Wednesday, January 29, 2020

Senate Hearing: DEP - No Decision Made On Joining Regional Transportation Climate Initiative Reducing Vehicle Carbon Dioxide Emissions

On January 29, DEP Secretary Patrick McDonnell told a joint hearing of the Senate Transportation and Environmental Committees that although the Wolf Administration is dedicated to addressing greenhouse gas emissions from power plants through RGGI, it will not make a decision to join a similar Transportation Climate Initiative to control emissions from vehicles until the program is fully designed.
“While the administration is committed to being a part of the TCI conversations, the administration does not support raising the gas tax in the Commonwealth, so we will not make any decisions on joining until the program is fully designed,” said McDonnell.
Here is a summary of the major comments and questions at the hearing.
Panel I - DEP, PennDOT
McDonnell provided the Committees with background on the status of the Transportation Climate Initiative which is designing a cap-and-invest program covering transportation fuels.  A total of 12 Northeast and Mid-Atlantic states and the District of Columbia are part of the TCI initiative.
He noted the transportation sector is the number one source of greenhouse gas emissions regionally, but in Pennsylvania transportation is the third largest, after electricity generation and industry sources.  The Commonwealth, however, is ranked second in the region behind New York for transportation emissions.
“Despite the encouraging trend of decreasing overall emissions, more must be done to make the reductions necessary to effectively combat climate change,” McDonnell said, “In fact, DEP projects overall emissions to increase from 2015 levels by 2025 and even more so by 2050 if no additional policies are implemented.”
He noted in January 2019, Gov. Wolf issued an executive order setting a goal of reducing greenhouse gas emissions in Pennsylvania by 26 percent by 2025 and by 80 percent by 2050, from 2005 levels.
“In order to reach the climate goals set forth by Governor Wolf, focus needs to be prioritized to reduce emissions in the transportation industry,” said McDonnell.
“Since 2016, Pennsylvania has committed to be part of the discussion in the design of the multistate TCI program,” said McDonnell.  “DEP and PennDOT have worked together with the other TCI jurisdictions to actively drive the agenda and shape the program design. 
“Our input and advocacy were successful in keeping natural gas outside the cap. Additionally, we were the leading voice among the states to ensure that rural equity considerations be given full attention,” explained McDonnell.  
“We continue to push for the program design to allow qualified offset credits, such as reforestation, as a way to increase carbon capture and sequestration, which could add new value to our forestry industry. Finally, we continue to advocate for the inclusion of infrastructure resiliency investment as an eligible category to dedicate TCI auction proceeds,” McDonnell said.
 On December 17, 2019, the Regional Initiative put a draft Memorandum of Understanding out for public review containing the outline of a cap-and-invest greenhouse gas reduction program for transportation fuels.  [Comments are due by February 28.]
The TCI jurisdictions conducted economic modeling to evaluate various options for a program that caps and reduces carbon dioxide pollution from combustion of gasoline and on-road diesel fuel by up to 25 percent compared to 2022 levels over 10 years.
Preliminary modeling estimates that by 2032, the proposed program could yield monetized annual public health benefits of as much as $10 billion, including over 1,000 fewer premature deaths, and over 1,300 fewer asthma symptoms annually region-wide, among other safety and health benefits.
[The associated auction of pollution allowances under the proposal is projected to generate up to nearly $7 billion annually that participating jurisdictions could invest in solutions to further reduce pollution and to improve transportation choices for rural, urban and suburban communities.]
“We have committed to being at the table during the design process to ensure Pennsylvania has a voice, provides input, and that the program is fully understood in hopes that TCI will be an effective program to reduce greenhouse gas emissions from transportation throughout the region,” said McDonnell.
Visit DEP’s Climate Change webpage to learn more about Pennsylvania’s efforts to reduce greenhouse gas emissions.
Acting PennDOT Secretary Yassmin Gramian, P.E. also provided written comments on behalf of the Wolf Administration, saying, “PennDOT views TCI as an important opportunity. Automated driving technologies, electric vehicles, shared mobility models and connected vehicle- infrastructure networks are changing transportation in sweeping ways. 
“The conversation on how to best foster innovations like these while supporting our existing transportation system is ongoing and will continue to evolve. 
“We have been gratified to work with our fellow Mid-Atlantic-Northeast jurisdictions across boundary lines and party lines to shape the Transportation and Climate Initiative. By remaining focused on our common goal, I am confident we will make genuine and significant progress to solve our climate crisis, whatever approach the Commonwealth chooses to follow.
“It is critical that we remain willing to examine how to best support sustainable transportation in an ever-changing world, and PennDOT looks forward to proactively continuing conversations on investing in a safe, clean and robust modern transportation system.”
Questions For DEP, PennDOT
Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, said he has no problem looking at the Transportation Climate Initiative, but we have to look at where electric vehicles are made, including where the rare earth minerals come from and how it is mined, including using kids for mining.
“I’m not against them, but there are a lot of issues that need to be addressed,” said Sen. Yaw.  “I don’t want to have clean air at the expense of kids.”
