Gov. candidate Shapiro is skeptical of RGGI. It’s unclear if AG Shapiro will do something about it.

His campaign has called instead for an expanded alternative energy portfolio, increased funding for clean energy R&D

By: - October 27, 2021 4:30 pm

Pa. Attorney General Josh Shapiro speaks at a union rally on Oct. 16, 2020 in Pittsburgh (Capital-Star photo).

Now that he’s running for governor, Democratic state Attorney General Josh Shapiro is trying to separate himself from incumbent Gov. Tom Wolf’s signature environmental initiative. 

Shapiro’s campaign did not specifically say if, elected as governor in 2022, he would pull the commonwealth out of the Regional Greenhouse Gas Initiative. Also known as RGGI, it’s a multi-state organization that caps carbon emissions from power plants and forces plant owners to purchase credits to cover their greenhouse gas output.

It’s also unclear if candidate Shapiro’s opposition will carry over into his official role as the commonwealth’s top attorney, where he plays a key role in allowing that same policy to move forward.

In a statement, Shapiro said RGGI was not “real action,” based on his own environmental and economic priorities.

“Ultimately, that is a determination I will make as governor, in close consultation with workers and affected communities,” Shapiro said in an emailed statement. “I refuse to accept the false choice between protecting jobs or protecting our planet — we must do both and my priority will be ensuring Pennsylvania has a comprehensive climate and energy policy that will move all of us forward.”

His campaign instead shared a draft environmental platform with the Capital-Star, calling for an expansion of the state’s clean energy portfolio for utility companies, more electric car infrastructure, and investments in clean energy research and development, among other things.

But before he potentially wins his party’s nomination, or the November 2022 election, Shapiro will have a chance to review the regulation in his official capacity, and could wage a legal challenge to block it. 

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As of Wednesday, his office’s plans were unclear. 

“It would be inappropriate for our office to weigh in on the final regulations until they are submitted in their latest form,” Jacklin Rhodes, a spokesperson for the attorney general’s office, told the Capital-Star in an email.

The statement also came as the GOP-controlled state legislature considers legislation to block the initiative. A resolution disapproving of the policy passed the state Senate Wednesday 32-18 short of the two-thirds majority to override Wolf’s veto. It now heads to the House.

Since 2019, the Wolf administration has pushed forward with RGGI as a way to address the state’s carbon emissions, which are the second-highest among all 50 states, and fight climate change. 

Environmentalists back the initiative, arguing it will reduce the commonwealth’s carbon footprint by forcing companies to pay for their carbon pollution.

In a statement, Charlie Lyons, spokesperson for Clean Power PA, a coalition of environmental and community groups that supports RGGI, said that the initiative would foster economic growth and cut state carbon emissions by as much as 220 million tons.

Looking at those stats, “we are confident that Attorney General Shapiro reaches the same conclusion if he becomes our next governor,” Lyons said.

But fossil fuel industry groups, business and free market advocates, and and — critically for an ambitious Democrat — organized labor, all oppose it.

Now that Shapiro’s officially running for statewide office in a tough midterm election year, his publicly skeptical stance on RGGI is in line with that of the influential state building trades unions, whose membership includes construction workers who build new gas-fired plants and maintain older coal power plants. Those businesses would be required to pay under the initiative’s carbon fee.

Shapiro first mentioned the position to The Indiana Gazette, the daily newspaper of a western Pennsylvania county that has three large coal power plants in and around its borders that will be heavily impacted by RGGI.

“I understand the aims of RGGI, and the goals,” Shapiro told the newspaper during a campaign stop in the western Pennsylvania borough. “I have real concerns about the impact it will have on consumer prices, hurting families at a time when many are struggling really to put food on the table.”

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However, the state has yet to formally join RGGI. And while candidate Shapiro has started to express opposition as he hits the campaign trail, attorney general Shapiro and his office must make sure the regulation passes legal muster before it is implemented.

Under state regulatory law, “if the Attorney General determines that a rule or regulation is in improper form, not statutorily authorized or unconstitutional,” they shall notify the agency proposing the rule writing within 30 days of their opposition.

It is then up to the agency to either address those concerns or implement the regulation anyway. However, the AG’s office can then file a suit in the Commonwealth Court to block the regulation from taking effect.

In public statements, Shapiro’s office has argued that it cannot review proposed regulations on policy, only on their form and legality. 

While RGGI has sparked a vigorous policy debate, opponents also have raised legal questions about the regulation.

The initiative would force power plant owners to pay for each ton of carbon emitted from a fossil fuel power plant. The price would shift over time depending on demand. It was $9 per ton at the most recent auction in September. 

The Wolf administration has acknowledged that the initiative creates more revenue than is needed to enforce the law — the Department of Environmental Protection projected RGGI would bring in $187 million from power plant operators in its first year.

But by creating so much revenue, opponents, including fossil fuel plant owners and unions, have argued the department has overstepped.

The state law cited by the Wolf administration for RGGI authorizes “fees sufficient to cover the indirect and direct costs of administering the air pollution control plan.”

Because “the proceeds of the auctions are enormous, and they are grossly disproportionate to the cost” of administering the program, RGGI amounts to a tax, Anthony Holtzman, an K&L Gates attorney representing fossil fuel power plant owners, told a state regulatory board in September.

