Pennsylvania governor vetoes Senate move to block state from joining RGGI

Source: By Kassia Micek, S&P Global • Posted: Wednesday, January 12, 2022

Pennsylvania Governor Tom Wolf vetoed a Senate resolution that would have hindered the state from joining the Regional Greenhouse Gas Initiative and prevented “effectively achieve climate goals and reduce carbon emissions,” according to a statement from the governor’s office.

Wolf has made joining RGGI a focus of his climate change plans. In 2019, he set Pennsylvania’s first statewide climate goals, aiming to reduce greenhouse gases by 80% by 2050.

“I am vetoing, disapproving and returning the Concurrent Resolution because Final Form Regulation 7-559 is a vital step for Pennsylvania to reduce carbon emissions and achieve our climate goals,” Wolf said in a Jan. 10 statement. “Addressing the global climate crisis is one of the most important and critical challenges we face.”

Final Form Regulation 7-559 authorizes Pennsylvania’s participation in RGGI under the authority of the Air Pollution Control Act.

“While the Republican-controlled General Assembly has failed to take any measures to address climate change, by joining RGGI, my administration will take a historic, proactive and progressive approach that will have significant positive environmental, public health and economic impacts,” Wolf said. “In addition to the environmental benefits, participating in this initiative will allow Pennsylvania to make targeted investments that will support workers and communities affected by energy transition.”

Electric power generation is one of the largest contributors to GHG emissions, so joining RGGI is a commonsense solution that would have an immediate impact on Pennsylvania’s climate and public health, according to the statement.

Pennsylvania is expected to join RGGI in second-quarter 2022.

RGGI Auction 55

Applications for the first RGGI auction of 2022 must be submitted by Jan. 26, according to the notice for the 55th quarterly CO2 allowance auction.

Auction 55 will take place March 9 with 21,761,269 quarterly CO2 allowances for sale, according to the Jan. 11 RGGI statement. The states will use a minimum reserve price of $2.44/st in 2022.

The RGGI CO2 allowance clearing price averaged $9.47/st in 2021, 52% higher year on year with Auction 54 reaching a record high of $13/st.

Auction 55 will offer allocation year 2021 and 2022 CO2 Allowances (Initial Offering) and allow for activation of an Emissions Containment Reserve (ECR) or a Cost Containment Reserve (CCR), according to the RGGI auction notice.

There is an 11,611,278 allowance CCR available for Auction 54 that will be assessed if the interim clearing price exceeds the CCR trigger price of $13.91/st, according to the RGGI statement. Auction 55 also include an ECR of 10,961,898, which are available to be withheld if the interim clearing prices are less than the ECR trigger price of $6.42/st.

All allowances offered for sale in Auction 55 will be recognized for compliance purposes without limitation by the participating states, according to the RGGI auction notice.

RGGI background

RGGI is a cooperative effort of 11 New England and Mid-Atlantic states — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont and Virginia — to reduce CO2 emissions from the power sector.

In 2009, it became the first mandatory cap-and-trade program in the US to limit carbon emissions by requiring power plants with generating capacity at or above 25 MW to obtain a number of allowances equal to the number of tons of CO2 they emit.

Virginia joined RGGI in January 2021 and New Jersey rejoined January 2020 after an eight-year hiatus.