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House of Representatives
Session of 2021 - 2022 Regular Session


Posted: December 15, 2020 09:59 AM
From: Representative James B. Struzzi, II and Rep. Donna Oberlander, Rep. Pam Snyder
To: All House members
Subject: Legislative Authority Over Carbon Tax/Multi-State Compacts (RGGI) - former HB 2025
Since Pennsylvania deregulated its electricity market, 19 coal-fired electric generating units (EGUs) have or are in the process of closing or converting. If Pennsylvania were to adopt a carbon tax, such as that imposed by joining the Regional Greenhouse Gas Initiative (RGGI), the remaining coal-fired EGUs would be forced to pay hundreds of millions in additional taxes and, as a result, will shut down. This would lead to the direct elimination of thousands of family sustaining jobs in those communities, not to mention the loss of millions in local and state tax revenues. It would also have significant negative economic consequences regionally as these coal-fired EGUs consume nearly one-fifth of Pennsylvania’s bituminous coal production, an industry that provides $6.91 billion in total economic output to Pennsylvania

In addition to triggering the closure of coal-fired EGU’s, joining RGGI or implementing any other form of a carbon tax would also lead to the closure of every coal refuse-fired EGU. The coal refuse reclamation to energy industry provides significant environmental benefits long recognized by this General Assembly and contributes $615 million annually to our state’s economy.

Ultimately, with the loss of Pennsylvania’s coal and coal refuse EGUs - nearly one-quarter of our total electric generation capacity - the burden of a carbon tax on power generation would be borne exclusively by Pennsylvania’s natural gas-fired EGUs. Consequently, under the levy of a carbon tax, natural gas-fired EGUs in the Commonwealth would be at a competitive disadvantage against plants in neighboring states that do not impose such a tax, and capital investments in natural gas electric generation would be diverted to those states.

A carbon tax is a major energy and fiscal policy initiative, and if such a tax is to be imposed on Pennsylvania industries, we believe it must emanate from the General Assembly. In addition to the fiscal impact on Pennsylvania manufacturers, coal and gas electric generation, consumers, and future economic investments made in our state, this also implicates serious constitutional principles of checks and balances that merit a strong, bipartisan response from the Legislative Branch.

In an effort to support the authority of the General Assembly on this issue, we will be introducing legislation in the near future that delineates the process for legislative approval before Pennsylvania could impose a carbon tax on employers engaged in electric generation, manufacturing or other industries operating in the Commonwealth, or enter into any multi-state program, such as RGGI, that would impose such a tax.

Any carbon tax will ultimately be paid for by Pennsylvania residents and businesses. Given Pennsylvania is already ahead of the carbon dioxide reduction goals established under Governor Wolf’s Climate Action Plan, why would we want to jeopardize thousands of Pennsylvania jobs and trigger significant higher electricity rate increases when the existing competitive market has already achieved these gains?

To that end, we urge you to join us in sponsoring this legislation and ensuring its prompt enactment.

Introduced as HB637