Emily Dennis

November 17, 2021

Air pollution is a great health risk to the many citizens living in the Commonwealth of Pennsylvania. Bordering states have already taken their own initiatives to work toward cleaner air that produces economic, environmental, and health benefits for their citizens. Pennsylvania is teetering on a decision about joining the Regional Greenhouse Gas Initiative (RGGI). The state should acknowledge the various benefits and the service it would be doing for its citizens, as well as for the environment by joining RGGI. 

The Regional Greenhouse Gas Initiative (RGGI, pronounced “Reggie”) is most commonly known as the cap-and-trade program for carbon dioxide emissions in the power sector. RGGI was originally implemented back in 2009 as the nation’s first market-based, cap-and-invest regional initiative.^[1] Today, it has been adopted by ten New England and Mid-Atlantic states as they work toward combating the effects of climate change. These states have seen immense benefits from the program, including in their economic and healthcare sectors. As RGGI gains popularity, more states are looking to possibly implement it. However, this program is seen by many as part of the environmental movement. In today’s political climate, these types of programs can be difficult to pass, especially in states that have a split in political parties. The most recent state to introduce the RGGI program is Pennsylvania. The State Legislature is facing staunch opposition from both the Republican majority and other conservative groups as Democrats fight for the State’s adoption of the program.

Pennsylvania’s Democratic Governor, Tom Wolf, has already used his executive order power to direct the Department of Environmental Protection (DEP) to propose regulations that would cut carbon pollution and enable the state’s participation in RGGI.^[2] His executive order has rubbed the state’s Republicans in the wrong way, even though the state has the legal authority to regulate climate pollution under Article I, Section 27 of the Pennsylvania Constitution. On July 31, 2020, the DEP presented its carbon limit proposal to the Environmental Quality Board. The Board voted 15-4 to advance the proposal into the official rulemaking process under the Regulatory Review Act. The public was given opportunities to comment on the proposal. A revised version was then approved in a 3-2 vote by the Independent Regulatory Review Commission in late 2021.^[3] The majority Republican General Assembly claims that Governor Wolf cannot make this executive action in a unilateral format. Republicans and other RGGI critics are concerned with the regulatory process as well. Additionally, they claim that Governor Wolf lacks the statutory authority to make this move, and state that the public hearing process was never open to stakeholders without internet access. State representatives, like Senator Joe Pittman, claim that RGGI would destroy the economy in their district, as many constituents rely on coal and natural gas plants for jobs and electricity.^[4]  

In a last-ditch effort to oppose RGGI in the state, powerful groups like the Pennsylvania Manufacturers’ Association and the Pennsylvania Independent Oil and Gas Association are making attempts to block the bill’s passage. So are various coalitions, like the Citizens Alliance of Pennsylvania and the Power PA Jobs Alliance. These coalitions lean more conservative, and they bring together labor unions and businesses, urging them to write letters of opposition and express resistance to the program.^[5] While many environmental organizations are pushing their support for RGGI, the groups opposing the program have a solid argument. Pennsylvania is one of the largest fossil fuel-producing states in the country. In Indiana County alone, there are 1,225 jobs directly related to the coal industry. The county is home to three coal-fired plants and earns an estimated $873 million in tax revenue from the sector. It is expected that business and schools will struggle financially if the plants are to shut down, which is likely to happen by 2025.^[6]

While the General Assembly and their respective supports continue to argue over the adoption of RGGI, it’s important to understand the various elements of the proposed program. RGGI contains many factors that are crucial to its success. First and most importantly, there is the carbon dioxide (CO₂) cap. This cap is representative of a regional budget on CO₂ emissions. While the cap fluctuates from year to year, the cap for 2021 is 119,767,784 CO₂ allowances across all the participating states. For the program, an “allowance” is equivalent to one ton of emitted CO₂.^[7] In its beginning stages, RGGI gave states a cap of 188 million allowances from 2009 to 2011. Comparatively, the power sector in these states has been successful in controlling its emissions, as the cap allowances have decreased tremendously in consecutive years. There have also been two interim adjustments to the caps to account for banked allowances that companies held on to during the earlier control periods. These control periods are three-year terms in which fossil fuel electric power generators are required to have allowances equal to their CO₂ emission output.^[8]

