Pennsylvania Legacies #212: Rising to the Occasion

Josh Raulerson (00:01):

It is Friday, April 5th, 2024. I’m Josh Raulerson, and this is Pennsylvania Legacies, the podcast from the Pennsylvania Environmental Council. Right now, billions of federal dollars are up for grabs as states and cities develop plans to reduce their carbon emissions. The opportunity is unprecedented and so colossal that taking full advantage is a challenge in itself. To meet that challenge, the Shapiro Administration has put together a team dedicated to maximizing funding potential from the Inflation Reduction Act and the Infrastructure Investment and Jobs Act. The team recently cleared a major hurdle under intense deadline pressure with completion of Pennsylvania’s priority Climate Action Plan. That document sets the agenda for the first phase of investments as the state goes after competitive climate pollution reduction grants under a program the Department of Environmental Protection is calling RISE PA. Acting Interim DEP Secretary Jessica Shirley unveiled the proposal Tuesday at an event near Pittsburgh. There she was joined by union leaders and elected officials in touting its potential for job creation and economic growth.

Jessica Shirley (01:08):

The goal of RISE PA is to offer grants for small, medium, and large scale decarbonization projects at industrial facilities. With funding we hope to secure through this program, the Climate Pollution Reduction Grants program, we don’t have to choose between addressing air pollution and creating jobs. With RISE PA, we can do both.

Josh Raulerson (01:29):

Louie Krak is infrastructure implementation coordinator with DEP, and he’s responsible for much of the heavy lifting in getting that Priority Climate Action plan in well ahead of last Monday’s deadline. He’s on the podcast today to explain what’s in the plan, what went into its developments, and what happens next. Louie Krak, welcome to Pennsylvania Legacies. Glad to have you here.

Louie Krak (01:50):

Thank you so much for having me. I’m really jazzed to be talking about what has become one of my favorite things to talk about, and that is industrial decarbonization.

Josh Raulerson (02:00):

You are part of a team an important team in the governor’s administration looking at what’s called critical investment. Can you talk about, about what that means what’s happening in your office and what the priorities are right now?

Louie Krak (02:13):

I’d be happy to. So I’m an infrastructure coordinator with the Governor’s Office of Critical Investments, and Governor Shapiro created this office about a year ago. And, and our office’s sole mandate is to leverage as much federal funding coming down the pike from the Infrastructure Investment and Jobs Act and Inflation Reduction Act to drive forward transformative projects across Pennsylvania. So it, it, it has been an interesting journey because this office didn’t exist before. So really you know, I was one of the, the first people brought on with the, with the change of administration to do work that had existed in some form in the previous administration. But under the leadership of Executive Director Brian Regli, we’ve really done a lot of work in the last year to grab as many federal dollars as we can and put them on task to do good work for the citizens of Pennsylvania.

Josh Raulerson (03:17):

And there’s, there’s quite a bit of that federal money coming, I understand. Has there been an effort like this in, you know, in recent memory within the governor’s office? An opportunity that’s comparable.

Louie Krak (03:28):

In terms of opportunity, just in general, we’re, we’re sitting at a historic moment. There has never been this much investment in climate and clean energy at the federal level, and we may never see this level of investment again in our lifetimes. I certainly hope that’s not the case, because although it is a lot of money, it’s still not enough to get us to where we need to be in terms of reducing greenhouse gas emissions. Right. But the, the Infrastructure Investment and Jobs Act and Inflation Reduction Act combined, you know, have the opportunity to, to take a substantial bite out of that out of those emissions. So, you know, Governor Shapiro recognizes the value of these dollars, and the historic moment we find ourselves in which is why our office was created in, in the first place, is because a lot of these funding opportunities are nationally competitive. There are some funds that are coming directly to Pennsylvania that we’re guaranteed to get that money once we apply for it. But in terms of one of the opportunities we’re talking about today it’s a competition amongst a lot of different folks across the country to, to get these dollars. And, you know, in a way that’s a really good thing to see that there’s so much appetite across the country to do this work.

Josh Raulerson (05:04):

Tell us a little bit about your background, how you came to this role, and how that background informs the work you’re doing right now.

