In dead of night, state subsidizes polluters
Late in the night of Friday, June 25, state lawmakers pushed through a $40 billion budget negotiated without public feedback.
That last part is important, because if taxpayers across the commonwealth had a chance to read this document before its hasty approval, they likely would have been disappointed at what they found.
Buried two-thirds of the way through a dense tax code bill, nestled between tax breaks for entertainment venues and expansion criteria for Keystone Opportunity Zones, was a major $320 million giveaway for a new fossil fuel facility.
This sweetheart deal leaves many questions unanswered, chief among them: who stands to benefit from such an enormous subsidy, and why are our elected officials still incentivizing dirty industries that are in decline while other states and nations are doing the exact opposite?
Unfortunately, burying enormous subsidies deep within legislation, and away from public scrutiny, is nothing new: Pennsylvania has been handing out opaque fossil fuel subsidies for years.
In 2012, the Legislature passed the largest corporate subsidy in its history—a 25-year, $1.65 billion subsidy for Royal Dutch Shell to build a cracker plant in Beaver County to turn fracked gas into resins used to create single-use plastics. That bet already is questionable because the plant will open in an oversaturated market that the Institute for Energy Economics and Financial Analysis forecasts will create immediate financial distress for the facility as soon as it’s operational.
Aside from the enormous impacts on air and water pollution caused by single-use plastics, this facility is also a climate disaster—Royal Dutch Shell could emit upwards of 2.2 million tons of carbon pollution annually, despite being ordered recently by a judge to slash its carbon emissions by 45% by 2030, from 2019 levels.
The next wave of massive fossil fuel subsidies came in the summer of 2020 — a time when the public rightfully was focused on the early days of the pandemic — when the state Legislature and Gov. Tom Wolf used their time to approve Act 66, a subsidy for up to four additional petrochemical facilities. That legislation provided these facilities, which turn fracked gas into chemicals and fertilizers, 24 years of tax breaks totaling about $160 million per facility.
Fast-forward to June 25 of this year, when our lawmakers again decided to game the system in favor of dirty industry. This time, the Legislature reduced the number of facilities that could benefit from the Act 66 subsidy from four facilities to two—a tacit recognition that their subsidy package in 2020 wasn’t the economic driver they claimed it would be—but kept the total handout at $26.6 million. It also mandated that the unallocated tax credits, now guaranteed to be between $320 million and $480 million over 24 years, go to one facility.
To further put the size of this subsidy into perspective, it is three times larger than what legislators provided to the poorest school districts in this year’s budget. A new polluter is getting more than nursing homes ravaged by the pandemic. All of this, at the same time the state Legislature decided to withhold $5 billion in American Rescue Plan funds rather than invest those dollars in small businesses, sustainable job creation, or modernizing our natural infrastructure like state parks, waterways, and green spaces.
It’s not currently clear what type of petrochemical facility will get this handout, but regardless of the type, it’s yet another example of our lawmakers throwing good money after bad in a misguided economic development strategy that prioritizes dirty fossil fuels over cleaner, more sustainable alternatives.
According to a report released earlier this year by PennFuture, our state government subsidizes polluters to the tune of $3.8 billion annually, making Pennsylvania one of the largest corporate subsidizers in a country that is the second-largest fossil fuel subsidizer in the world. Until Pennsylvania stops cobbling together backroom deals like these, our economy will remain tethered to fossil fuels at a time when we need exactly the opposite.
Lawmakers and Wolf failed in their first chance at investing in a visionary future, but have an opportunity at redemption when they return in the fall and must spend the remaining $5 billion in federal stimulus funds.
Pennsylvanians can’t afford to let them waste their tax dollars on polluting deals like this again.