Pa. carbon cap and fee plan projected to cut emissions, hasten coal closures

Modeling performed for the state Department of Environmental Protection and released on Thursday predicts that a large share of Pennsylvania’s remaining coal-fired power generation would be priced out of the market once plants have to buy credits for each ton of carbon they emit, beginning in 2022. Plants that run on waste coal piles would receive a special exemption in the program. The modeling suggests Pennsylvania’s coal-fired generation will decline substantially by 2030 even without the carbon policy, with low-priced natural gas making up most of its lost share. Nuclear plants would be preserved under the program, while renewable energy would be largely unchanged. Gov. Tom Wolf directed regulators last fall to lay the groundwork for Pennsylvania to participate in a regional program that caps carbon emissions from the power sector in 10 Northeast and Mid-Atlantic states. It is a signature effort in his plans to address climate change. Hayley Book, a DEP senior adviser on energy and climate, said during a presentation on the modeling results a key finding is that even as Pennsylvania will see “significant emissions reductions” over the decade, “we remain a leading electricity exporter for the region and Pennsylvania generation remains at near historical levels.” The plan would eliminate 180 million short tons of carbon dioxide over 10 years by driving down emissions in Pennsylvania and across the regional electrical grid, she said. A similar reduction across the initiative’s participating states resulted in air quality improvements worth about $5 billion in avoided health-related costs, she said. DEP’s modeling does not yet factor in the economic impacts of investing the roughly $300 million in annual revenue that the agency anticipates receiving from the carbon credit auctions. The Regional Greenhouse Gas Initiative, which would be linked with the state’s carbon program, directs participating states to invest the bulk of their auction proceeds into programs that further drive down emissions, like renewable energy and energy efficiency projects. The state Department of Environmental Protection proposes to set its initial carbon emissions cap at 78 million short tons in 2022, with annual reductions between 3% and 4%. In 2030, the cap would be 58 million tons. DEP advisory board members who work in fossil fuel industries noted the predicted path of emissions is decreasing anyway. Affected power plants are expected to emit 60 million tons of carbon in 2030 without a carbon fee, compared to 51 million tons with a fee. “Why is it that we need to jump into RGGI if your modeling is suggesting we are going to be at that projected number virtually by doing nothing?” Jim Welty of the Marcellus Shale Coalition asked. Nuclear plants, which do not emit carbon when they generate power, have said the program would allow them to stay open and compete in a market where low-priced natural gas would otherwise price them out. Energy Harbor Corp., which owns the Beaver Valley nuclear power plant in Shippingport, recently rescinded its plan to shut down in 2021, citing Pennsylvania’s plan to institute a carbon fee as a primary driver. DEP’s modeling assumes the Beaver Valley plant will stay open through 2030 with or without a carbon fee, but the company has said it will revisit its decision to stay open if the carbon program is blocked. Senate Republicans wrote to Mr. Wolf this week urging him to rescind his executive order that directed DEP to develop the carbon cap and fee, citing concerns about the economic impact of the coronavirus. They said the agency’s modeling can’t have captured the impacts of the current economic shutdown. “Communities, such as those in Western Pennsylvania and other parts of the state with fossil fuel plants, are already suffering under the effects of the pandemic. These very same communities are the ones to suffer exponentially more if a carbon dioxide trading program proceeds in Pennsylvania,” they wrote. Ms. Book said other states in the initiative have shown that the program can create jobs, such as in energy efficiency. “These are local jobs that can be leveraged to put Pennsylvanians back to work, not only spurring our economy but achieving emissions reductions,” she said.   This article appeared on the Pittsburgh Post-Gazette website at https://www.post-gazette.com/business/powersource/2020/04/23/Pa-carbon-cap-and-fee-regional-greenhouse-gas-nuclear-coal-gas-DEP-shale-plant/stories/202004230142]]>

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