5 Ways Carbon Taxes Harm PA

When Governor Wolf announced his decision to join the Regional Greenhouse Gas Initiative (RGGI) through executive order this past October, he also sent the message that PA is closed for business. For businesses operating on slim margins and working families struggling to get by, higher electricity bills and lost jobs are a sobering prospect. 

RGGI is ill-advised even if advocates are well-intentioned: the initiative seeks to reduce CO2 emissions and save the climate by placing caps on electricity production. But besides ruining economies, RGGI has very little impact. It hasn’t lowered emissions at all since it was enacted in other states over a decade ago—that’s a decade of failures Pennsylvania can learn from.

Now, the same northeastern states that conceived and joined RGGI are promoting a new carbon tax scheme called the Transportation Climate Initiative (TCI). Instead of capping electricity production, it seeks to reduce car emissions by raising the cost of fuel. It’s another high-cost, low-impact attempt to improve the environment while ignoring the tremendous strides we’ve made in energy efficiency and reducing emissions over the past decade. 

Over the past three weeks, lawmakers have held two hearings on these programs to better understand their impact on average Pennsylvanians. Our takeaway: five ways carbon taxes can seriously harm Pennsylvania. 

  1. Rising Electricity Bills. Current auction prices could increase Pa. electric costs by $412 million per year, according to David Stevenson of the Caesar Rodney Institute. The poorest Pennsylvanians already suffer under energy costs that are over a quarter of total the household income. RGGI would only make this worse. 
  2. Less Manufacturing. Increased energy costs resulted in a 12 percent reduction in goods production and a 34 percent reduction in energy-intensive production for RGGI states.
  3. Minimal Emission Reductions Attributable to the Program. Emission reductions were primarily achieved through EPA regulations that impacted coal plant capacity and an increased reliance on natural gas due to low market prices. 
  4. Wasteful Alternative Energy “Investments”. In Delaware for example, only 23% of RGGI funds went towards energy investments. In Maryland, energy pumps bought with auction revenue were less efficient than those purchased without the rebate, and most of the solar energy projects would have happened even without tax credits.
  5. Higher Gas Taxes. Pennsylvania has the second-highest gas tax in the nation behind California. The TCI would increase our gas tax without necessarily improving our roads. According to preliminary guidelines, revenues must go towards increasing emission reduction and improving air quality. Revenue could also be spent on improving access to transportation, which might include some infrastructure projects, but certainly would exclude projects such as highways and bridges. 

Lawmakers in Harrisburg should remember that a cleaner environment isn’t accomplished through government mandates. Pennsylvania should focus on creating an environment for more carbon-emission-reducing innovations, like hydraulic fracturing. Limiting the supply of energy will only harm the lives of everyday Pennsylvanians.