Secretary McDonnell said there are other sources of the rare metals needed to make electric vehicles and putting the issue of where the minerals come from in a spotlight is helpful.  There have been technical developments that have also reduced the amount of the metals used in the technology.
Sen. Kim Ward (R-Westmoreland), Majority Chair of the Senate Transportation Committee, expressed concern about TCI increasing the state vehicle fuel taxes.
Both Secretary McDonnell and Acting Secretary Gramian said again the Wolf Administration does not support an increase in vehicle fuel taxes.
Secretary McDonnell explained the TCI is looking at putting a fee on vehicle fuels at the wholesale and distributor level that may or may not increase the price of fuels, depending on the way the TCI program is designed.  And that design is not finished yet.
Sen. Steve Santasario (D-Bucks), Minority Chair of the Senate Environmental Resources and Energy Committee, noted there have been real and serious health issues associated with the use of fossil fuels over the last 125 years or more.  
He added, with globalization, the United States should play a leading role in improving conditions in developing counties where many of these materials come from.  But that goes well beyond the scope of what the Committee can deal with.
At the end of the day, Sen. Santasario said, while all those concerns are legitimate, climate change is an existential threat to our planet, our society.  
“I understand we have to wait to see how this unfolds [TCI] and we have to be involved, but it’s something we need to do,” said Sen. Santasario.
Sen. Scott Martin (R-Lancaster) expressed a concern that people talking about climate change as a catastrophe is scaring our kids. The world is not going to end, he said.  He pointed to statistics from the 1920s and 1930s when the United States had more people dying from extreme weather.
Secretary McDonnell said the nature of the threats from flooding and other impacts has changed, noting Lancaster County experienced significant flooding from relatively brief, heavy downpours over the last several years.
Sen. Doug Mastriano (R-Adams) said if we look at the history of the doom and gloom predictions they don’t come true-- population growth, the climate growing colder and others.  He also said, let’s be careful about using any modeling to make decisions.  
He said cap-and-trade programs restrain private industry and new technology.  He said he has to look at this carefully for its impact on his constituents and their pocketbooks.
Secretary McDonnell said the science around climate change is settled and the impacts are there to see.  If anything, it’s worse and happening faster. The modeling bares out what you expect to see, especially in the conversion of coal plants to natural gas.
Panel II Witnesses
Kevin Sunday, PA Chamber of Business and Industry, said in prepared testimony-- “We recognize that a changing climate will present significant challenges to Pennsylvania and the United States, and that anthropogenic activities are a contributing factor. 
“Addressing this challenge will necessarily involve the private sector to develop innovative solutions, practices and technologies; however, we must be judicious in proceeding in a manner that continues to leverage Pennsylvania’s historic strengths as an energy producer and a leader in manufacturing, allowing businesses and consumers the choice to develop and utilize the energy solution that works best for them, while still pursuing the desired environmental result.”
Sunday said, however, “competitive markets have delivered greater environmental benefit than cap-and-trade constructs while also driving down costs for consumers.”
“It has, however, been our member companies’ experience that these types of voluntary practices, despite achieving significant emission, reductions, are not recognized when regulatory obligations are imposed through cap and trade mandates.”
Sunday pointed to significant reductions in nitrogen oxides, volatile organic compounds and sulfur dioxide as a success in Pennsylvania.
[Note: All these pollutants have emissions standards set by the federal and state governments.  Nitrogen oxides and sulfur dioxide reductions are the result of a market-based cap-and-trade program established decades ago.]
“With specific regard to Pennsylvania, the state’s transportation [sector] has achieved since 1996 a slight 4 decrease in CO2 emissions from the transportation sector-- 1.5 million metric tons or 2.4 percent,” said Sunday.  “And yet, over these past two decades, Pennsylvania drivers are driving about 7 billion more vehicle miles per year, according to federal Census and Federal Highway Administration Data. 
“Overall, the state has since 2005 reduced its greenhouse gas emissions in total tons more than that of all but one other state, according to the most recently available federal EIA data.”
“The current proposed design of TCI is to impose a fee on the suppliers of motor vehicle fuels in participating states,” said Sunday.  “This fee, which is expected to increase gasoline costs by five to 17 cents per gallon, is projected to result in a 20 to 25 percent reduction in CO2 [carbon dioxide] emissions from the sector-- or 1 to 6 additional percentage points versus a business-as-usual scenario.”
Sunday noted since the TCI design was released the Governors of Maine and New Hampshire dropped out of the process and the Governors of Connecticut and Vermont said they cannot support an additional tax on their drivers.
“Our members appreciate the basis for these other states’ skepticism and have concern the regional approach of TCI will harm our state’s industry and economy, while not effectively addressing leakage-- that is, the shift in the production and sale of goods to a state that is not participating in the Transportation and Climate Initiative,” said Sunday.
He also raised the issue of how the provision in Pennsylvania’s constitution restricting the use of proceeds from taxes on vehicle fuels for highway and bridge repair would be applied to any funds generated by the TCI proposal.
