Pennsylvania’s Climate Change Initiatives Entering 2022
In 2021, Pennsylvania advanced significant regulatory and executive initiatives that will carry through 2022. Some of these actions focus on greenhouse gases (GHGs) generally, while others are more specific to particular GHGs, such as CO2 or methane.
Regional Greenhouse Gas Initiative (RGGI)
On July 13, 2021, the Environmental Quality Board (EQB) voted to approve a final rulemaking titled “CO2 Budget Trading Program,” which would allow Pennsylvania to join as the newest member of the Regional Greenhouse Gas Initiative (RGGI). The final rulemaking is now making its way through the regulatory review process outlined in the Regulatory Review Act.
RGGI is an intergovernmental organization consisting of ten member-states (CT, DE, ME, MD, MA, NH, NJ, NY, RI, VT) that has established a market-based cap-and-trade program for CO2 emissions from fossil fuel-fired power plants that have 25 megawatts or more of nameplate capacity and send at least 10 percent of their gross generation to the grid. In October 2019, Governor Tom Wolf signed Executive Order No. 2019-07 which directed the Pennsylvania Department of Environmental Protection (PADEP) to develop and present to the EQB a proposed rulemaking that would enable Pennsylvania to join RGGI.
The rulemaking would aim to reduce CO2 emissions from RGGI sources by 25.5 percent between 2022 and 2030. Based on an analysis conducted by a consultant retained by PADEP, most emission reductions are expected to come from reductions in coal use, while a smaller percentage would come from natural gas. While Pennsylvania would expect to see a total statewide emissions reduction of 183 million tons of CO2 by 2030, approximately 96 million of that 183 million tons of CO2 emissions would be shifted (i.e., leaked) to other states within PJM territory. PJM is a regional transmission organization that coordinates the movement of electricity in Pennsylvania, all or parts of 12 other states, and the District of Columbia. In fact, nearly all the anticipated reductions in natural gas emissions and generation in Pennsylvania are expected to be leaked to other PJM states.
PADEP expects the auctions of RGGI credits to yield annual revenues of between approximately $131-$187 million through 2030, which is considerably less than what PADEP expected earlier in the rulemaking process. The Air Pollution Control Act requires that all auction proceeds be directed to the Clean Air Fund “for the use in the elimination of air pollution.” PADEP is in the process of developing a reinvestment plan for the auction revenues which is expected to include reinvestment in energy efficiency, renewable energy, and greenhouse gas abatement. Although PADEP has taken the position that the allowances amount to fees that are authorized under the Air Pollution Control Act, opponents of the final rulemaking argue that the anticipated revenue from the auctions exceeds an authorized fee and instead amounts to an unauthorized tax.
Relatedly, still pending before PADEP and the EQB is a rulemaking petition that was submitted by a group of individuals and organizations in 2018 that asked the EQB to establish a cap-and-trade program that would encompass a much broader set of sources than RGGI. For a more detailed explanation of this pending rulemaking petition, please refer to our prior article here. On November 17, 2020, PADEP informed the EQB that PADEP intended to present a report analyzing the costs and benefits of the rulemaking petition by early 2021. On October 19, 2021, PADEP revised that anticipated deadline to early 2022.
On May 23, 2020, the EQB initiated a public comment period on a proposed rulemaking to reduce methane emissions by setting emissions standards for volatile organic compounds and other pollutants (along with co-benefits of methane reductions) from existing oil and natural gas production facilities, compressor stations, processing plants, and transmission stations. PADEP received extensive comments during the public comment period, which closed on July 27, 2020. PADEP is planning to submit the final-draft rulemaking to the EQB in first quarter 2022 and finalize the rulemaking by second quarter 2022.
On December 21, 2020, a group of three northeastern states, including MA, CT, RI, and the District of Columbia, formed the Transportation and Climate Initiative (TCI) by signing on to a Memorandum of Understanding (MOU) with a goal of creating a cap-and-invest program to reduce CO2 emissions from the transportation sector. The program would specifically target fuel suppliers. Pennsylvania and seven other states have opted not to sign on to the MOU at this time and instead intend to continue to work with the TCI states to develop the details of the program while pursuing their own state-specific initiatives. TCI issued a draft model rule in March 2021 and a final Model Rule in 2021. Updates on efforts to implement the Model Rule can be found here.
Relatedly, PADEP has developed a draft proposed rulemaking that would amend PADEP’s Clean Vehicles Program at 25 Pa. Code Chapter 126, Subchapter D, by establishing a requirement for automakers to offer for sale a percentage of Zero Emission Vehicle (ZEV) Program-eligible light duty vehicles as part of their model offerings. The draft proposed rulemaking, which can be found here, was presented to PADEP’s Air Quality Technical Advisory Committee on October 14, 2021.
PADEP has halted development of a proposed rulemaking that would amend 25 Pa. Code Chapters 121, 129, and 130 to impose additional requirements for the control of hydrofluorocarbons (HFCs) by preventing the future use of HFCs in sources such as air conditioning and refrigeration. PADEP intends to wait for U.S. EPA to develop a national rule to address HFCs.