Ask the Experts: Exploring the impacts of a cap-and-trade program

The Debate Over Pennsylvania’s Energy Policies

The yearslong debate over Pennsylvania’s energy policies – and how they could incentivize renewable energy production – has entered its next phase. Gov. Josh Shapiro unveiled two energy plans in March designed to reduce emissions from the electric generation sector and build on a law that requires electricity generators to generate a portion of their power from alternative energy sources.

The Proposals

The proposals – the Pennsylvania Climate Emissions Reduction, or PACER, and the Pennsylvania Reliable Energy Sustainability Standard, or PRESS – are two new acronyms in an energy discussion that has become so complicated that it has even wonks wondering what the best path forward is.

Shapiro’s PACER proposal – an alternative to the state’s entrance into the controversial multistate cap-and-trade compact known as RGGI – would require the Department of Environmental Protection to set emissions caps for the state’s power plants and have plants pay for carbon allowances, with revenues from the allowances going toward programs to offset energy costs and support communities impacted by job loss and pollution.

The PRESS proposal would expand on the state’s Alternative Energy Portfolio Standards Act, requiring the state to obtain 50% of its electricity from a diverse range of energy resources by 2035, including 35% from clean energy sources.

Expert Opinions

City & State spoke to three experts deeply involved in energy and environmental discussions: Patrick McDonnell, president and CEO of PennFuture; Rachel Gleason, executive director of the Pennsylvania Coal Alliance; and Patrick Cicero, the Pennsylvania Consumer Advocate, on the proposals and how everyone from producers to consumers could be impacted going forward.

These conversations have been edited for length and clarity.

Thoughts on Shapiro’s PACER Proposal

Patrick McDonnell (PM)

As we went through RGGI, there was a lot of modeling that was done to end up at the cap that was ultimately developed for the program. So the stringency test is: Are we getting the same kind of carbon reductions under any other proposal we would have been getting under RGGI? That question has yet to be answered because it will depend on the cap and exactly how all the revenue is spent … It’s both how you spend the money from the auction and where you set the cap that ultimately determines where you are going to be at the end of the day in terms of actual carbon reductions.

Rachel Gleason (RG)

It’s worse than RGGI from a policy perspective. It still does not address that we’re not an island … We are the largest exporter of electricity in the United States. I find it interesting that Shapiro is clearly putting carbon dioxide reductions before reliability and affordability. Reliability continues to not be addressed … Conventional thermal generation is retiring at an unprecedented rate largely because of misguided policy decisions, and new resources that are reliable and resilient are not coming on the grid at a sufficient pace.

Concerns about Regional Transmission Organization (PJM)

Patrick McDonnell (PM)

One of the things that we’ve seen in surrounding states is real investment in renewable energy. Even in places they would point to, like Ohio and West Virginia, they’re now doing better than us in energy efficiency and on renewable energy. I think they are seeing where the future is in terms of what demand is going to be, not just in terms of kilowatt hours but where those kilowatt hours come from. You look at a state like West Virginia, which gets very associated with coal and trying to be protective of that. They’re also building one of the largest battery manufacturing facilities in the U.S. right now with federal dollars. You look at a state like Ohio, they are building electric vehicle component manufacturing and have dedicated programs for that. Those are the kinds of things I think a carbon trading program gives us the ability to do.

Rachel Gleason (RG)

The RGGI working group that Shapiro put together did not recommend attempting a carbon tax scenario. They only recommended a cap-and-trade type of scenario that was PJM-wide … because that’s the only way you address leakage of energy. That’s another thing that his plan does not address: leakage.

Patrick Cicero (PC)

The biggest unintended consequence is the lack of coordination between state-level policy and the policy for our regional transmission organization, PJM. PJM’s inability to predict or accommodate thermal generation retirements with the onboarding of non-thermal resources like wind and solar and the development of things like battery storage shows there is not a predictable path or integrated resource planning. One of the biggest challenges is that no one’s paying attention to the transmission build-out.

Impact on Jobs in the Energy Sector

Rachel Gleason (RG)

Immediately harmed by punting sources to a third tier of energy standards would be the coal refuse plants that rely on the current state Tier II credit, as well as manufacturers who benefit from the current Tier II credit for power generated from like byproducts still making processes.

Patrick McDonnell (PM)

What we’re talking about are things that are both important environmentally, important for climate but also important for job creation. Again, I don’t want to be losing jobs to surrounding states. We see that this is a big portion of their plans for economic development, so we should make sure we’re not just as ambitious but more ambitious, and I think having PRESS and PACER kind of working in tandem is a good way to really start to get there.

Concerns about Grid Reliability and Consumer Costs

Rachel Gleason (RG)

Everything has a cost. When you discourage reliable thermal generation and encourage and subsidize unreliable generation, that’s going to impact utility bills … It’s unclear to me if it’s all residents of the commonwealth or low-income residents of the commonwealth who would receive rent relief, but it also doesn’t address businesses. The governor says that he’s actually losing to “friggin’ Ohio.” But if you’re going to increase utility rates for large manufacturing-type businesses in Pennsylvania, they are going to bear the brunt of the higher cost of electricity that results from these plants – then you’re going to lose to Ohio.

Patrick Cicero (PC)

The question of reliability and cost are inextricably entwined. I think it’s a bit of a false dichotomy that has been presented that we don’t have to have an “either-or” – either we have reliability and it’s expensive, or we have no reliability, but we don’t do anything. I

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy
• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 13: Climate Action

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 7.2: Increase substantially the share of renewable energy in the global energy mix.
• SDG 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
• SDG 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.
• SDG 13.2: Integrate climate change measures into national policies, strategies, and planning.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article does not explicitly mention specific indicators. However, some potential indicators that can be used to measure progress towards the identified targets include:

• Percentage of electricity generated from renewable energy sources
• Investment in renewable energy infrastructure
• Reduction in carbon emissions from power plants
• Number of jobs created in the renewable energy sector
• Percentage of electricity obtained from diverse energy resources

Table: SDGs, Targets, and Indicators

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: cityandstatepa.com

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