Penna. legislators and Gov. Wolf should listen to the concerned citizens

From an Article by Chrissy Suttles, Ellwood City Ledger, March 9, 2020

Environmental groups and legislators from throughout the state gathered in Harrisburg on Monday (3/9/20) to rally against hefty tax breaks for some natural gas manufacturers.

Representatives from PennFuture, the Breathe Project and nearly three dozen other organizations spoke out against House Bill 1100 in the Capitol rotunda, urging Gov. Tom Wolf to veto the bill passed with bipartisan support last month.

HB 1100 would establish multi-million-dollar tax breaks for companies investing at least $450 million to build a manufacturing plant that creates a minimum of 800 combined temporary and permanent jobs. The incentive is similar to what Shell Chemicals received years ago to build its petrochemical complex in Potter Township.

The new program would cost $22 million annually per plant in missed taxes until the strategy ends in 2050. It encourages the use of natural gas across the board, roping in fertilizer manufacturers.

Speakers argued the subsidy’s return on investment would include health complications and environmental degradation related to natural gas extraction. Others said clean energy companies should be included in the tax breaks.

“No industry is entitled to an open-ended tax credit,” said PennFuture president Jacquelyn Bonomo. “The entitlement mindset of this industry is unacceptable to communities who refuse to be soaked in toxins in exchange for jobs. The days where Pennsylvanians must accept pollution in exchange for progress must come to an end.”

As part of a package of Republican-sponsored bills called Energize PA, the effort is just one of many established to help subsidize the natural gas and petrochemical industries. Although the bill passed through the state House and Senate with sweeping support, including from Beaver County’s state legislators, Gov. Tom Wolf plans to veto it.

Wolf believes the tax breaks should be considered on a case-by-case basis, but the General Assembly could override that veto if it so chooses. Because the bill includes language requiring companies to pay construction workers the prevailing wage rate and make “good-faith efforts” to employ local laborers, it has earned the support of state building trade unions.

Veronica Coptis, executive director of the Center for Coalfield Justice, said the billions of dollars in taxpayer subsidies offered in HB 1100 could be invested in schools, childcare, public safety and community development instead. Democratic representatives from Pittsburgh and elsewhere noted the investment’s uncertainty in an unpredictable market.

“This bill asks us to prop up corporate profit margins in an uncertain and volatile global market,” said state Rep. Sara Innamorato, a Democrat from Pittsburgh. “Courting petrochemical development with no plan to recoup that investment pits our public health, public dollars and public goods against private profits. We need coordination, clarity and transparency on the true costs of subsidizing these industries and operations.”

While supporters say petrochemical production will further strengthen the state’s economy, critics caution the industry’s risk to climate and public health. Environmentalists point to a region along the Mississippi River in Louisiana known as “cancer alley” due to a cluster of cancer patients living near petrochemical facilities. (See the graphic below.)

Additionally, Shell’s cracker alone is legally permitted to emit 2.2 million tons of carbon dioxide each year and more natural gas development could lead to increased methane leaks and pipeline spills.

Matt Mehalik, executive director of the Pittsburgh-based Breathe Project, said those concerned about the Ohio River Valley’s future have seen how heavy industrial development can wreak havoc on a region.

Larry Schweiger, chair of the Climate Reality Action Fund, said lawmakers should be instead promoting clean and renewable energy.

“If Pennsylvania lawmakers were serious about creating good paying jobs they would do what New York did by investing in clean energy,” he said. “For about $1.5 billion, New York spawned 40,000 renewable energy jobs where $1.6 billion in the cracker plant will create 300 to 600 jobs post construction.”

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Who in their right mind would give tax incentives for heavy polluting chemical plants?

ITC for solar energy being dramatically reduced

From an Article by Ari Natter, Bloomberg News, February 5, 2020

The Trump administration is withholding nearly a billion dollars for a clean energy program it has unsuccessfully tried to cut, congressional Democrats said Wednesday, raising the specter of political interference.

The unspent funds now amount to $823 million in the Energy Department’s office that provides grants and other financial assistance for alternative energy, electric vehicles and energy efficiency, according to Democrats on the House Science Committee, which is holding a joint subcommittee hearing on the topic.

The Office of Energy Efficiency and Renewable Energy, which has a $2.85 billion budget, was targeted for 80% cuts in the last White House budget request — only to see Congress increase its funding instead. The office has also recently canceled funding of proposed projects and left scores of staffing positions unfilled, said Illinois Democrat Bill Foster.

“When Congress passes a budget, we expect that budget to be followed,” said Foster, chairman of the panel’s Investigations and Oversight subcommittee. “It’s unclear to many of us there has been a completely good-faith effort.”