The second element of RGGI is its cost containment reserve (CCR). States involved with RGGI have established a CCR which consists of separate CO₂ allowances on top of the previously mentioned cap. These extra allowances are held as a form of reserved caps. They are sold off if the allowance price grows beyond a pre-defined price level. The CCR is only active if the emission reduction costs are greater than expected. Each year, the CCR for companies is replenished to capacity. In 2021, the CCR price of activation is $13.00. This number is set to increase 7 percent every year and is set at 10 percent of the regional cap each year. Emissions containment reserve (ECR) involves a similar policy. ECRs began in 2021, as implementing states can withhold allowances if prices fall below a certain price. The ECR is used only when emission reduction costs are lower than expected. For 2021, this price is $6.00, and is also expected to increase by 7 percent each year.

Auctioning off allowances is another piece of RGGI legislation. These auctions are held on a quarterly basis by RGGI Inc., a nonprofit established to run the program.^[9] States are able to hold auctions in a sealed-bid format and offer allowances for a uniform price to participating power plant owners. The states are then able to reinvest their proceeds into programs meant to improve energy and benefit consumers. Once the allowances are purchased, companies and other buying entities are able to trade the allowances on secondary markets. These markets are monitored by independent agencies, like Potomac Economics. It is their job to identify attempts of exercising market power in order to collude or manipulate prices, make recommendations regarding rule changes, and assess if auctions were carried out legally.^[10] Tracking and compliance also play a major role in the RGGI program. Budget sources are required to have allowances equal to their emissions over a three-year period. As previously mentioned, these sources have to hold their allowances equal to 50 percent of their emissions during these interim control periods. RGGI uses a program called RGGI COATS that enables the tracking of emissions, allowances, and other market data.  

While many constituencies, Republicans, and coalitions alike voice concern over RGGI and its impacts on their constituents, there have already been studies that show that Pennsylvania would benefit in many areas, including in economic, health, and environmental sectors. Prior to Pennsylvania’s interest in RGGI, the program led to $1.3 billion in net economic benefits, from 2012 to 2014. Since its launch in 2009, participating states have seen a net gain in economic growth, increased jobs, long-run electricity cost reductions, and decreased emissions (ceres.org). RGGI states have been able to decouple emissions from economic growth. From 2005 to 2013, these states saw a reduction of over 40 percent in CO₂ emissions from the power sector. At the same time, their regional economies grew by 8 percent. Between 2009 to 2014, RGGI states saw emissions drop by 35 percent compared to only 12 percent in non-participating states. RGGI state economies also grew more in this period than non-RGGI states, growing 21.2 percent and 18.2 percent respectively. These numbers should give Pennsylvania legislatures hope as they move toward ratification of the program. According to the DEP, RGGI would be able to lower Pennsylvania’s CO₂ emissions between 97 and 227 million tons by 2030, if adopted by 2022. The DEP’s modeling has also shown an increase in Gross State Product of up to $2 billion. This is alongside an increase of over 30,000 jobs and an increase in Disposable Personal Income of up to $3.7 billion for citizens by 2050.^[11]

Air pollution already poses a huge health and safety threat to the people of Pennsylvania. Long-term health effects from this pollution include issues linked to heart disease, lung cancers, and respiratory diseases, as well as nervous system and brain damage.^[12] Those most at risk include young children, elderly adults, and pregnant women.[13] Allegheny County, home to the city of Pittsburgh, has been ranked in the top 2% of counties with the worst air quality in the United States.^[14] Some of the more prominent pollutants found in Pennsylvania’s air include carbon dioxide, nitrous oxide, and sulfur dioxide. With the implementation of RGGI, air pollution would be greatly reduced, as nitrous oxide emissions would be cut down by 112,000 tons per year, and sulfur dioxide emissions by 67,000 tons per year.^[15] This would result in significant savings in the healthcare sector. The DEP reported that this sector could save up to $6.3 billion by 2030. Since it was first introduced in 2009, states have saved nearly $11 billion on healthcare costs from the reduction of nitrous and sulfur dioxides. The DEP’s study also showed that RGGI could prevent up to 639 premature deaths from respiratory illness, reduce hospital visits for respiratory illness by up to 30,000, and avoid up to 83,000 lost workdays, along with creating healthier adults.

