Will Pennsylvania Governor Unlock Decades of Affordable Energy?
By Gordon Tomb
February 6, 2023 - Now that Pennsylvania Gov. Josh Shapiro has taken office and there’s a new state Legislature, Pennsylvania will either shine as an energy superstar or continue down the path of dim economic decline.
Our commonwealth is a national leader in energy production that’s stifled by onerous regulations, market-distorting subsidies and an irrational hostility toward fossil fuels.
Shapiro’s energy policies will have implications for the power grid’s reliability throughout the Northeast, for thousands of jobs in the coal and natural gas industries and for the competitiveness of manufacturers statewide.
Residential electricity rates — already up an average of 73% since 2020 — will continue to erode Pennsylvania’s competitiveness, unless the status quo changes.
In 2021, Pennsylvania exported more electricity than any other state, according to the state’s Independent Fiscal Office. The U.S. Energy Information Administration lists Pennsylvania as the second-largest net supplier of total energy to other states, after Texas, and the third-largest coal-producing state, after Wyoming and West Virginia. Pennsylvania natural gas production hit a record 7.6 trillion cubic feet in 2021, second only to Texas.
Energy producers managed that despite a regulatory regime inclined to abuse its authority. Former Gov. Tom Wolf’s Department of Environmental Protection, for example, tried to impose new regulations on coal mines that directly contradict existing law. The department withdrew the proposal only after the state Independent Regulatory Review Commission disapproved it.
During his tenure, Wolf repeatedly attempted to enact a severance tax on natural gas — an industry already burdened by more than $6 billion in special taxes and fees over the last decade.
In 2019, Wolf began his unilateral push for entry into the Regional Greenhouse Gas Initiative, despite opposition from legislators, labor unions and many in the public. The Regional Greenhouse Gas Initiative, currently under review in the courts, is a carbon tax on electricity generators that would cost Pennsylvania consumers an estimated $800 million a year, according to the Independent Fiscal Office, and simply move most of the emissions to neighboring states.
Will Shapiro take a more reasonable approach to energy regulation?
Shapiro’s been lukewarm about the carbon tax, saying it’s “not clear” whether the Regional Greenhouse Gas Initiative would “address climate change, protect and create energy jobs and ensure Pennsylvania has reliable, affordable and clean power for the long term.”
With allies in both the environmental and labor communities, Shapiro’s campaign rhetoric alternately addressed the interests of both — speaking sometimes of permitting reform to speed approvals of energy projects and other times of severely restricting gas-well drilling.
“Josh refuses to accept the false choice between protecting jobs or protecting our planet,” stated his campaign website.
As the state attorney general, Shapiro charged natural gas drillers and pipeline operators with criminality for offenses ordinarily handled as civil matters. Industry supporters worry that such treatment dampens business investment in the state. The environmental left labels Shapiro’s criminal prosecutions of producers as only a “slap on the wrist.”
What we do know is that Shapiro proposes to increase alternative energy’s share of retail electricity sales from 18% to 30% — a 67% boost. The alternative energy program already costs consumers $104 million a year in subsidies and puts power plants fueled by coal or gas at a disadvantage.
While some regulations are important for health and safety, there are too many onerous restrictions that keep the state from producing affordable energy. Shapiro should support a proposed state constitutional amendment that would ensure that the Legislature can review and disapprove regulations that unduly restrict energy production. Elected representatives, not unelected bureaucrats, should have the final say over these expansive and costly regulations.
Shapiro should also back regulatory reform that allows power plants and well drillers to continue to operate and employ tens of thousands of people. Three at-risk power plants alone support more than 8,000 jobs.
Finally, Shapiro should withdraw from the Regional Greenhouse Gas Initiative carbon tax and streamline regulations on the state’s fossil fuel industry. Doing so would promote affordable energy production and power grid stability and help unleash Pennsylvania’s energy potential.
Championing good energy policy will be crucial for Shapiro. Developing Pennsylvania’s deposits of natural gas and coal would enhance its role as a global powerhouse and promote the well-being of Pennsylvanians.
But further restricting Pennsylvania’s energy potential will continue to drive investments, jobs and people out of the state.
Gordon Tomb is a senior fellow with the Commonwealth Foundation, a Pennsylvania-based free-market think tank, and a senior adviser with the CO2 Coalition in Arlington, Virginia.