How politics could undo the promise of a clean energy future in Pennsylvania

The most ambitious climate bill in history has the potential to accelerate Pennsylvania’s transition to a green economy or keep it tied to fossil-fuel production, depending on shifting political dynamics and the influence of long-entrenched oil and gas companies.

For Gov. Tom Wolf, whose environmental legacy consists of playing defense against a Republican-dominated legislature and a powerful fossil-fuel lobby, the passage of the federal Inflation Reduction Act (IRA) is welcome news.

“These are necessary investments,” Wolf said during a talk at the Global Clean Energy Action Forum in Pittsburgh on Sept. 22, just weeks after the IRA was signed into law Aug. 16. “That will pave the way for a faster and smoother transition to a clean-energy future. And they’re going to provide states and local governments with more resources to continue to progress and make real reductions in emissions.”

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These investments could cut annual emissions in 2030 by around 1 billion metric tons, or around 40% below 2005 levels, according to the widely cited, albeit imperfect, modeling by Princeton University’s REPEAT Project. The $437 billion spending bill does so by incentivizing the good rather than punishing the bad — through tax credits, grants and loan programs, to prompt the cleanup of polluting industries and the build-out of greener alternatives.

How close Pennsylvania gets to realizing this vision will come down to how legislators, regulators, local zoning boards and municipalities use what’s available to them. It could also come down to the outcome in November of a contentious gubernatorial race and the potential shift of legislative power after a midterm election with redrawn electoral maps.

In a commonwealth with a powerful fossil-fuel industry and a currently Republican-dominated legislature, how will IRA dollars get doled out and will it help the state transition to a green economy?

“Even with tax credits being available, there’s going to be policy changes needed at the state level to help make this massive, historic bill work,” said Robert Routh, public policy and regulatory attorney at the Clean Air Council.

His organization is currently “trying to understand how best to work with state governments, local governments and other stakeholders on how to make this money flow in the most effective way possible.” “Then,” he said, “how to reduce barriers to entry for renewable projects that now have some financial certainty looking ahead over the next decade.”

Routh himself is excited about the possibility of cashing in on the $7,500 tax credit for an electric vehicle after passage of the IRA. But on a statewide scale, he’s most excited about the creation of the Methane Emissions Reduction Program (MERP).

The program requires the federal Environmental Protection Agency to update how it monitors greenhouse gas emissions and allocates just over $1.5 billion over the next six years to monitoring and mitigating methane leaks from natural gas and petroleum production. These funds will be disbursed as grants, rebates, loans, and contracts for improving leak-prone equipment and plugging abandoned oil and gas wells on nonfederal land, among other uses.

And $700 million of this funding will be earmarked for marginal conventional wells, a class of oil and gas well responsible for outsized emissions despite their relatively low production volumes.

Pennsylvania oil and gas companies emit more than 1.1 million tons of methane annually, according to the Environmental Defense Fund, which notes that this emission rate is chronically underreported to state regulators. A portion comes from marginal conventional wells; the Appalachian region is home to an estimated 160,000 of them (or 29% of the nationwide total), making Pennsylvania a prime candidate for this funding, argue advocates like Routh, who says their eligibility for IRA funding will come down to how the federal government defines “marginal” and “conventional.”

The commonwealth is several years overdue on a set of regulations monitoring volatile organic compounds (VOCs) that are slated to reduce methane as a co-benefit. The regulation faced rippling opposition, ended up being bifurcated and now needs to be passed by December, lest the commonwealth lose millions in federal highway funding.

Yet, Routh notes, these regulations will inevitably end up being superseded by an EPA rule, which it will issue by the end of 2022, that specifically and directly targets methane; under the new rule the EPA will mandate states to develop their own plans to reduce methane. At the end of that process, should a state’s methane rule be more lax than the federal rule, it will be subject to a waste emissions charge that the IRA introduced — the only punitive measure written into the bill.

Among its most praised impacts, the IRA incentivizes the build-out of wind and solar by expanding the Production and Investment Tax Credits for renewable projects. According to the White House’s rosy estimates, the IRA will bring an estimated “$270 million of investment in large-scale clean power generation and storage to Pennsylvania between now and 2030.”

But without political will for legislation that supports these subsidies, the state may not be well-positioned to welcome the growth of industries like wind and solar. Pennsylvania still lags other major fossil-fuel-producing states like California and Texas in its energy production from solar and wind. Even though it’s the largest producer of natural gas in the nation, Texas, for example, derives 4% of its energy from solar and 21% from wind. But as the second-largest producer of gas in the country, Pennsylvania generates less than one half of 1% of its electricity from solar and 1.5% from wind. Meaningful legislation to boost these industries has, in recent years, been introduced by handfuls of Democrats, only to die in committee.

In a presentation shared with Capital & Main, Shanti Gamper-Rabindran, associate professor at the University of Pittsburgh, notes that the success of clean-energy tax credits will vary by municipality — the commonwealth’s home rule charter puts power over zoning decisions in the hands of local communities, so energy projects must be permitted locally before they receive state environmental permits to pass. And some townships are getting ahead of incoming solar projects; last year, for instance, North Beaver Township banned solar siting on farms.

Local decisions about renewables can also be swayed, as it is in decisions relating to oil and gas; in one notable instance, Penn Township, outside of Pittsburgh, reversed its decision to reject zoning permits for three fracking well pads after it was sued for $300 million by the company that applied for the permits. Municipalities operate with limited budgets; a suit from a determined energy company could entirely shape how permitting processes play out.

Legislation at the state level could also hurt or hamper this mosaic of local responses to possible growing demand for solar and wind. Bills that preempt local self-governance are not uncommon — one that would have prevented municipalities from banning utilities by energy type sent shockwaves through the legislature this year before being vetoed by Wolf.

Should renewables see a surge in Pennsylvania, eventually growing to outcompete fossil fuels, it would have the effect of reducing pollution throughout communities that have long lived with undue exposure to fossil fuels, all while creating jobs that could throw a lifeline to economically depressed towns. Green-energy subsidies that multiply for producers that set up shop in former energy communities and that meet prevailing local wages and cultivate apprenticeship programs will help make this a certainty.

Copyright 2022 Capital & Main. This article was produced by the nonprofit journalism publication Capital & Main. It is co-published here with permission.