Energy Shows Why Regulatory Reform is Key

Recovering from COVID-19 will take more than a return to the status quo. Pennsylvania’s voluminous regulations will hamper job creation and rehiring. To be competitive, the commonwealth should take a hard look at the regulations on the books and the regulatory process. The current effort to implement RGGI regulations, which amount to a carbon tax on energy producers, is a warning sign that Pennsylvania needs comprehensive regulatory relief.

Progressive goals of reducing pollution and conservative goals of meeting current energy demands are both laudable and span across the political aisle. However, many energy regulatory schemes attempt to punish needed production and ignore pollution-reducing developments occurring in the energy sector.

Right now in Pennsylvania —the second-largest energy-producing state behind Texas— Governor Wolf is using executive action to attempt to join the Regional Greenhouse Gas Initiative (RGGI). This interstate compact is a cap-and-trade program that creates a series of regulations, including emission limits, and allows for the buying and selling of unused allowances.

Even as Pennsylvania is a leader in energy production, it has still managed to make reductions in CO2 emissions simultaneously. From 2010 to 2017, the state managed to reduce emissions[1] by 15 percent, while the national average reduction was only 8 percent. Additionally, the state has either reduced beyond the national average or increased less than the national average for both decades following 1990.

Pennsylvania is creating more energy to power the eastern seaboard and simultaneously reducing CO2 emissions. Instead of celebrating our progress, the governor is looking to hamstring the industry through regulation. Current legislative bills would provide much-needed oversight to prevent such unilateral implementation of costly regulations.

And RGGI is sure to be costly. The energy-producing sector employs over 113,000 workers, accounting for almost 2 percent of total employment.

The long-term solution to preventing cap and trade or other devastating regulations doesn’t focus on energy, but on regulatory oversight. House Bill 806, introduced by Representative Dawn Keefer, and Senate Bill 5, introduced by Senator John DiSanto, would require legislative approval for any regulation with an annual impact of $1 million or more. If this were in place, Wolf would not be able to implement such a costly regulation without the legislature.

Senate Bill 609, introduced by Michele Brooks, would add even more oversight to this process, by requiring regulations with an impact of $1 million or more to go through an automatic review after 3-years. Additionally, House Bill 1055, introduced by Representative Kate Klunk, and Senate Bill 251, introduced by Senator Kristin Phillips-Hill establish an Office of the Repealer. This office would require a review of existing regulation and establish a one-in, two-out rule for new regulations. All these bills would not only protect the energy sector from unfair burdens but protect all Pennsylvania industries.

Pennsylvania has remained a leader in energy production, supports the demands of other states, and still manages to reduce overall CO2 emissions. Rather than targeting one sector for their emissions while ignoring others, lawmakers need to consider long-term consequences. Broader regulatory reform would create more scrutiny around highly costly proposals like RGGI and help lawmakers identify other regulations that do more to hold back job creators than protect Pennsylvanians.

[1] Table 2