Louie Krak (05:11):

So, I have to start by saying I’m a Pennsylvania native. I was born and raised in Lancaster County. I spent about a decade living, working and going to school in New Haven, Connecticut before moving to Harrisburg a couple years ago to pursue a career in public service. And I started my career with the Commonwealth, actually in the Department of Agriculture. I was working in the Bureau of Farmland Preservation helping to, to preserve Pennsylvania farmland, which is some of the most fertile, productive farmland in the world. And Pennsylvania actually leads the entire nation in farmland preservation in terms of numbers of acres and numbers of farms preserved. And so during my time at, at, in working on farmland preservation, I helped to preserve over 1,200 acres of farmland, including — this was the coolest one I worked on — the Berry Farm, that’s Berry with a B, that I worked on in college.

So that farm is now preserved and will remain a farm in perpetuity, which is really, really cool. And I, I wanted to work on farmland preservation because there’s a, a lot of environmental benefits to preserving farmland. And I have a background in environmental studies, so I knew I wanted to do environmental work. And then I wanted to see what was happening at the Department of Environmental Protection, again, given that background. And, and my real desire is to work on climate change. So an opening became available in the policy office in the Department of Environmental Protection. And so I worked as a policy specialist on air energy and climate policy before moving into my current role.

Josh Raulerson (07:07):

Not to get too far off topic, and we’re here to talk about industrial decarbonization today, but given your background, I’m curious, you know what is happening with IRA, IIJA funding in that sector? Are there opportunities especially related to decarbonization or, you know climate policy, I guess, coming through the agriculture sector?

Louie Krak (07:28):

Yes, absolutely. So there is a lot of money coming for what they call smart agriculture practice. So it’s, it’s recognized that farmland has the huge potential to absorb carbon dioxide and act as a, a carbon sink, and you can increase and, and kind of accelerate that absorption by doing smart agriculture practices like no-till farming and planting cover crops and things like that. And so I actually, you know, worked on some of those things during my time at the Department of Agriculture. And so there’s a lot of money coming for smart agriculture practices from the IRA as well as some clean energy opportunities coming out of the U.S. Department of Agriculture. They have a, a, a program to help finance renewable energy projects for farmers that got an additional billion dollars through the IRA. And there were some new programs that were rolled out as well that were looking at clean energy production and resiliency in the agricultural sector. So there were both specific opportunities coming out of the U.S. Department of Agriculture, as well as some Department of Energy opportunities that are targeted at rural and remote areas and, and trying to deploy clean energy and increase the resiliency of the grid in those areas.

Josh Raulerson (09:06):

So yeah, there’s a lot of overlap with what we’re here to talk about today. I imagine we can get into that a bit later, but turning to the industrial sector, what is heavy industry’s contribution to Pennsylvania’s carbon footprint? What, what, what kind of emissions are we talking about and what are the major sources?

Louie Krak (09:22):

So according to DEP’s annual Greenhouse Gas Inventory, the industrial sector is the highest emitting sector statewide, and it accounts for about 30% of Pennsylvania’s total greenhouse gas emissions. And so for context, in the year 2020, which is the most recent year that we have emissions data on, there’s about a three year lag between when, when DEP publishes the report and the most, when the most recent data is available. So back in 2020, the industrial sector emissions totaled over 73 million metric tons of carbon dioxide equivalent. So that means both carbon dioxide and other greenhouse gases. And so when you’re talking about industrial sector emissions, as they’re defined in the greenhouse gas inventory, they come from four separate subgroups. So there’s the combustion of fossil fuels, which are the fuels that are combusted on site to heat and cool industrial buildings and equipment.

Then you have industrial process emissions, which are those that, you know, you can think about the emissions from a cement or line manufacturing or iron and steel production would fall into that category. And then you also have activities involving natural gas and oil systems. So here we’re talking about natural gas production, transmission distribution, as well as oil production. And, and actually the the emissions from abandoned oil and gas wells are also accounted for under that subgroup. And then the last one is activities involving underground coal mining and abandoned coal mines. So, you know, Pennsylvania has a, a long history of coal production, and one of the things you have to do when you’re mining for coal is drill vents to vent out the methane that is naturally occurring within these coal mines so that, you know, it’s a safety issue if the, obviously if methane is flammable.

So you don’t want, you know, your, your coal shafts to explode. So you have to vent the methane into the atmosphere, essentially, unless you have technologies that can either capture or abate those emissions. So that makes Pennsylvania’s industrial emissions footprint unique compared to other states, because we do have that, those extractive industries and those emissions from natural gas and oil systems and coal mining. And then the, the last thing I just want to note is that the scope two emissions, which are the emissions that at industrial facilities from electricity usage, those emissions are actually accounted for in the, in the electricity sector of the greenhouse gas inventory. But if you add those emissions or, you know factor them in, that 73 million metric ton number is actually higher. So, so that’s what we’re talking about. That’s what the universe of industrial sector emissions looks like in Pennsylvania.

