Legal challenges to RGGI are keeping millions in carbon allowances from flowing to Pennsylvania

By Cassie Miller

Pennsylvania is missing out on millions of dollars in revenue from carbon-allowance auctions that are part of a multi-state initiative to combat climate change as legal challenges to the commonwealth’s involvement in the initiative continue. 

The commonwealth formally joined the Regional Greenhouse Gas Initiative, or RGGI, in late April after considerable bipartisan pushback from opponents, who said Democratic Gov. Tom Wolf’s decision to join the multi-state agreement was an example of executive overreach. 

Because of those legal challenges, Pennsylvania has missed out on three carbon-allowance auctions held this year, leading to frustration among environmental advocates who say the lost revenue could have been put to good use in the commonwealth. 

“It’s frustrating to see deadline after deadline go by,” Molly Parzen, executive director for Conservation Voters of Pennsylvania said, adding that the revenue could have been used to weatherize homes across Pennsylvania and build more climate-resilient communities. 

According to a September statement from RGGI, Inc., the third carbon-allowance auction of 2022, which was held on Sept. 7, generated more than $301 million in revenue for reinvestment.

Pennsylvania’s neighboring states generated millions of dollars in proceeds from the most recent auction, including New Jersey, $38.6 million; Maryland, $37.9 million; and New York, $73.9 million, according to reported auction results. 

“It’s disappointing that attempts to delay RGGI are resulting in Pennsylvania missing out on significant economic benefits, not to mention crucial time to cut our carbon emissions,” state Sen. Carolyn Comitta, of Chester County, the ranking Democrat on the Senate Environmental Resources and Energy Committee, told the Capital-Star.  

“Unfortunately, delays to RGGI are also significantly limiting our response to the growing impacts of climate change,” Comitta said. 

Legal battles

In July, the Commonwealth Court of Pennsylvania issued an order, blocking the state from continuing its efforts to join RGGI. 

Officials at the state Department of Environmental Protection and the Environmental Quality Board appealed the decision to the state Supreme Court, which has yet to issue a ruling. 

“I remain optimistic that RGGI will clear these obstacles,” Comitta said. 

Allocating RGGI funds 

Until the state’s highest court makes its ruling, Pennsylvania lawmakers are continuing discussions about how best to spend Pennsylvania’s share of the revenue generated from RGGI’s quarterly carbon-credit auctions.

To plan for all eventualities, last summer, Comitta introduced legislation to direct the proceeds. 

The legislation, also known as the “RGGI Investments Act,” would establish funds to disburse the estimated $300 million in annual revenue accordingly: 

• 37.5% to the Energy Communities Trust Fund; 
• 12.5% to the Environmental Justice Communities Trust Fund;
• 46% to the Clean Air Fund divided as follows: 
  • 56% to the Greenhouse Gas Abatement, Energy Efficiency, and Clean and Renewable Energy Investments Account
  • 44% to the Commercial and Industrial Energy Efficiency Account; 
• 4% for administration of the program.

“This is money coming into the commonwealth that we need to decide to do something productive with,” Parzen said. 

Without specific legislation allocating the funds, revenue from RGGI auctions would all go to the state’s Clean Air Fund. 

“That’s why we need to pass the RGGI Investments Act,” Comitta said. “So Pennsylvania is prepared to make effective investments in the clean energy economy, environmental justice communities, and support for workers and communities impacted by the transition from fossil fuels.” 

The bill is currently awaiting a vote by the Senate Environmental Resources and Energy Committee. 

Parzen said that lawmakers who are opposed to RGGI and its supporters will have to reach a compromise in the next legislative session to determine how the money will be spent and move the bill out of committee. 

“The money is coming and we can either use it or not use it,” Parzen said, adding that the allocation of RGGI funds “shouldn’t be politicized.”

RGGI in the governor’s race

Conservation Voters of Pennsylvania, which has endorsed Democratic gubernatorial nominee Josh Shapiro along with a handful of other environmental organizations, is supportive of Shapiro’s willingness to continue dialogues and build consensus around the commonwealth’s involvement in RGGI, Parzen said. 

She added that in his recent comments on the campaign trail, Shapiro was “laying out the importance of bringing people to the table” around RGGI, including voices outside of Pennsylvania’s oil and natural gas industry. 

“Those are the voices we think are so often not included in this conversation,” Parzen said, adding that Conservation Voters of Pennsylvania has had “productive conversations” about RGGI with Shapiro’s campaign.

In November 2021, Shapiro’s Republican opponent for governor, state Sen. Doug Mastriano, a Republican from Franklin County, penned an op-Ed in opposition to RGGI, calling the initiative “burdensome” and adding that it will “do more harm than good.”

Cassie Miller is a reporter for the Pennsylvania Capital-Star, where this story first appeared.