Carbon Neutrality is One Step Closer in Pennsylvania

In a historic 14-5 vote on April 16, the Pennsylvania Environmental Quality Board (EQB) advanced a citizen petition to create a cap-and-trade program. The aim of the petition is to bring the state to carbon neutrality by 2052. The petition was originally filed by the Clean Air Council (no affiliation with Clean Air Engineering) and modeled after California’s market-based approach.

This doesn’t mean the State will implement the proposed cap-and-trade program. The vote only authorizes the Department of Environmental Protection (DEP) to further study the cap-and-trade petition. The DEP will issue a report on the impacts and benefits of the proposed program. It will as also make a recommendation to the EQB to adopt, reject or modify the proposed regulation.

Highlights of the Proposed Regulation

Some notable highlights from the proposed regulation include:

– Initial emissions cap established in 2020 for covered sources based on 91% of the 2016 greenhouse gas (GHG) emissions. The cap will decline 3% each year until carbon neutrality is reached in 2052.

– Emissions allowances equal one metric ton of CO2 equivalent (CO2e) as calculated under the EPA Greenhouse Gas Reporting Program (GHGRPP). The available yearly allowances will be auctioned or distributed by the DEP.

– Sources required to report their emissions under the GHGRPP will be required to annually surrender allowances equal to their total annual GHG emissions in CO2e.

– Fuel distributors of petroleum, natural gas, propane and natural gas liquids, and coal fuel products will annually surrender allowances equal to the CO2e of GHG emissions released into the air from fuel combustion.

– The allowances will be sold by auction with a reserve price of $10 in 2020. The price will increase by 10% yearly for inflation. Proceeds from the auctions will go to the state’s general fund which petitioners estimate could be as much as $1.6 billion per year.

– Allowances may be banked for future use, can be traded freely, and bought by any person.

Even if this petition is not adopted the future is clear regarding GHG regulations in the state with Governor Tom Wolf’s executive order signed on January 8, 2019 calling climate change one of the biggest issues we face. The governor set a goal for a 26 percent reduction of GHG emissions by 2025 and an 80 percent reduction by 2050, from 2005 levels.

As you would expect, there is opposition to the petition. There are political concerns about bypassing the state legislature and implementing climate policy through the executive branch. Others assert that the petition essentially imposes an unconstitutional tax by generating revenue from a cap-and-trade program not approved by the legislature.