Josh Raulerson (12:39):

So hopefully we can break that down a bit as we get into what DEP and the administration are proposing by way of the CPRG program. But what are the issues you’re up against when you look at this issue broadly industrial decarbonization? What are the barriers that have to be addressed?

Louie Krak (12:53):

So industrial decarbonization is unique because of how diverse the number of operations are, right? So there are many different types of industrial operations. There’s many different types of industrial facilities, and each facility is unique. And what that means is there is no one size fits all solution for decarbonizing industry that just works across the board, right? It, it’s not like the electricity sector where the answer is, well, we need zero emission electricity sources. And obviously it’s more complicated than that, but it is very complicated in, in the industrial space because there are many different types of industries, and you almost need a bespoke decarbonization solutions at a facility by facility basis. The other piece of this is the technology solutions and equipment needed to decarbonize industry are very expensive. There’s high upfront capital costs, for example, for installing a carbon capture system on a cement plant.

It’s just very expensive. And so there’s not a business for installing these industrial decarbonization technologies, both because they’re expensive and a lot of them are expensive because they’re not commercially available or, you know, they’re just starting to become commercially available, or they’re still in the research and development phase. So they, in, in essence, they have a low technology readiness level, if you’re going to use the lingo that the Department of Energy uses to, it’s a scale that they use to rate how commercially ready a technology is. And, you know, sort of along those lines, if you do invest in one of these, you know, expensive technologies, it is possible that it, it will increase your operating expenses as well. If, if for example, you’re switching from combusting a fossil fuel to using electricity, and now you’re paying more for the electricity than you were for the, the fossil fuel, well that’s a, that’s a business problem there. And, and then just briefly, there’s a lack of what I’ll call regulatory sticks. There are no, you know, regulations in place right now in Pennsylvania requiring industrial facilities to reduce their greenhouse gas emissions, and there’s also a lack of carrot incentives for them to do so as well. And that’s really what I’m hoping to talk about today, is an opportunity that we’ve identified as, as a giant potential carrot to move this work forward.

Josh Raulerson (15:41):

Well, let’s get into that. I think you’re referring to the, the CPRG grants?

Louie Krak (15:44):

I am, yes. And for those who don’t live in the acronym soup world of government, we’re talking about the Climate Pollution Reduction Grants, which is a $5 billion program coming out of the Environmental Protection Agency through the Inflation Reduction Act, the Climate Pollution Reduction grants just going to refer to it as CPRG from here on out for ease. It’s a unique program because it’s two phases. Phase one is funding for climate action planning, and phase two is funding to implement those plans. And so because of this sort of staged process, the first piece of this is last spring, DEP applied for and received a $3 million planning grant to do in-depth climate action planning over the next several years. And this planning is meant to prepare us to then apply for a $4.6 billion nationally competitive pot of implementation funding to then come up with project ideas for implementing the plans. So that’s, that’s CPRG in a nutshell.

Josh Raulerson (17:02):

So where are we today in that timeline? I think is the planning mostly over with?

Louie Krak (17:07):

Well, yes and no. So the planning piece of it requires a few different deliverables. The first is, is called a Priority Climate Action Plan, and that’s supposed to be a narrow plan that focuses on, you know, potentially a few sectors or a handful of greenhouse gas reduction measures that the state prioritizes. And then later on we’re responsible for producing what’s called a Comprehensive Climate Action Plan that has to address all the greenhouse gas emission sources statewide. And the, the Priority Climate Action Plan, which we call the PCAP, was due on March 1st. And happy to report that DEP submitted our PCAP on March 1st, and that’s a necessary prerequisite for applying for the implementation funding. So if you don’t get your PCAP done, you’re out of luck because that disqualifies you from applying for that $4.6 billion of implementation funding. So the, just briefly, the, the planning process for writing the PCAP involves first coordinating with three metropolitan areas in Pennsylvania that also received $1 million planning grants each to do the same planning process that DEP is doing.

