Federal dollars driving energy policy in Pennsylvania toward solar, hydrogen

A flurry of recent bipartisan agreements by state lawmakers on energy projects and policies is sending a clear message: Pennsylvania is slowly moving toward clean energy but fossil fuels aren’t going anywhere.

The grab bag of initiatives that passed alongside the $47.6 billion budget required the backing of labor, environmental, and pro-fossil fuel interests and the lawmakers that align with them. Members say the deals were only possible thanks to an influx of federal cash greasing the wheels.

Capitol sources told Spotlight PA the final package was the result of weeks of horse-trading before and after the June 30 budget deadline. Republicans got some of their wishes including a new fee on electric vehicles and a bill allowing third parties approved by the state to review environmental permits to speed the process. Democrats notched a victory with the creation of a state grant program to help schools pay to install solar panels.

But most substantially, lawmakers passed a Republican-sponsored bill to set up an administrative framework for the fledgling carbon capture industry in a late-night vote.

It’s one piece of a massive effort to build two hydrogen hubs in the commonwealth, boosted by $1.6 billion from the federal government. The Biden administration is going all in on hydrogen as a way to fight climate change and cut carbon emissions.

But some environmental advocates fear carbon capture is a way for Pennsylvania — the country’s second-biggest producer of natural gas — to continue propping up the fossil fuel industry. The technology is also unproven and could actually make climate change worse, experts say.

Despite these concerns, some prominent environmental groups in Pennsylvania did not publicly come out either for or against the legislation.

“When the key environmental groups went neutral, it just left it open,” said state Rep. Danielle Friel Otten (D., Chester), an environmental advocate who didn’t support the legislation. “I think most people are just feeling the pressure to comply with what the governor wants, what leaders want, what chairmen want. Especially in the heat of the budget where people have a lot of goals that get squashed.”

Democratic Gov. Josh Shapiro has pitched his own substantial plan to address climate change by boosting renewable energy use and capping carbon emissions. State lawmakers haven’t seriously considered either policy in the months since they were introduced.

Environmentalists, labor advocates, and lawmakers told Spotlight PA these proposals fell by the wayside largely because they were not fully fleshed out and too large to be addressed during budget negotiations.

All in on carbon capture

The Biden administration is spending billions of dollars to help states build sprawling networks of infrastructure to produce, store, and transport hydrogen and its byproducts.

Hydrogen, a clean-burning fuel, is only a truly green energy source if it is produced in a way that doesn’t release emissions. At least one of the Pennsylvania hubs plans to use natural gas to make hydrogen and implement carbon capture.

The process involves scrubbing carbon dioxide from emissions during fossil fuel production and then injecting it into wells underground for storage.

The new framework lays out the permits needed to dig an injection well, and establishes liability standards that say, among other things, that carbon storage operators can’t be held responsible for injuries from injection wells unless the claimant can prove the operator acted “without reasonable care.”

It also allows a driller to place an injection well over landowner objections as long there’s substantial support from other stakeholders.

Finally, it directs the state to apply for primary enforcement authority from the federal Environmental Protection Agency. If that is granted, it will mean the power to authorize carbon capture projects would rest solely with state officials — an arrangement some environmentalists have said could mean the wells don’t have enough safety oversight.

The hydrogen hub and carbon capture plans are enthusiastically supported by the unions that represent building and construction workers and fossil fuel interests, such as the Marcellus Shale Coalition. These industries spent hundreds of thousands of dollars to lobby lawmakers in the months leading up to budget negotiations, with fossil fuel groups such as the American Petroleum Institute and Marcellus Shale Coalition spending nearly $700,000 between January and March.

The bill also unified lawmakers typically at odds with one another — progressives such as state Sen. Katie Muth (D., Montgomery) and oil and gas backers such as state Sen. Cris Dush (R., Jefferson) voted against the bill citing reasons such as infringement on property rights and lack of safety assurances.

Muth added that her caucus leadership told her that the bill was dead in the weeks leading up to the election, and it wasn’t until hours before the vote that she was aware the bill would run.