Ted Leonard of the Pennsylvania AAA Federation, said, “AAA is increasingly concerned about initiatives that increase costs to the motoring public while technology and car buying habits are making great strides in reducing greenhouse gas emissions.”
“The most recent draft of the Transportation and Climate Initiative estimates that $1.4 billion to $5.6 billion will be collected from state fuel suppliers in 2022 alone and those costs will be passed on to the consumer,” Leonard said. 
“If that occurs, that would be an additional increase of 5 to 17 cents per gallon for Pennsylvania drivers. Adding that to the increase for the 2013 Pennsylvania Transportation Funding Law would yield a potential increase of 43.4 cents per gallon for Pennsylvania drivers since 2013,” Leonard explained.
“AAA believes that low and zero emission vehicle technology offers great promise in terms of improving vehicle efficiency and air quality while providing consumers with expanded transportation choices,” said Leonard.  “AAA supports state and federal programs that offer tax credits to offset the current cost disadvantages of such vehicles and to stimulate consumer demand for them.”
Drew Stilson, Environmental Defense Fund, said, “Pennsylvania is already feeling the impacts of climate change. Global temperatures have increased by 2 degrees Fahrenheit since the beginning of the 20th century, leading to an increase in dangerous nor’easters and cyclones; extreme heat especially in urban areas; and coastal flooding as sea levels rise.”
“The changing climate has direct consequences for Pennsylvania’s transportation systems,” Stilson said.  “A special report from the Pennsylvania Auditor General noted that climate-related costs to Pennsylvania totaled at least $261 million, including $125 million in infrastructure damage in 2018.”
“We have been successfully harnessing the power of markets for decades to solve our most pressing environmental challenges,” explained Stilson.  “In a cap-and-trade or cap-and-invest program, such as is contemplated under TCI, a cap is set on total emissions to limit pollution, and the cap decreases over time. 
“Companies buy and sell allowances that let them emit a certain amount under the predetermined cap as supply and demand set the price of an allowance. Trading gives companies a strong incentive to save money by cutting emissions in the most cost-effective ways.”
“Because TCI leaves it to the states to identify complementary policies and determine how to direct investments, Pennsylvania has plenty of latitude to create policies that address the transportation needs unique to its communities,” said Stilson.  “Many of these policies can provide cost savings directly to individuals within the Commonwealth.”
Stilson pointed out that business and individuals are expected to save money on fuel expenditures under the TCI program.
“By 2032, these savings produce an expected $700 million to $2.8 billion increase in GDP for the region compared to a scenario in which the TCI program is not implemented,” said Stilson.  “The results also show a $470 million to $2 billion increase in disposable personal income and 1,900 to 8,900 new jobs depending on the stringency of the cap.”
“Using tools like TCI, Pennsylvania can fund much-needed improvements and provide clean transportation to the people of Pennsylvania,” Stilson said.  “Placing a firm limit on carbon pollution – and then letting that carbon pollution “limit” drive a price in the fuel market can help ensure the most cost-effective deployment of clean transportation and mobility options.”
Questions For Panel II
Sen. Yaw concluded the hearing with a sentiment he shared at the October 2019 briefing the Committee held on Gov. Wolf’s executive order directing DEP to join the Regional Greenhouse Gas Initiative to establish a cap-and-trade program covering power plant greenhouse gas emissions.
He said he would be very reluctant to join with other states that Pennsylvania does not share common interests with or that are trying to sue the Commonwealth over air pollution, water cleanup or the “flavor of the month.”
He said Pennsylvania is much different than those states, being a net energy producer and exporter.
While the other states enjoy the energy we produce, he said, they also want to sue us.
“That doesn’t mean we don’t need to some things,”  Sen. Yaw said. “But, maybe we can accomplish a lot on our own.”
In November, Senate and House Republicans announced legislation to take away DEP’s authority to adopt any program to reduce greenhouse gas emissions-- Senate Bill 950 (Pittman-R-Indiana) and House Bill 2025 (Struzzi-R-Indiana). Click Here for more.
Comments were also provided to the Committees by--
-- John V. Kulik, Pennsylvania Petroleum Association
-- Mick Zuwaila-Rogers, Clean Air Council
-- Brianna Esteves, Ceres
-- Leslie S. Richards, Southeast PA Transportation Authority
Click Here to watch a video of the hearing [when posted] and for written testimony.
Sen. Kim Ward (R-Westmoreland) serves as Majority Chair of the Senate Transportation Committee and can be contacted by calling 717-787-6063 or send email to:  Sen. John Sabatina (D-Philadelphia) serves as Minority Chair and can be contacted by calling 717-787-9608 or send email to:
Sen. Gene Yaw (R-Lycoming) serves as Majority Chair of the Senate Environmental Committee and can be contacted by calling 717-787-3280 or sending email to:   Sen. Steve Santarsiero (D-Bucks) serves as Minority Chair and can be contacted by calling 717-787-7305 or sending email to:
Related Articles - Climate:
[Posted: January 29, 2020]  PA Environment Digest

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