And so we wanted to coordinate with the Pittsburgh area, Philadelphia area, and the Lehigh Valley area to make sure that our plans are in alignment and we’re sort of staying out of each other’s lanes because there’s certain rules around the implementation funding, and we want to make sure that we’re maximizing the opportunity to bring as many dollars to Pennsylvania while, while also not directly competing with each other. So DEP did a whole lot of stakeholder engagement in preparation for writing the CCAP. So we met with our sister agencies, we met with local governments industry, as well as held a series of community meetings. So there were four in-person community meetings held back in December in Clairton, Williamsport, Hazelton, and Wysox, which were identified as communities that that are impacted by industrial emissions because we decided pretty early on that we wanted to focus our priority climate action plan on reducing industrial sector emissions again, because the, it’s the highest emitting sector statewide.

So in, in those stakeholder engagement sessions, we also wanted to get feedback on what other greenhouse gas measures to include in our PCAP, aside from those related to industry, so that, that would enable potentially other local governments to apply for implementation grants that for, for addressing emissions from other sectors. And so once the engagement piece was complete, then DEP worked with a contractor to actually write and develop the contents of the PCAP. And like I said, we, we submitted that to EPA on March 1st, and you can find the PCAP on DEP’s website. It’s really a terrific document. So that was, that was part one just to qualify us to then go after the implementation funding. And that has been an adventure in and of itself. So the idea we came up with was, okay, we know we want to reduce industrial sector emissions, how are we going to do that?

And so what we’re proposing in our application is developing a statewide industrial decarbonization grant program. We had to design something from scratch and back in the fall we came up with an initial program design, but we wanted to get feedback from industry and other interested stakeholders on this sort of first volley across the net of what a statewide industrial decarb program could look like. So DEP issued a request for information at the end of December and we got 39 written responses to a series of questions. So the first part of the RFI had the initial program design laid out, and then we asked a series of questions and, and got robust feedback. And then we worked to analyze that feedback, and there was a process of revising and refining the program design to incorporate that feedback. And then the actual exercise that I did of writing the 40-page application, which was a whole giant undertaking.

And as part of that process, we solicited letters of support from industry environmental groups, labor organizations, NGOs, think tanks, engineering firms, industry associations. And we, we got a total of 60 letters of support from all those stakeholders saying they want to see this industrial decarbonization program happen in Pennsylvania. And we included all of those letters and included a congressional delegation letter signed by both state senators and 10 U.S. representatives, all supporting our application. The program, the final program design that we came up with is called Reducing Industrial Sector Emissions in Pennsylvania, which spells RISE PA — got to love a good acronym. I was like, I got to come up with something cool, because I know I’m going to be talking about this a lot. And let’s be frank, CPRG is not cool, but RISE PA tends to stick in, the mind.

Josh Raulerson (23:04):

Rolls off the tongue. That’s nice.

Louie Krak (23:06):

Yeah, it does. It does. And so I’m really proud to say that DEP submitted our implementation application requesting $475 million to open the RISE PA program. We hit submit on March 25th, which is one week before the April 1st deadline.

Josh Raulerson (23:26):

So based on all of the input you gathered and the public engagement and your, your internal analysis at DEP, what did you find, like where are the biggest opportunities to make a difference in the industrial sector and really anywhere else?

Louie Krak (23:38):

Yeah, so if you’re going just by a numbers standpoint within the industrial sector, that combustion of fossil fuels subgroup is the highest emitting subgroup out of the, the four that I listed. So just based on numbers, that’s where the most reductions could occur. But we’re looking at it more broadly. So just at a high level, we are looking to fund small, medium, and large scale industrial decarbonization projects and what a project might entail. We left the definition very broad because we want to leave room for innovative and new technologies, as well as some, some more tried and true methods for reducing emissions. And so, you know, the most immediate reductions and the most, what I’ll call shovel ready reductions really have to do with energy efficiency. Industrial facilities use a lot of energy, and so the best and most cost effective way to reduce energy usage, which then in turn will reduce the emissions associated with that energy are through energy efficiency measures.

And so as part of the development of RISE PA, we are actually partnering with the Pennsylvania Technical Assistance Program or PennTAP at Penn State, which offers free energy audits for small and medium sized manufacturers, and then provides them with energy efficiency recommendations that they can then implement to reduce their energy usage and therefore their emissions PennTAP told us, like in the last five years, they’ve done over 300 of these assessments and 60% of those assessments, none of the recommendations have been implemented largely due to a lack of funding to do so. Again, back to that piece of it has to make business sense in order for a lot of these companies to pursue these measures. So while the emissions from small and medium sized manufacturers at a facility five facility level may be small, if you do a whole lot of small projects, that adds up pretty quickly.

