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On November 7, 2020, Governor Wolf’s proposed CO2 Budget Trading Program Regulation was published in the Pennsylvania Bulletin, setting in motion a full comment and rulemaking process for the Commonwealth’s entry into the Regional Greenhouse Gas Initiative (RGGI). A final Environmental Quality Board (EQB) vote on joining RGGI is expected in the next few months. If approved by the EQB, Pennsylvania could become part of RGGI by January 2022.
RGGI is the nation’s first cap-and-invest program for greenhouse gas emissions and currently includes eleven states. The RGGI system applies to carbon dioxide (CO2) emissions from electric power plants that generate 25 megawatts or more. RGGI began in January 2009, and since then, RGGI states have cut carbon pollution from their electric power plants by more than half, removed tons of dangerous pollutants from the air, invested more than $3 billion in RGGI generated funding into their state economies, and created tens of thousands of new jobs.
The national trend away from coal to natural gas, wind, solar and other less expensive sources for producing electricity has played out decisively in Pennsylvania. Coal powered electricity’s share in Pennsylvania has fallen dramatically from 57% in 2001, to 47% in 2010, to 17% in 2019 and 16% in 2021. Coal-fired electricity is projected to fall to 4% by 2030 (with or without RGGI). This shift from coal is unlikely to change. A recent market study found the current “all-in cost” of generating electricity from coal “is more than double” the cost of solar and wind, and “nearly double” the cost of natural gas.
With Pennsylvania’s coal plants facing an uncertain future, one topic that deserves more attention is the potential role that RGGI funds could play in economic development and workforce initiatives, particularly in those coal communities most impacted by plant closures and related job losses. Gov. Wolf has proposed that a significant portion of RGGI proceeds (estimated to be up to $300 million annually) be placed into a new Energy Communities Trust Fund targeting investments towards coal community economic and workforce development and assistance strategies.
Case studies of coal power plant closures in New York, Massachusetts, Colorado, and Washington demonstrate that no local community chooses voluntarily to go through the wrenching experience and economic distress caused by changes in the energy marketplace. These case studies make clear there are no quick and easy solutions when coal plants close, but suggest a roadmap for recovery. Successful long-term strategies require local business and government consensus building and planning, the leveraging of private sector and federal resources, and moving beyond merely plugging short-term funding holes towards long term investment strategies that create jobs for displaced workers and grow new supply chain markets for small businesses.
While the case studies suggest that RGGI funding would not provide a panacea for Pennsylvania’s coal plant communities and workers, they demonstrate how a RGGI funded Energy Communities Trust Fund could provide a uniquely valuable tool for workers and coal plant communities facing common problems associated with power plant closures. Although no one-size-fits-all solution emerges from the case studies, they do reveal some critical issues confronting retired coal plant communities and how RGGI funding could help address them:
Direct Services to Coal Plant Communities for Immediate Needs
- Replacing Lost “PILOT” (Payments in Lieu of Taxes) or Local Tax Revenues – New York and Massachusetts both deployed tens of millions in RGGI funds to replace lost revenues. Replacing local tax revenues means saving local first responder jobs.
- Reuse of Coal Plants to Create New Businesses and Good Jobs – New York and Massachusetts have deployed millions in RGGI funds and other state funds to prepare coal plant sites for reuse – for new businesses, energy production or other uses – based on local community strategies. Attracting new businesses to old coal plant sites means new jobs.
- Project Development and Seed Funding – Coal community mitigation efforts require time for planning and money for new investments. The case studies show instances where RGGI funding played the lead role and others where private sector investments were dominant. Ideally, RGGI and private sector funds can be deployed together through a community and regional investment planning process. The case studies demonstrate the value of seed funding in producing blended state, federal and private sector investment strategies to create new jobs.
- Job Training & Job Placement for Displaced Workers – Existing state and federal workforce development programs can be supplemented and enhanced with RGGI funding designed to create local opportunities for displaced coal plant workers. A critical factor is the ability to invest in and develop new local businesses that can hire coal workers at wages comparable to their former jobs.
Funding and Assistance to Develop Long Term Public/Private Strategies
- Local Planning Approaches – The case studies vary in the reuse of coal plant sites (from recreational attractions to new gas-powered facilities) and economic development strategies adopted (from private sector funded grant programs to RGGI subsidized site redevelopment). Successful programs adopted locally developed investment strategies with RGGI funding combined with state resources supporting the planning process.
- Local Coal Plant Community Investment Funds – A TransAlta/Centralia, Washington case study demonstrates that dramatically improved economic growth rates are achievable after a coal plant closure. This model deserves further analysis.
Pennsylvania has been a national leader on energy technology development and economic innovation since the beginning of the industrial era. The Commonwealth has experienced significant disruptions before in the steel and anthracite coal industries. In analyzing a decision to move forward with RGGI, Pennsylvania is facing two fundamental options:
- Reject RGGI and allow market forces to determine when and if the last Pennsylvania coal-fired generating units at coal plants will close, with little or no help from existing owners or available local and regional funding sources to cushion the impact; or
- Adopt RGGI and use a significant portion of new RGGI funding to assist coal plant workers and coal communities by investing in local economies to create jobs and a more prosperous future.
Pennsylvania is not the only state facing a transition away from coal powered electricity. The eight case studies outlined in the report and descriptions of the experiences of coal plant communities in RGGI states and non-RGGI states can help inform the best options to choose moving forward.