Cap & Trade Debate Belongs in General Assembly

Member Group : PA Manufacturers' Assn.

An economy-wide, cap-and-trade carbon emission petition sent to the Department of Environmental Protection (DEP) last week for review not only undermines the General Assembly’s authority to debate such a costly and far-reaching regulatory scheme, but it raises constitutional concerns as well.

“This is unprecedented for the scope of the impact this would have on the economy, and it’s being pushed through not only without legislative review, but without the input of impacted state agencies and numerous advisory boards,” said PMA President & CEO David N. Taylor. “We are asking the DEP in the strongest possible terms to reject this petition.”

The petition from Clean Air Council, scientists, local governments and other groups, approved for review by the Environmental Quality Board (EQB) would have Pennsylvania adopt a California-style cap-and-trade plan; a proven ineffective plan whose costs to implement are especially harsh on lower income households.

Backed with apocalyptic warnings reminiscent of Al Gore’s 2007 prediction that the polar ice caps would gone in five years, Joe Minott, executive director of the Clean Air Council, told media outlets that “time is running out” to save the earth from climate change.

Under the plan, an overarching emissions cap would be established, and allowances to emit carbon distributed under that cap. Emitters exceeding their allowances would have to buy credits from those under their allowance. The cap would be reduced by three percent each year, until finally reaching zero.

The EQB sent the petition to the DEP, not on its merits but because it met certain parameters needed to be considered for review. The Department could either approve the petition as is, modify it, or reject it.

The DEP is almost sure to extend its time for review beyond its traditional 60 days since, as one legislative aide said, it would be impossible to review something of that scope in that amount of time.

Meanwhile, GOP lawmakers, along with some Democratic colleagues, plan to shift the debate to the General Assembly, where the discussion rightfully belongs. Sen. John Yudichak (D-Luzerne), Minority Chairman of the Senate Environmental Resources & Energy Committee, plans to introduce a resolution directing the Legislature’s bipartisan financial review committee, the Legislative Budget & Finance Committee, to study the full economic impact of the petition. That study could take a year or more.

Yudichak, a member of the EQB, voted to send the petition to the DEP because it met procedural muster, but said in a statement after the vote that the “EQB rulemaking petition process is not the appropriate way for environmental policy of this breadth to be made, regardless of the validity of the idea.”

The scope of any study, business leaders said in a letter to the EQB before the vote, should consider “whether there has in fact been clear statutory authority given by the legislature to establish and implement such a sweeping environmental regulatory program that would affect Pennsylvania’s entire economy.”

“The petition,” the letter went on, “cites general purposes of the Air Pollution Control Act but no specific programmatic authorization, because there is none for this type of program. More broadly, the members of the EQB must be judicious in considering whether or not the revenues collected by the auction, sale or transfer of carbon allowances constitute a tax, which constitutionally must be enacted by the General Assembly.”

That’s just for starters. Any study should include input from the state agencies impacted by this immense regulatory scheme, including the Public Utility Commission, which should assess the added energy costs to consumers, households, commercial and industrial customers and low-income customers.

Lower income households would be most harmed by a cap-and trade scheme since it works much like a regressive tax, according to Tim Benson, policy analyst with the Heartland Institute.

“California’s cap-and-trade program, which went into effect in 2012, requires greenhouse-gas emissions to be reduced 40 percent below 1990 levels by 2030 and 80 percent below 1990 levels by 2050, a target that will probably not be met,” Benson wrote in a January 2018 article, Why States Should Avoid Cap & Trade Schemes. “Cap-and-trade has helped force one million California households to spend at least 10 percent of their household income on energy costs, a situation experts refer to as living in ‘energy poverty.’ In some lower-income counties, as many as 15 percent of households are classified as energy impoverished.”

And the environmental benefits?

Ben Zycher, Senior Energy Analyst with the American Enterprise Institute, has said that climate temperature reductions under cap-and-trade schemes are nearly nonexistent. In a recent critique of a cap-and-trade trade plan proposed by the Climate Leadership Council (CLC), he wrote:

“Contrary to its assertions, the CLC proposal would increase the government allocation of resources and thus the size of government,” Zycher wrote. “And the premise that the proposal will strengthen the economy by engendering new investment in unconventional energy is a classic manifestation of the broken-windows fallacy: Because the proposal would increase energy costs with no environmental benefits, the economy in the aggregate would be smaller.”

Cap-and-pay-for-nothing has been the policy result in California and Pennsylvania ought to reject any similar proposal.