Gov. Wolf's budget to boost green energy on back of fossil fuels

Gov. Tom Wolf speaks after he took the oath of office to become the 47th governor of Pennsylvania, at the state Capitol in Harrisburg.
Gov. Tom Wolf speaks after he took the oath of office to become the 47th governor of Pennsylvania, at the state Capitol in Harrisburg.
Photo by AP
| Sunday, March 8, 2015, 9:00 p.m.

Gov. Tom Wolf is looking to borrow money to inject millions of dollars in subsidies and grants into Pennsylvania's renewable energy industry.

In his proposed $30 billion budget for the 2015-16 fiscal year, Wolf would fund several energy initiatives by issuing $675 million in bonds. He would pay the interest on the bond money with $55 million from a proposed severance tax on oil and gas drillers.

The plan would direct $225 million to energy investments. It would provide $150 million for grants and other aid to renewables, including $50 million to resurrect a rebate program for solar projects. A $100 million program enacted in 2008 to fund solar installations ended in 2013, and a 30 percent federal tax credit for solar projects is due to expire in 2016.

Another $20 million in bond money would fund a wind energy generation program, and $20 million would expand a green program to generate electricity by using agricultural waste. The Pennsylvania Energy Development Authority also would receive $30 million to expand the market for clean energy technology and fuels, and $30 million would fund initiatives in using recycled heat to produce power, or what is known as co-generation.

“We must expand and develop new markets for Pennsylvania's energy technologies, services and fuels, and this budget makes historic investments to bolster and transform our energy economy,” said John Quigley, acting secretary of the state Department of Environmental Protection.

The $225 million in energy investments also would fund a “last mile” natural gas distribution line fund, which would offer $25 million in matching grants to business parks and manufacturers to construct the remaining miles of pipelines.

DEP officials could not provide details on where gas lines might run or how the agency would disburse grants.

The remaining $675 million in bond money would fund $350 million in loan programs for business development in the state, along with $100 million in technology initiatives for businesses.

Wolf's plan would generate money in the long term and further reduce reliance on fossil fuels, said Rob Altenburg, director of PennFuture's Energy Center in Harrisburg, a environmental and renewable advocacy group.

“The renewable energy subsidies are an investment to build an industry that is ... not as strong as it could be,” he said.

Altenburg warned against a subsidy structure that propagates a boom-and-bust cycle, in which consumers and business rush to take advantage of incentives but abandon the industry when government aid ends.

“We would hope that the program is implemented in a way that is really focused in building a sustainable industry that's not just creating a temporary blip,” he said.

State law requires 18 percent of electricity to come from alternative fuel sources and renewables such as wind, solar and hydropower by 2021. Wolf's budget also includes $2 million for a 15 percent tax credit for alternative energy production projects.

Kevin Sunday, manager of government affairs for the Pennsylvania Chamber of Business and Industry in Harrisburg, questioned Wolf's logic of borrowing more money to spend on aid for select energy industries, all while proposing a tax on the shale gas industry that has brought economic benefits to the state. Renewable energy should be encouraged but not at the expense of other industries that support themselves, he said.

“It's ironic that one industry is expected to subsidize its competition,” Sunday said. “Certainly we should have renewables in the portfolio, but only to the extent they can compete on prices like everyone else.”

The governor's budget, outside of the bonds, includes $10 million to expand DEP inspection and oversight of oil and gas operations. The agency could not provide details on how that money would be used.

The governor's spending plan also would shift some funding for the state Department of Conservation and Natural Resources from oil and gas leases to the general fund.

“(It) just moves us in the direction of making our budget more stable and less reliant on those dollars generated from leasing,” said Christina Novak, a spokeswoman for the agency.

The department plans to upgrade its seismic monitoring technology and audit oil and gas operations in state forests and parks to make sure the state is accurately compensated, she said.

Last month, Wolf laid out a plan to tax Marcellus shale well drillers 5 percent plus 4.7 cents for every thousand cubic feet produced. He said that would raise $1 billion for education in fiscal 2015-16.

A state impact fee on gas drilling has generated $632.3 million for environmental grants and municipalities. Impact fee revenue for 2014 is expected to be $220.4 million when announced next month, according to the state's Independent Fiscal Office.

Lawmakers and analysts have said Wolf's budget is not likely to pass the Republican-led legislature. The fiscal year starts on July 1.

Katelyn Ferral is a Trib Total Media staff writer. Reach her at 412-380-5627 or kferral@tribweb.com.

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