And we know that those emissions can be reduced today with technologies that are already commercially available. So the small scale award track in the RISE PA program is exclusively focused and available to small and medium-sized manufacturers. And we’re anticipating if we get funding to run this program, most of those projects will be those sort of shovel-ready energy efficiency projects. But then we also wanted to leave room for some of the big, bold, transformative, large projects that can reduce large numbers of emissions. And so the, the medium and large scale award tracks are meant to provide opportunities for those really expensive projects that are just not going to pencil without some sort of incentive.

Josh Raulerson (26:51):

Earlier, you mentioned that sometimes the obstacle there is just the, the technology isn’t quite ready, is, I mean, is that accounted for in the plan when you’re looking at those larger, more bold and innovative projects that you be approaching? Is some of that directed toward the research and development piece of it? Or is it more about just getting the technology implemented?

Louie Krak (27:12):

I, I think it’s both. In the case of, of some projects that we learned about in the industrial stakeholder outreach that we did, they would potentially be first of a kind or second of a kind projects, like more like pilot projects. And there’s a lot of risk associated with being the first or second or third person to do something versus the thousand person. And so that goes back to the point of why it’s important to reduce the, the high upfront costs and really de-risk these investments because the other piece of the program design is there’s a cost share that the facilities must contribute. You know, we’re not just going to sign you a blank check and say, here you go, go do your thing. So they have to have some skin in the game, but we want to be able to provide enough of an incentive that makes them comfortable with, with making the investment and gives them some assurance that that the investment that they’re making is not going to bankrupt them.

Josh Raulerson (28:16):

Well, and then at the other end of the spectrum, you were talking about the small and medium sized and mostly energy efficiency focused interventions. What are some examples? What are, like, some smaller manufacturers might be looking at just by way of lower hanging fruit to reduce their energy consumption?

Louie Krak (28:31):

Yeah, I mean, it could be, it could be a lot of different things. Again, back to the point of sort of each facility having its own unique pathway toward net zero or toward reducing emissions. But you know, some of the projects we learned about were, you know replacing a boiler that’s powered by natural gas and switching to an electric boiler, for example, we got somebody that suggested, well, we haven’t changed out our LED light bulbs or switched to LED light bulbs yet. So really it’s, it’s a wide gamut of potential projects, but the, the small and medium sized manufacturers could also go after some of the bigger awards as well if they wanted to do something more bold like fuel switching or more expensive electrification processes that would, you know, involve changing the way that they manufacture the thing that they manufacture.

So it’s really, again, back to the point of no one-size-fits-all solution. Part of the fun of this, I think if we get the funding to do this program, we’ll just be, to see the, the wide diversity of the, the project proposals that come in. And something we also designed into our, our application is, you know, we want to create an industrial decarbonization playbook that highlights success stories and provides information for other facility operators to do similar projects and, and really create a, a community of learning around this in order to scale the impact of these dollars. Because the reality is, even though we’re asking for $475 million, which is almost the maximum award you can ask for under the CPRG program, yes, it is a lot of money. But the Ohio River Valley Institute just commissioned a report that they released a couple weeks ago called the Pennsylvania Industrial Decarbonization Roadmap. This is a first in the country report just looking at Pennsylvania’s industrial sector. No other state has a report like this. And what they found is in order to decrease Pennsylvania’s industrial emissions by 84% by 2050 — again, this is not even getting to net zero, this is an 84% reduction — it will cost $34.6 billion. So I just want that number to sink in for a second. We’re asking for $475 million, which is a drop in the bucket compared to the kind of investment that we need to, you know, make the really substantial reductions in the industrial sector.

And one of the, the pieces of the program design as well, since there is a cost share component, we will be leveraging private capital to, to help make the grant dollar stretch further. We brought on a contractor to do an analysis of the cost effectiveness of the program design and the potential emissions reductions and how much private capital we could leverage. And with $440 million of that $475 going directly to projects themselves across those three award tracks that I mentioned, that has the potential to leverage up to $938 million of private capital. So you add those two numbers together and you’re, you’re at like $1.3 billion of investment, which is substantial. And then they found that the cost effectiveness would come out to about $83 per metric ton from 2025 to 2030, which is less than half the social cost of carbon that EPA proposed, which is $190 per metric ton. So considering how expensive decarbonizing industry is, we feel like we’ve come up with a, a pretty good design here, and the consultant ran the numbers and RISE PA has the potential to reduce 5.2 million metric tons of CO2 equivalent from 2025 to 2030 and 9.2 million metric tons from 2025 to 2050. So we’re hoping that that provides a really compelling argument for why EPA should make the investment to, to make RISE PA a reality in the Commonwealth.

