benefit of generating investment funds for Pennsylvania’s clean energy infrastructure. 

In just a few short weeks, the September RGGI auction will take place without Pennsylvania’s participation. Power plants in Pennsylvania will continue to emit harmful pollutants into our air and advance the climate change disaster that is being felt across the world. RGGI could not only provide a solution to this problem but would make it possible for Pennsylvania to comply with the 90 percent carbon emission reduction included in the EPA’s proposed carbon rule.   

We can only hope the Pennsylvania Supreme Court will uphold RGGI and the State can participate in the December 2023 auction, although it is unlikely the case will be resolved in time.  Pennsylvanians deserve to reap the benefits enjoyed by other participating RGGI states in our region. Power plants need to be held responsible for the harmful emissions they release into the air we breathe. The State could utilize RGGI to create accountability and force power plants to reduce their GHG emissions, which would improve the health and quality of life for all Pennsylvanians.   


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