As Focus Shifts, PA Energy Industry Undergoes Change

Americans have been focused on the COVID-19 pandemic and social justice issues since March. Despite the Pa. attorney general’s recent grand jury report outlining perceived systemic failures in Pennsylvania’s natural gas industry, the people of the state are less focused on energy issues than earlier in the year.

The most recent edition of Franklin & Marshall College’s statewide poll indicates that energy issues are receding from the forefront of Pennsylvanians’ minds. This is not unexpected, as there are pressing issues at the national level that have overshadowed regional issues. According to the poll, the COVID-19 pandemic is undoubtedly the main concern among Pennsylvanians. Some 32 percent of respondents find the pandemic as the most pressing issue in the run-up to November’s presidential election. While just 2 percent of respondents named energy as their main issue in F&M’s January 2020 poll, that small percentage has fallen further to only 1 percent in the most recent poll.

Though the people’s focus has shifted away from energy issues, Pennsylvania’s energy industry has endured major changes in the past several months. The pandemic, and subsequent shutdown, hit the already struggling natural gas industry especially hard. Major industry players such as EQT, Chevron, and Dominion Energy have made significant changes since the national slowdown; curbing production, laying off employees, and even selling off assets in Appalachia.

Harrisburg has also pushed measures to combat climate change that will affect the energy industry. Last year, through an executive order, Gov. Tom Wolf directed the Department of Environmental Protection to begin the process of joining the Regional Greenhouse Gas Initiative (RGGI), “the first mandatory, market-based program in the United States to reduce greenhouse gas emissions”. The RGGI includes 10 states in the northeast, all of which have committed to energy generation emissions reductions through a cap-and-trade system.

Cap-and-trade is a system in which a ceiling is placed on carbon emissions, and power plants are allotted an allowance of ‘credits’ for carbon dioxide emissions; that is the ‘cap’ in cap-and-trade. If a plant does not use its full allotment of credits, it can sell them to other plants within the RGGI that have used all of their credits. This is the ‘trade’ in cap-and-trade. If a plant continues to over-emit - even if it has purchased surplus credits - it could be subject to fines or other penalties.

The system promotes the use of non- or low-emitting energy sources, with renewables being the pinnacle, but certainly leaves room for natural gas power plants. While renewables are not able to meet the electrical demand of the state yet, natural gas power plants present a cleaner option, emitting 50-to-60 percent less carbon dioxide than coal-fired plants. Given the structure of a cap-and-trade system, these lower emissions will stretch the value of each credit, while generating the same power.

According to DEP estimates, joining the RGGI could bring benefits to the environment, residents’ health, and the economy, including a reduction of 188 million tons of carbon emissions by 2030; $6.3 billion in health care savings related to a reduction in pollution-related illness; and, a $2 billion increase in Gross State Product through renewable energy production leading to a net increase of 27,000 jobs. There is legislation within the General Assembly now attempting to block the Commonwealth from joining, which has passed the House but will likely be vetoed by the governor if it makes it to his desk.

The concerns about climate change and energy issues may have waned due to recent events, but are likely to return to the forefront of conversation as more initiatives to reduce greenhouse gases are developed and as renewable energy sources consider to move into the mainstream of energy production.