Josh Raulerson (33:12):

And is part of the reasoning that then, like by making that large upfront investment, that over time the cost goes down and it kind of snowballs from there? Or is that overly optimistic?

Louie Krak (33:22):

Well, I think it has the opportunity to do that. Back to your point about sort of pilot projects and first of a kind projects, if we’re able to complete projects that inspire other projects and, and then all of a sudden you get a learning curve effect there and you’re de-risking the technology for other folks who may not receive subsidy to do these projects. But, but now there’s a business case to do so because enough projects has happened that it starts to drive down the cost of the technology. And then, you know, through this industrial decarbonization playbook that we want to do, providing the information for other facility owners and operators to do similar projects, or at least begin to understand how they might decarbonize their facility because they have a real world example to point to and, and, and, and potentially connect with those folks who did it at their facility.

That’s one way to scale the impact of the dollars. And the other way is, you know, this, there’s no reason that this program designed couldn’t be adopted by other states. Pennsylvania is a member of the U.S. Climate Alliance, which is a bipartisan coalition of 24 governors who agree to adhere to the greenhouse gas reduction emissions goals of the, the Paris Agreement. And so, like what would happen if a handful of the states in the U.S. Climate Alliance did their own version of RISE PA, you know, the opportunity for states that may have political will to fund a program like RISE PA through their own, you know, general assembly versus getting federal money to do it, or, you know, something along those lines. You know, if RISE PA comes to fruition, Pennsylvania will become a national leader in industrial decarbonization. And there’s something very poetic about that story because Pennsylvania was one of the birth birthplaces of the industrial revolution. And our lands bear the scars of that contribution to the country. We have hundreds of thousands of acres of abandoned mine lands. We have hundreds of thousands of abandoned oil and gas wells leaking methane into the air. And so the time is now for someone to step into that leadership role and show that industrial decarbonization can be done, and we’re the ones who are going to do it. And if you want to do it, we’d gladly share how we did it with you.

Josh Raulerson (35:59):

So one of the technologies that figures in a lot of people’s decarbonization strategies is, is carbon capture, which you mentioned earlier, and that tends to be one of those costly investments that have to be made. And especially when you consider hydrogen hubs coming online in Pennsylvania and across the country, how do those things fit together? Depending on the production pathway, carbon capture could potentially be a really big part of how hydrogen is produced in Pennsylvania. How does RISE PA, you know, account for that and integrate with what’s happening with hydrogen?

Louie Krak (36:28):

Yes, both fuel switching to hydrogen and carbon capture utilization and storage projects would be eligible project types for RISE PA. But there’s some difficulties that those projects would have. And when we’re talking about carbon capture and storage, yes, the technology is, it’s a lower technology readiness level, it’s expensive, but there are some industrial processes that cannot be fully decarbonized without carbon capture and storage. Like the cement industry is, is one example of that. So, you know, the big issue with carbon capture and storage from a permitting perspective is you need a class six underground injection control. Well, to store that carbon dioxide underground and currently only EPA can issue that kind of permit to a Pennsylvania company wanting to have one of these wells. And it’s a very long and convoluted permitting process. So the climate pollution reduction grant money has to be spent and the projects have to be done within five years.

And so that presents a challenge when you think about how complicated and potentially long it would take from a permitting perspective to, to cross all the I’s and dot the T’s on a carbon capture and storage project. I’ve talked to folks who say they think it could potentially be done, and there’s a path forward for potentially extending beyond those five years with the EPA rules, but that’s a big challenge we see with carbon capture and storage. And in terms of the, the hydrogen hubs, it very exciting that Pennsylvania’s the only state in the country to win two hydrogen hubs. But the reality is that it’s going to take a long time for these hydrogen hubs to actually come online and start producing hydrogen. It’s only the very beginning of a long process through the hydrogen hub, you know, competition. I think that’s where a lot of the confusion comes in.

There are different stages that unlock different thoughts of funding to help continue to develop the hubs, but it’s going to be a while until hydrogen actually starts getting produced. However, one of the highest and best uses for clean hydrogen is for those industrial processes that can’t decarbonize without it. So would certainly love to see some of the clean hydrogen that’s going to be coming out of Pennsylvania’s to hydrogen hubs flowing to something like a, a steel plant that wants to fuel switch to hydrogen, for example, that is a project that has technology that’s, that is ready and proven and would love to see a, a proposal like that come through RISE PA. Again, if we get the funding to open the program. So there’s definitely an interplay and an intersection between clean hydrogen and industrial decarbonization, but for the purposes of the five years, we would have to get projects done. That’s a tight timeline, both for carbon capture and storage and for the hydrogen hubs.

Josh Raulerson (39:50):

Earlier you said that even though the focus is on industrial decarbonization, that the, the PCAP also looks at some other sources. Can you break down what those are and you know how they’re prioritized in the plan?

Louie Krak (40:02):

Yes. So the PCAP has nine priority climate action measures total, and the first five have to do with industrial decarbonization. So I’ll just run through those quickly. Those are industrial electrification, efficiency and process emissions. We’ve got low carbon fuels, so, you know, like fuel switching to, to hydrogen for example, onsite renewable energy generation, carbon capture utilization and storage, and then fugitive emissions reductions, which would be those technologies that reduce emissions from natural gas and oil systems and from coal mining. And then the, the remaining four priority measures were included as a direct result of the extensive stakeholder engagement that DEP did to learn what measures are important to other stakeholders like local governments and community members. So based on the feedback we heard we included four additional measures that focus on a net zero electricity grid building electrification and efficiency electric and alternative fuel vehicles, and also public and active transportation. It’s interesting too, the, the net zero electricity grid piece indirectly helps with industrial decarbonization because one of the major and most cost effective industrial decarb levers is electrification. But if, if you’re electrifying a process and your electricity is coming from a source where it’s produced via fossil fuels, you’re really not doing a whole lot to reduce emissions. So certainly the greener the grid gets the more that helps with industrial decarbonization as well. So there is a synergy between the two with that measure.

Josh Raulerson (41:55):

And this is where it kind of gets into the governor’s broader agenda for energy, looking at things like carbon pricing and portfolio standards. Can you, can you draw those lines for me?

Louie Krak (42:06):

Sure. So the governor recently announced two very exciting pieces of energy policy, PACER and PRESS, and I’m going to focus on, on PRESS for the time being because it’s most relevant to this. The comment I just made about you know, decarbonizing the grid also helps to decarbonize industry. And so PRESS is a, it, it stands for the Pennsylvania Renewable Energy Sustainability Standard. And it’s a piece of legislation that would modernize what’s called the Alternative Energy Portfolio Standard that was passed back in 2004. That is what was passed to incentivize clean energy generation in Pennsylvania and has a, a tiered structure. So there’s, there are tier one energy resources and tier two energy resources under the, the Alternative Energy Portfolio Standard. And, and those tiers are at 10% and 8% of the, of the total energy mix.

And those numbers have been maxed out for a while. So we are, we are no longer, you know, able to send a market signal that we want to see more clean energy come online, which is why it’s so imperative that we, we have something like press come to fruition because press would increase the, the tier one, which is the you know, emissions free energy generation sources, think solar wind things along those geothermal would be tier one. It increases tier one from 10% to 35% by 2035, and also expands the definition and creates a tier three. And like, it’s, it’s, it is a really cool program design, so I encourage you to, to go look up, press and, and read more about it. But back to your point, if PRESS were to come into law and all of a sudden there’s clean energy that’s being incentivized, that will help to reduce electricity se sector emissions and green up the grid. And that’s really good news for industrial decarbonization projects that are focused on electrification because we’re going to be having more clean electrons coming onto the grid to, to use as a source for those projects.

Josh Raulerson (44:48):

So earlier you were talking about how there’s a, I mean, there’s a kind of a distinction between near term goals through the PCAP, and then longer term there’s going to be a comprehensive plan. Is that beginning to shape up yet, or do you have a sense of what the comprehensive plan might look like and when that happens?

Louie Krak (45:04):

Yeah, so we thankfully have more time to work on the, the CCAP, as it’s called. We were under a really short timeline to produce the PCAP because I’ll just remind you, the PCAP was due March 1st and our implementation application is due April 1st. So we had no choice but to work on both implementation and PCAP in parallel because it was just, it was crunch time. So we, we have longer to develop the CCAP and DEP has already started to work with a contractor on developing the, the CCAP, but that deliverable won’t be due until the summer of 2025. So it’s a similar process to the PCAP in that, you know, they, we will need to do additional stakeholder engagement and as I said, this plan will have to address all of the sources of greenhouse gas emissions statewide. So the scope of the plan will be much wider.