The Regional Greenhouse Gas Initiative plays an important role, as the United States takes steps toward combating climate change. Air pollution is a major hazard to the environment, citizens’ health, and the economy. As surrounding states have taken steps toward mitigating climate change, it’s pertinent that Pennsylvania do the same. Being one of the country’s largest fossil fuel-producing states, Pennsylvania would be setting an example for polluters not just in the United States, but worldwide. The struggle behind RGGI’s passage is one that is commonly seen being played out in the political world time and time again. However, RGGI offers a compromise that is beneficial for people regardless of political ideals and affiliations. By reducing greenhouse gas emissions in the power sector, RGGI has been able to clean up the air, reduce air-related illnesses, and provide states with incentives to invest in cleaner energy opportunities. Pushing for RGGI’s passage in Pennsylvania should be considered a no-brainer, as the impending effects of climate change will be seen in the near future.   

Thank you to Mr. Ward Allebach of the University of Pittsburgh’s Department of Geology and Environmental Science for providing insightful feedback.

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[1] “Elements of RGGI.” RGGI, RGGI, 2021, https://www.rggi.org/.

[2] Yelda, Rita. “Pennsylvania Takes Key Step towards Major Climate Action.” NRDC, NRDC, 1 Sept. 2021, https://www.nrdc.org/media/2021/210901-0.

[3] Yelda, Rita. “Pennsylvania Takes Key Step towards Major Climate Action.” NRDC, NRDC, 1 Sept. 2021, https://www.nrdc.org/media/2021/210901-0.

[4] Cann, Harrison. “Pennsylvania Takes the Final Step toward Joining Rggi.” City & State PA, City & State PA, 1 Sept. 2021, https://www.cityandstatepa.com/content/pennsylvania-takes-final-step-toward-joining-rggi.

[5] Wolman, Jordan. “Pennsylvania Rggi Opponents Mount Tense Last Stand.” POLITICO, POLITICO, 13 Oct. 2021, https://www.politico.com/news/2021/10/13/pennsylvania-fossil-fuel-rggi-515931.

[6] Wolman, Jordan. “Pennsylvania Rggi Opponents Mount Tense Last Stand.” POLITICO, POLITICO, 13 Oct. 2021.

[7] “Regional Greenhouse Gas Initiative: A Fact Sheet.” Ceres, 2016.

[8]“Elements of RGGI.” RGGI, RGGI, 2021.

[9] “Regional Greenhouse Gas Initiative: A Fact Sheet.” Ceres, 2016.

[10] “Elements of RGGI.” RGGI, RGGI, 2021.

[11] “RGGI.” Department of Environmental Protection, Commonwealth of Pennsylvania, 2021, https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx.

[12]“Air Pollution.” National Geographic Society, National Geographic, 9 Oct. 2012, https://www.nationalgeographic.org/encyclopedia/air-pollution/#:~:text=Long%2Dterm%20health%20effects%20from,air%20pollutants%20cause%20birth%20defects.

[13] “Air Quality in Pennsylvania.” Pennsylvania Air Quality Index (AQI) and USA Air Pollution | AirVisual, IQAir, 26 Oct. 2021, https://www.iqair.com/us/usa/pennsylvania.

[14]“Allegheny County Ranks in Top 2 Percent in U.S. for Cancer Risks from Air Pollution, Study Reveals.” WTAE, Pittsburgh’s Action 4 News, 12 July 2018, https://www.wtae.com/article/allegheny-county-ranks-in-top-2-percent-in-us-for-cancer-risks-from-air-pollution-study-reveals/22129941.

[15] “RGGI.” Department of Environmental Protection, Commonwealth of Pennsylvania, 2021, https://www.dep.pa.gov/Citizens/climate/Pages/RGGI.aspx.

Photo credits to: Desmond1234, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons