PRINTER'S NO. 1871
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
15
Session of
2020
INTRODUCED BY COSTA, FONTANA, SANTARSIERO, MUTH, HUGHES,
COLLETT, YUDICHAK, FARNESE, SCHWANK, LEACH, BLAKE, HAYWOOD,
STREET, SABATINA, DINNIMAN, KILLION, L. WILLIAMS AND
TARTAGLIONE, AUGUST 11, 2020
REFERRED TO ENVIRONMENTAL RESOURCES AND ENERGY, AUGUST 11, 2020
AN ACT
Establishing the CO2 Budget Trading Program; providing for
powers and duties of department; establishing the Energy
Transition Fund; providing for revenue from sale of carbon
allowances; establishing the Energy Transition Board; and
providing for energy transition plan.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Energy
Transition and Recovery Act.
Section 2. Findings and declarations.
The General Assembly finds and declares as follows:
(1) This Commonwealth's electric power sector is
experiencing a rapid and unprecedented transition. Until
recently, this Commonwealth produced nearly all of its
electricity from coal-fired and nuclear power plants.
However, since 2011, low natural gas prices and wholesale
electricity market rules that favor gas have driven a massive
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increase in gas-fired generation.
(2) Over the last decade, the replacement of coal plants
with gas plants has led to lower carbon dioxide emissions
from this Commonwealth's electric power sector, which is
responsible for approximately one-third of this
Commonwealth's overall greenhouse gas emissions and is the
largest source of carbon pollution in this Commonwealth.
However, gas plants are currently threatening to replace this
Commonwealth's nuclear plants and lock in high pollution
levels for decades.
(3) Emissions of carbon dioxide and other greenhouse
gases pose a significant threat to the health and well-being
of the residents of this Commonwealth and to this
Commonwealth's economy. The most comprehensive scientific
analysis has determined that to avoid the worst impacts of
climate change, the United States must reduce its greenhouse
gas emissions from all sectors of its economy to a net zero
by the year 2050. To achieve the reductions, this
Commonwealth must ensure that greenhouse gas emissions are
eliminated from its electric power sector before the year
2050.
(4) To ensure continuing reductions of carbon pollution,
this Commonwealth needs to regulate carbon pollution, as well
as drive investments in energy efficiency, renewable energy,
battery storage and other clean energy technologies.
(5) In accordance with Executive Order 2019-07 issued by
Governor Wolf on October 3, 2019, the Department of
Environmental Protection has developed a proposed rulemaking
under the act of January 8, 1960 (1959 P.L.2119, No.787),
known as the Air Pollution Control Act, that would establish
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a CO2 Budget Trading Program to reduce carbon pollution from
the electric power sector through the year 2030 and enable
this Commonwealth to participate in the Regional Greenhouse
Gas Initiative beginning in the year 2022.
(6) Consistent with the Department of Environmental
Protection's existing statutory authority, the proceeds from
carbon allowances sold at auction through the Regional
Greenhouse Gas Initiative would be deposited into the Clean
Air Fund administered by the Department of Environmental
Protection for use in the elimination of air pollution.
(7) This act deposits one-fourth of the proceeds from
carbon allowances sold at auction through the Regional
Greenhouse Gas Initiative into the Clean Air Fund and
deposits three-fourths of the proceeds into a newly
established Energy Transition Fund.
(8) The Energy Transition Fund serves a broader set of
social and economic purposes than the Clean Air Fund,
including electricity bill reductions for low-income
residents of this Commonwealth, additional investments in
environmental justice communities and transition assistance
for workers and communities affected by the closure of power
plants and other energy infrastructure.
(9) Enhanced investments in these areas are critical to
reduce air pollution as this Commonwealth addresses the
impacts of the COVID-19 pandemic, the ongoing transition of
this Commonwealth's electric power sector and climate change.
(10) Furthermore, this act requires that carbon dioxide
emissions from this Commonwealth's power sector be reduced to
zero before the year 2050.
Section 3. Definitions.
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The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Air Pollution Control Act." The act of January 8, 1960
(1959 P.L.2119, No.787), known as the Air Pollution Control Act.
"Board." The Environmental Quality Board of the
Commonwealth.
"Climate change action plan." The plan required under
section 7 of the act of July 9, 2008 (P.L.935, No.70), known as
the Pennsylvania Climate Change Act.
"Commission." The Pennsylvania Public Utility Commission.
"Department." The Department of Environmental Protection of
the Commonwealth.
"Electric power sector." The generation of electricity from
power plants in this Commonwealth with nameplate capacity of 15
megawatts or greater.
"Emissions leakage." Incremental carbon dioxide emissions
that result from the shift of power generation from this
Commonwealth to a jurisdiction that has no limits on carbon
dioxide emissions or that has limits less stringent than the
limits adopted by regulation.
"Energy transition agencies." All of the following:
(1) The department.
(2) The Department of Community and Economic
Development.
(3) The Department of Human Services.
(4) The Department of Labor and Industry.
(5) The commission.
"Environmental justice community." A census block group in
which minorities represent at least 30% of the population or in
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which 20% of the residents are at or below the Federal poverty
level according to the most recent decennial census by the
United States Census Bureau.
"Executive Order." Executive Order No. 2019-07 issued by
Governor Tom Wolf on October 3, 2019.
"Fund." The Energy Transition Fund established under section
6.
"Greenhouse gases." Carbon dioxide and other gases that
absorb and re-emit infrared radiation when in the earth's
atmosphere.
"Low-income residential customers." A residential electric
utility customer with a household income below 150% of the
Federal poverty level.
"Moderate-income residential customers." A residential
electric utility customer with a household income between 151%
and 250% of the Federal poverty level.
"PJM." The regional transmission organization, or its
successor, that coordinates the movement of wholesale
electricity in a multistate region that includes this
Commonwealth.
Section 4. CO2 Budget Trading Program.
(a) Emissions reduction.--In accordance with the Executive
Order, the board shall promulgate a regulation to establish a
CO2 Budget Trading Program for the electric power sector. The
regulation shall include an annually declining carbon budget and
shall enable this Commonwealth to participate in the Regional
Greenhouse Gas Initiative beginning January 1, 2022. The
regulation may include measures that mitigate emissions leakage
to other jurisdictions.
(b) Review.--Implementation of the regulation promulgated
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under subsection (a) shall be evaluated by the department on a
triennial basis in the climate change action plan. The
department's review shall include, but may not be limited to:
(1) An assessment of the electric power sector's
progress toward the emission reduction required under
subsection (a).
(2) An analysis of whether the regulation has resulted
in emissions leakage.
(3) A determination of what revisions to the regulation
are necessary to reduce emissions from the electric power
sector to net zero by the year 2050.
(4) An assessment of the impacts of the regulation on
environmental justice communities.
(c) Revision.--The department's review under subsection (b)
shall propose any changes necessary to ensure that the
regulation reduces emissions in the electric power sector to
zero no later than the year 2050. If the department's review
under subsection (b) determines that the regulation has resulted
in emissions leakage or any negative economic or environmental
impacts on environmental justice communities, low-income
residential customers or moderate-income residential customers,
the department shall recommend and propose changes to the
regulation to fully mitigate the identified negative impacts.
Section 5. Powers and duties of department.
The following apply:
(1) The department shall have the power and duty to
implement and enforce regulations promulgated by the board
under this act.
(2) The department may delegate the implementation and
administrative support functions for any CO2 allowance
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auction conducted under the CO2 Budget Trading Program to an
agent qualified to conduct auctions, including a regional
entity, if the agent performs all functions under the
direction and oversight of the department.
Section 6. Energy Transition Fund.
The Energy Transition Fund is established as a special
nonlapsing fund in the State Treasury to support energy
affordability, energy efficiency, renewable energy and a just
and equitable transition to a decarbonized economy for
environmental justice communities and workers and communities
affected by the closure of power plants and other energy
facilities. The fund shall be administered as a trust for the
purposes specified under this section.
Section 7. Revenue from sale of carbon allowances.
(a) Energy Transition Fund.--Three-fourths of the revenue
from the sale, allocation, exchange or conveyance of carbon
allowances under this act shall be deposited into the fund.
(b) Clean Air Fund.--One-fourth of the revenue from the
sale, allocation, exchange or conveyance of carbon allowances
under this act shall be deposited into the Clean Air Fund and
shall be disbursed in accordance with the Air Pollution Control
Act.
Section 8. Energy Transition Board.
The Energy Transition Board is established and shall consist
of the following members:
(1) The Secretary of Community and Economic Development.
(2) The Secretary of Environmental Protection.
(3) The Secretary of Human Services.
(4) The Secretary of Labor and Industry.
(5) The chair of the commission.
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(6) The Director of the Office of Environmental Justice
within the department.