“After this whole week, leadership has told me to my face that the bill was dead. Minutes after the budget vote, suddenly it's back on the table,” Muth told Spotlight PA.

The embrace of carbon capture concerns some environmental advocates, for more reasons than just the new regulatory framework.

Karen Feridun, co-founder of the Better Path Coalition, a grassroots environmental advocacy group, is worried that embracing carbon capture will just prolong reliance on natural gas. She noted that the technology is still not broadly used and carries risks, like carbon dioxide leaking from transportation pipelines or storage wells and resulting in explosions, or seeping into groundwater.

Many lawmakers, she said, seem to be treating hydrogen production and carbon capture as unavoidable — a stance she said is reinforced by the federal money flowing to the projects.

“You're in that ‘better-than-nothing’ mindset, which is how [lawmakers] seem to be regarding some of these things,” Feridun said.

Not all environmental advocates are as concerned, though. Three of the most prominent groups on this issue in the commonwealth — Conservation Voters of PA, PennFuture, and the state chapter of the Sierra Club — were neutral on the new carbon capture framework.

Environmental and labor advocates told Spotlight PA they think this new camaraderie between clean energy proponents, fossil fuel interests, and organized labor creates new opportunities for environmentalists to have a voice in state energy policy.

Katie Blume, the legislative director for Conservation Voters of PA, is skeptical of carbon capture, but she was encouraged by environmental protections included in the law. The bill was amended to limit what lands could be used for carbon storage. Those dedicated to the purposes of conservation or wildlife diversity, for instance, are off-limits.

“If carbon capture is coming to Pennsylvania with federal investments, we need to make sure we regulate this new-to-Pennsylvania technology in appropriate ways that protect our communities,” Blume said.

The impact of federal cash

Much of the recent action is related to the billions of federal dollars Pennsylvania stands to receive from the Inflation Reduction Act and Bipartisan Infrastructure Law for energy projects.

The new $25 million Solar for Schools grant program is built around the assumption that projects will qualify for some of this federal money, and that between the state and federal support, the equipment, permitting fees, and other related costs the projects entail will be affordable or free for schools.

A spokesperson for state Rep. Elizabeth Fiedler (D., Philadelphia), the bill’s prime sponsor, said that available federal funding was a major reason the program won rare bipartisan support. It ultimately passed the GOP-controlled state Senate by an overwhelming majority.

Rob Bair, the president of the Pennsylvania Building and Construction Trades Council, said the federal tax credits and grants gave lawmakers and advocates an opportunity to come together on energy issues where there had been gridlock for years.

Bair worked with Fiedler on the Solar for Schools legislation and said he was surprised and encouraged by the amount of common ground between himself and Fiedler. He said he sees their collaboration as a model for creating “good-paying middle-class jobs” in the new energy sector going forward.

“It's no secret, I have my industry partners. You guys know the building trades are all about jobs,” Bair said at an April news conference. “There has to be compromise. There has to be a path forward. We do have to protect the climate. We have to protect jobs.”

The new fee on electric vehicles is also related to federal tax credits, though in a different way.

The federal government is trying to incentivize people to buy more electric vehicles using tax credits, which allow drivers to recoup up to $7,500 if they purchase plug-in or fuel-cell cars. However, Pennsylvania lawmakers have long argued electric vehicles don’t pay their fair share for road maintenance, as they avoid the gas tax that pays for some of it. Republicans have generally led that crusade, but the issue is bipartisan.

The bill lawmakers passed eliminated the existing alternative fuel tax on electric vehicles, which had electric vehicle users self-report monthly mileage and pay a corresponding tax for their electricity usage. Instead, the bill establishes an annual flat fee for all electric vehicle users that the Department of Transportation sets.

According to a fiscal note on the bill, the new fee is expected to bring in nearly $30 million annually by 2030. The old fuel tax brought in $18 million last fiscal year. The revenue will go toward road maintenance.