David Hess, a former DEP secretary and former environmental lobbyist, told the Capital-Star that some of the legal arguments raised against RGGI are “bogus.” But the tax debate “certainly … is something that would be under the purview of the attorney general.”

Hess added that Shapiro’s office already would have approved an early draft of RGGI as legally sound. Regulations pass through the same lengthy process twice before they become law. 

Now, on the second pass through Shapiro’s office, Hess said that little about RGGI has fundamentally changed since the AG’s office approved initiative as a proposed regulation

“There are things around the edges,” Hess said. But carbon pricing is fundamental to RGGI, and has not been removed.

“Obviously,” Hess added, Shapiro “could, on second review, look at things differently.”

In an email, Rhodes, the Shapiro’s official side spokesperson, confirmed that the office did complete an initial review, “but that review pre-dated any changes made to the regulations” during the regulatory process.

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When RGGI was approved by a state regulatory board in early September, the board split 3-2. 

Two of the commissioners, appointed by Republican legislators, agreed with an argument raised by Holtzman that the rule amounted to a tax. That argument was echoed by some union groups, such as Pittsburgh Regional Building Trades Council.

In a formal comment on the initiative, the council said it was concerned that if approved by state courts, “attempting to join RGGI via regulation … would pave the way for an economy-wide carbon tax that would be especially harmful to large manufacturers, which employ and contract with thousands of union workers.”

Among the council’s members are the Boilermakers Local 154, a union whose 2,000 members frequently service fossil fuel power plants. They have vocally opposed RGGI, and the union’s  leader appeared in an ad for President Donald Trump’s reelection campaign.

Still, the council has endorsed Shapiro, according to his campaign. The council did not immediately respond to a request for comment.

Locking down such union support will be important for Shapiro’s run, especially as Republicans attempt to seize on fossil fuel-related jobs as a wedge issue to gain union backing.

Jason Richey, a Pittsburgh attorney with K&L Gates, and a Republican candidate for governor in 2022, told the Capital-Star that Shapiro needs to “quit being a politician” on RGGI and “say whether you’re for it, or you’re against it.”

“It’s not a very hard question that was posed to him,” Richey added.

Former GOP U.S. Lou Barletta, who also is seeking the Republican nomination next year,  also has openly courted labor early in his run.

In a statement, he said that Shapiro’s statement on RGGI “is telegraphing that he would be even more extreme on environmental regulation than even Gov. Wolf, which is really saying something.”

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Shapiro, who has dinged the Wolf administration’s oversight of natural gas drilling and pipelines, has told the Philadelphia Inquirer that climate change is an “existential threat.

Will Simons, a spokesperson for the Shapiro campaign, said that his administration “would bring people together to address climate change, protect and create energy jobs, and ensure Pennsylvania has reliable, affordable, and clean power for the long term.”

In a top line of Shapiro campaign’s environmental policy shared with the Capital-Star, the 2022 hopeful called for the state to raise its alternative energy portfolio requirement from 8 percent to 30 percent of total electricity generated in the commonwealth, and ensure the state captures more carbon than it releases by 2050.

The platform also called for increasing the set back for natural gas drilling from buildings and mandating the disclosure of fracking fluids, echoing policies called for in a 2020 grand jury report on gas drilling.

Shapiro’s platform also calls for capping abandoned mines and wells, and expanding research and development funding for zero-carbon technology.

Finally, he called for expanding electric vehicle infrastructure, investing in weatherization and energy efficiency projects, promoting community and grid scale solar, and addressing lead.

“That’s a stark contrast with the complete lack of a plan presented by the Republican candidates – their inaction would lead to higher costs for consumers, make Pennsylvania less competitive in the energy section, and create more pollution in our communities,” Simons said.

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Richey, whose campaign website is filled with policy prescriptions for Pennsylvania, told the Capital-Star that he’d support all types of energy for the state, and, if elected, would sign legislation requiring all future carbon fees to go through the General Assembly.

He added that climate change exists, but that the state couldn’t do anything about fossil fuel consumption “until green technology advances to the point where it can completely eliminate our reliance on fossil fuel, which I would say is a good thing.”

“The world needs so much fossil fuel power,” Richey said. “There’s nothing you can do about that right now.”

Tim Murtaugh, a senior adviser to the Barletta campaign, added in an email that “the left is trying to force a rapid transition to ‘green energy’ at the expense of jobs and affordable energy for Pennsylvanians.”

“While those technologies may lie in the future, they are too many years away to be practical now,” Murtaugh said. In the mean time, he said Barletta supports extracting rare Earth elements used in modern electronics from coal waste, which he said would remove pollution and limit imports from China.

In an email, former DEP secretary Hess said that the Shapiro campaign’s platform was “a good start on an environmental/energy agenda, but only a start.”

He wanted to see more farmland preservation, the disposal of conventional oil and gas drilling waste water, as well as funding a backlog of repairs in the state park system and more funding for environmental enforcement.

“I’m sure he’ll fill out his agenda after he has the chance to talk to more people,” Hess said.

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Stephen Caruso
Stephen Caruso

Stephen Caruso is a former senior reporter with Pennsylvania Capital-Star. Before working with the Capital-Star he covered Pennsylvania state government for The PLS Reporter.