(7) One member appointed by the President pro tempore of
the Senate.
(8) One member appointed by the Speaker of the House of
Representatives.
(9) One member appointed by the Minority Leader of the
Senate.
(10) One member appointed by the Minority Leader of the
House of Representatives.
(11) Seven members appointed by the Governor, which
shall be representatives of each of the following:
(i) Environmental justice communities.
(ii) Labor organizations.
(iii) Renewable energy companies.
(iv) Energy efficiency companies.
(v) Environmental organizations.
(vi) Energy-intensive industries.
(vii) Organizations representing low-income
Pennsylvanians.
Section 9. Disbursements from fund.
(a) Disbursement.--Money in the fund shall be disbursed
annually by the State Treasurer in accordance with an energy
transition plan developed by the energy transition agencies and
approved by the Energy Transition Board. After the payment of
administrative costs as authorized under subsection (b)(2), the
money in the fund shall be used as follows:
(1) Fifteen percent of the money in the fund shall be
used to provide electricity bill assistance to low-income
residential customers. The money used under this paragraph
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shall be in addition to any existing funding for electricity
bill assistance programs.
(2) Twenty percent of the money in the fund and any
unexpended funds under paragraph (1) at the end of each
fiscal year shall be used to supplement Federal funding for
the Weatherization Assistance Program.
(3) Thirty percent of the money in the fund shall be
invested in distributed solar generation programs, energy
demand reduction programs and projects and energy efficiency
programs and projects, not including the Weatherization
Assistance Program, with a priority given directly to benefit
environmental justice communities, low-income residential
customers and moderate-income residential customers.
(4) Thirty-five percent of the money in the fund shall
be used for programs and projects that support workers and
communities impacted by the closure of energy facilities or
support environmental justice communities.
(b) Administrative costs.--
(1) Administrative costs incurred by the department
shall be paid from the Clean Air Fund.
(2) Administrative costs incurred by the State Treasurer
and the energy transition agencies under this act shall be
paid from the fund and capped at 2.5% of the available
proceeds in the fund as determined on an annual basis.
Section 10. Energy transition plan.
(a) Development.--An energy transition plan shall be
developed through a Statewide public input process conducted by
the energy transition agencies. The energy transition agencies
shall jointly submit a draft energy transition plan and the
final energy transition plan to the Legislative Reference Bureau
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for publication in the Pennsylvania Bulletin and post the draft
plan and final plan on the publicly accessible Internet websites
of the energy transition agencies. The Statewide public input
process shall include all of the following:
(1) At least five public hearings in the fossil fuel
producing regions of this Commonwealth.
(2) At least five public hearings in environmental
justice communities.
(3) The opportunity for public comment after the draft
plan is made available in the Pennsylvania Bulletin and on
the publicly accessible Internet websites of the energy
transition agencies.
(b) Public input.--During the Statewide public input process
under subsection (a), the energy transition agencies shall
specifically seek input from organized labor, environmental
justice organizations, local elected officials, local and
regional economic development organizations and educational and
workforce development service providers.
(c) Criteria.--The energy transition agencies shall
establish criteria for the purpose of identifying the
communities impacted by the closure of energy facilities under
section 9(a)(4), including, but not limited to, the following:
(1) If a community experienced the closure of a power
plant in the last 15 years.
(2) If a community experienced the loss of other major
fossil fuel infrastructure in the last 15 years.
(d) Existing structures.--The energy transition agencies
shall design the energy transition plan to maximize
disbursements to existing State and local agency programs that
serve the purposes of the fund.
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Section 11. Regional cooperation.
The commission and the department shall do all of the
following:
(1) Consult with PJM to maximize regional cooperation
and consistency throughout the PJM region with respect to
greenhouse gas emissions reduction goals, mitigation of
emissions leakage, grid modernization and resiliency,
deployment of renewable energy generation and storage and
consumer costs.
(2) Request that PJM work with the Commonwealth and
other states served by PJM to reduce greenhouse gas
emissions, including adopting such market mechanisms or
frameworks as may be necessary to avoid market distortions
and minimize emissions leakage during the implementation of
this act.
(3) Request from PJM any information that may be
necessary or useful to the commission and the department in
implementing this act and minimizing emissions leakage.
Section 12. Prohibition.
Revenue from the sale, allocation, exchange or conveyance of
carbon allowances may not be used or disbursed except as
provided under this act.
Section 13. Effective date.
This act shall take effect in 60 days.
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