The Natural Resources Defense Council said in a statement that the delayed-funding was yet another example of “ideologically driven efforts that thwart action to combat climate” change. The Trump administration has moved to ease Obama-era rules limiting greenhouse gas emissions from cars and power plants, while also pulling the country out of the Paris climate accord.

“The agency is flouting congressional intent,” said Arjun Krishnaswami, an analyst with the environmental group’s climate and clean energy program.

Republicans on the committee said so-called carry-over funding within the office was normal. “It’s business as usual,” said Representative Ralph Norman, of South Carolina.

And Daniel Simmons, assistant secretary for Office of Energy Efficiency and Renewable Energy, said the agency fully intends to spend its appropriated funding “consistent with both congressional guidance and administration priorities.” The office is in the process of hiring more staff, Simmons said.

He pointed to $126 million in funding for solar technologies announced by the Energy Department just as the hearing began Wednesday. ”This has been a very good faith effort,” Simmons testified.“We are trying to be good stewards of tax payer dollars.”

Planning underway by Clean Energy States Alliance, May 9, 2019

The Office of Energy Efficiency and Renewable Energy, which grew under Obama, has financed research into technologies ranging from electric vehicles to energy projects powered by ocean waves. It has been credited with financing research to help make the cost of wind power competitive with coal-fired electricity, and cutting the costs of LED lighting.

Sen. Brooks McCabe (D-Kanawha), lead sponsor of SB 465

The Marcellus Gas and Manufacturing Development Act was passed out of the the Senate Energy, Industry and Mining Committee on Feb. 17th.   The purpose of the Act contained in Senate Bill 465 is to encourage and facilitate “the development of oil and gas wells and the downstream uses of natural gas in this state and the economic development in this state associated with the production and various downstream uses.”   It intends to do that by using tax credits and incentives for industrial expansion (particularly for fractionation and ethane cracker plants) and promoting natural gas as an alternative energy fuel.  It also encourages the West Virginia Economic Development Authority, that agency that oversees TIFs, and the WV Infrastructure and Jobs Development Council to provide public assistance to this private industry sector, Marcellus shale gas, and it’s correlative industries fractionation and ethane cracking.

The bill contains tax breaks geared toward subsidizing both the planned Dominion fractionation plant and an anticipated, but as yet unannounced, cracker plant.  (See  Special Report: Task Force Charged with Opening Door to Chemical Industry in Kanawha Valley, FrackCheck Feb. 18.) The  bill also lowers the bar for the amount of investment qualifying for special privileges to certain manufacturing businesses to enjoy a 95% break on county property taxes.  So if a cracker plant costs $10 million, the owner or ownership entity pays county property taxes on an adjusted appraised value of only $500,000.  There’s a little whip-snapper provision that adds a small penalty if the investment occurs after July 1,2011; the cost of the real estate acquired for expansion is deducted from the basis for computing the credit.

The bill also adds fractionation and cracker plant investments to the list of industrial expansions which qualify for the Manufacturing Tax Credit (up to 5% of the cost of new manufacturing property).

Currently WV Code 11-13A-5a calls for 10% of oil and gas severance fees to be distributed back to the counties, with the majority directed to the counties in which the fees were generated. The bill amends that to allow for distribution of the severance fee to fund permitting and inspection of gas wells as well as highway funds.  Of the excess above the 10% of severance fees that is redirected back to counties, a $2 million Marcellus Shale Permit Fund is established to fund the WVDEP in permitting and inspection of gas wells.  A baseline of $64.8 million must be distributed from severance fees to counties and municipalities for highway maintenance under this bill.

Incentives for investing in natural gas powered vehicles and other alternative fuel powered vehicles (but not ethanol) and investing in the equipment to fuel those vehicles are also included in the bill.

The sponsors are Senators McCabe, Kessler (Acting President), Browning, Unger, Snyder, Stollings, Plymale, Wells, Palumbo, Beach, Klempa, Yost and Foster.  The bill goes to the Finance Committee next.  Story of bill’s introduction , Feb. 9.   Story of bills passage

Text of the Marcellus Gas and Manufacturing Development Act.

Further light reading:

ARTICLE 6F. SPECIAL METHOD FOR APPRAISING QUALIFIED CAPITAL ADDITIONS TO MANUFACTURING FACILITIES

ARTICLE 13S. MANUFACTURING INVESTMENT TAX CREDIT

ARTICLE 13R. STRATEGIC RESEARCH AND DEVELOPMENT TAX CREDIT

§11-13A-5a. Dedication of ten percent of oil and gas severance tax for benefit of counties and municipalities (must scroll down)