Northeastern Climate Pact’s Growth Stalls as Pennsylvania Exits

The growth of a regional cap and trade pact once hailed as a White House-proof way to cut emissions has stalled out for now, thanks largely to rising electricity prices that have spooked lawmakers in non-member states, energy analysts say.

Supporters of the Regional Greenhouse Gas Initiative (RGGI) have always wanted to expand into new states due to the unpredictability of climate efforts at the federal level. The program has made strong gains in the recent past, with New Jersey, Pennsylvania, and Virginia either joining or rejoining over the last six years.

Environmentalists in other states, most notably North Carolina, have at times pushed to join the program, too. But few advocates or lawmakers are pushing for membership now, especially following Pennsylvania’s decision to leave, according to Timothy Fox, managing director at ClearView Energy Partners.

“I don’t see a lot of movement elsewhere,” Fox said. “There are very few proposals even among progressive, Democrat-leaning states to decarbonize.”

Under RGGI, states agree to cap carbon dioxide emissions of power plants. Utilities must buy allowances for those emissions, and the revenue goes to the states. The 10 member states are all clustered in the Northeast and include New York, Maryland, and all of New England.

One key reason for the lack of enthusiasm is the widespread narrative that RGGI increases consumer electricity prices, Fox said. The direct effect the program has on ratepayers is a hotly debated topic, but the nationwide spike in residential electricity prices has created a fertile environment for anti-RGGI messaging.

Meanwhile, President Donald Trump took the US out of the Paris Agreement—a 2016 treaty that seeks to limit global warming—on his first day in office, and his administration has taken various steps to prop up the fossil fuel sector while rolling back climate and air pollution regulations.

The national political outlook and the price-hike narrative helped drive a budget bill in Pennsylvania that took the state out of RGGI, which Gov. Josh Shapiro (D) signed Nov. 12.

Cost Concerns

Pennsylvania state Sen. Tracy Pennycuick (R) capitalized on the theme in a recent post on her website, saying RGGI “would impose a new energy tax on Pennsylvania power producers, which in turn would increase the cost to heat your home and turn on your lights.”

RGGI’s proponents argue that, even if the program does raise consumer rates, it still benefits them in other ways.

Carbon emissions from the power sector in RGGI states have fallen by 46% since the program’s inception in 2009, according to RGGI data, and member states have raised more than $6 billion from auctions, which has been poured back into communities for everything from bill assistance to clean transportation projects, the program says.

States are also free to spend RGGI proceeds to more directly help consumers with their bills, allaying affordability concerns.

“The political tides will shift in particular states here and there,” said Jackson Morris, director of state power sector policy at the Natural Resources Defense Council. “But this is one of those tools a governor can use to do a good job of wisely investing those revenues in a way that can help address affordability concerns.”

Seeding the Ground

In the meantime, RGGI’s proponents are grateful that last month’s elections restored and solidified program membership in two key states.

In Virginia, Gov.-elect Abigail Spanberger’s (D) win means the state will likely stay in RGGI, based on her campaign promises. Gov. Glenn Youngkin (R) pulled the state out of the pact, but if it returns, it would be the largest emitter in the program.

Spanberger’s campaign team did not respond to an interview request about her plans.

Meanwhile, in New Jersey, Gov.-elect Mikie Sherrill’s (D) win presumably means the state will stay in the program—which her opponent, Jack Ciattarelli, firmly opposed on affordability grounds. New Jersey’s ongoing membership isn’t a foregone conclusion, given that former Gov. Chris Christie (R) yanked the state out of the program in 2012 for eight years.

“Sherrill’s win firms things up,” Morris said. “If she had not won, you would probably have seen a scenario like Youngkin, because the legislature would not have been supportive of membership. But that outcome isn’t going to be an issue now.”

But in Pennsylvania—a key state because it would have been the largest emitter in RGGI—the paths to rejoin are so narrow that few advocates see the state doing so anytime soon.

Nevertheless, environmentalists are still trying to seed the ground, hopeful for a future in which state lawmakers are open to joining the pact.

One approach they’re taking is urging the state Supreme Court to rule on a pending case that anti-RGGI advocates say is now moot.

The case seeks to overturn a lower court ruling that struck down Pennsylvania’s bid to join RGGI because it imposed an unconstitutional tax. The state, under Shapiro, argued the funds raised are government fees, not taxes, meaning Pennsylvania should have the right to impose them.

The state Department of Environmental Quality and legislator intervenors have petitioned the court to drop the case, arguing it’s now moot.

Even a decision favorable to environmentalists wouldn’t put Pennsylvania back in RGGI because it wouldn’t override the $50.1 billion budget law that took the state out of the program, said Jessica O’Neill, a senior attorney at PennFuture, a clean energy advocacy group.

But environmentalists recently countered with a petition of their own, asking the court to rule, because a decision in their favor would clarify how the state’s Air Pollution Control Act can legally be used to enact climate regulations in the future, O’Neill said.

State environmentalists are also urging Shapiro to keep pressing on a package of bills he introduced last year that includes a Pennsylvania-only version of RGGI.

“The problems are still there,” said Molly Parzen, executive director of Conservation Voters of Pennsylvania. “So we’re right back at it, pushing for whatever the next thing is.”