Here comes the notorious RGGI

Here comes the notorious RGGI

Kiplinger rates Pennsylvania as the seventh-least tax-friendly state in the United States in its 2019 rankings.

Just to place this in simple perspective, 43 states have a more friendly tax environment.

The publisher of business forecasts and personal finance advice cites, among other things, the Keystone State’s high property taxes and the second-highest gasoline taxes in the nation.

It’s certainly not the kind of thing that attracts people, business and industry.

And it appears that Gov. Tom Wolf wants to make the tax climate – if not the commonwealth’s overall business climate — even less friendly.

On Thursday, the governor “ordered his administration to start working on regulations to bring Pennsylvania into a nine-state consortium that sets a price and caps on greenhouse gas emissions from power plants,” reports The Associated Press.

It’s known as the ‘Regional Greenhouse Gas Initiative” (RGGI). But as long as silly acronyms are being employed, many would prefer “RKERPI” – the “Regional Kill the Economy & Raise Prices Initiative.”

Of course, anytime the word and phrase “government” and “sets a price and caps” appear in the same sentence, we should hold onto our wallets.

A government-created “market” is not a true marketplace. And the plan represents a hubris akin to a claim that the number of angels on the head of a pin can be counted.

Proponents of tackling “climate change,” however, see things differently. But a 2017 white paper by Cato Institute scholar David T. Stevenson took the proponents’ scholarship to task.

Simply put, he debunks “claims by the Acadia Center and RGGI Inc. that the RGGI program has generated significant benefits.”

From the paper’s conclusion:

“Using data from five comparison states with similar overall electricity policies, except for RGGI, along with looking at national trends, I find the RGGI Inc. and Acadia Center claims to be misleading.

“The Acadia Center claims that compared to other states, RGGI states increased electric prices by half as much, had 3.6 percent more economic growth and reduced emissions 16 percent more, leading to greater health benefits from pollution reduction.

“In reality, 2007 to 2015 net weighted average nominal electricity prices rose 4.6 percent in RGGI states compared to 2.8 percent in comparison states.

“Linking real economic growth to RGGI alone is fraught with problems. Real economic growth rates in RGGI states between 2007 and 2014 varied widely from a negative 7 percent for Connecticut to a plus 8.2 percent for New York.

“Also, average RGGI revenue only amounted to 0.01 percent of the combined average real GDP of the RGGI states, so one wouldn’t expect much impact.

“Ignoring those difficulties, real economic growth was 2.5 times faster in comparison states than in the RGGI states. High RGGI state electric rates led to a 35 percent reduction in energy intensive industries and a 13 percent drop in the goods production sector, while comparison states saw only a 4 percent drop in energy intensive industries and a 15 percent gain in goods production.

“This article finds there were no added reductions in CO2 emissions or associated health benefits from the RGGI program. RGGI emission reductions are consistent with national trend changes caused by new EPA power plant regulations and lower natural gas prices.”

Yet the Wolf administration wants to climb on to the RGGI bandwagon?

It certainly sounds like the latest in a long line of government rackets that, past being prologue, have the exact opposite effect of what is claimed.

Remember this as the debate over RGGI heats up.

Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).