A third thing that’s been going on in the background in all of this is by statute DEP is required to do a climate action plan every three years. And so DEP is also working on our most recent update of that plan. So there’s like a lot of intersections and a lot of planning going on. So I anticipate that the comprehensive climate action plan will probably also incorporate some of the work that DEP is already doing on the statutorily required climate action plan that’s due in 2024. But we’re still in the very early stages of CA development.

Josh Raulerson (46:48):

Many people may know that in the IRA and IIJA legislation, there’s an emphasis on not just making this transition to clean energy, but making a just transition and, and a focus on equity and things like environmental justice. Where does that figure in the PCAP and what you’re working on right now, how are you addressing those issues?

Louie Krak (47:05):

Well, we had to specifically address benefits and impacts to low income and disadvantaged communities for each one of the priority climate action measures that we identified in the PCAP. So again, I’d encourage folks to go online and give a read through of the PCAP because there’s a lot of analysis on just those issues, and there will be even more analysis in the CCAP. But in terms of RISE PA, we wanted to incentivize projects that will reduce emissions and co pollutant emissions. So that’s, that’s another key piece of the CPRG program is EPA’s goal is not only to reduce as many greenhouse gas emissions as quickly and cost effectively as possible, but also co-pollutants, right? Things like criteria air pollutants and hazardous air pollutants, your NOx your SOx. Going back to my air quality background, you know, if you want a really acronym heavy topic dig into air quality, it’s pretty wild.

But back to the point is, we want to see the greenhouse gas and co-pollutant emissions reductions happening in the communities that are most vulnerable and disproportionately impacted by those sources of pollution. So in the RISE PA program design, we created what’s called the Community Benefits Bonus. So this is a bonus adder that will increase the award size for projects that occur in low income and disadvantaged communities as defined by EPA, I prefer not to, to use the term disadvantaged community. I prefer to use the term vulnerable community, but I’m using the language that the feds have used because that’s what we’re required to do. But just wanted to kind of make that caveat so that the community benefits bonus would increase the award size for projects that are located in vulnerable communities. And also the applicant would have to provide an approved community benefits plan. So they’ll have to outline exactly how their plan is going to benefit the community members, and we’ll have to engage with the community in order to, to make that plan. We wanted to bake equity and environmental justice into the RISE PA recipe, so to speak. And I think that that will be an effective way to drive the investment toward the communities that need it the most.

Josh Raulerson (49:47):

Can you talk about why you prefer the language of vulnerable communities to disadvantaged? What does that mean to you?

Louie Krak (49:53):

You know, DEP does a lot of work in the environmental justice space. We have an Office of Environmental Justice, we have the Environmental Justice Advisory Board, but we also have Interim Acting Secretary Jessica Shirley, who is a real champion of environmental justice and has been throughout her entire time at the department. And in one of my early conversations with now Secretary Shirley, she explained to me that there are negative connotations associated with the word disadvantaged. And that when asking communities that are disproportionately impacted by pollution, how should we be referring to these communities? Vulnerable is a less stigmatized word than disadvantaged, and I think more accurately describes the folks who live there. I mean, just thinking about me as a human being, I wouldn’t really want to be called disadvantaged when in fact what’s happening is an injustice. And so it is just a term that through the work that the department has done, that’s what I stick to.

Josh Raulerson (51:11):

Does it also kind of reframe it to underscore that really we’re, we’re anticipating changes from a changing climate and the those impacts, unless we are thinking proactively are going to be disproportionate. So vulnerability is really the operative consideration here. Is that part of the thinking?

Louie Krak (51:28):

I think so. And, and you articulated that well, in addition to DEP producing a climate action plan every three years, they also by statute, have to produce a climate impacts assessment. So we know climate change is happening, but how is it impacting Pennsylvanians today and how will it impact them in the future as well? So as part of that work, identifying those Pennsylvanians who are most vulnerable to the impacts of climate change is a key piece of the puzzle.

Josh Raulerson (52:04):

You know, and we take it as sort of axiomatic — and correctly, I think — that the point is to reduce emissions. The point is to address the climate crisis, that has to happen. But there is also a sort of a, an economic story here that maybe bears emphasis again: when we look at Pennsylvania staying economically competitive, especially in the industrial space, you know, why is this so important for Pennsylvania beyond just the, you know, the immediate issue of, of the climate?

Louie Krak (52:31):

Yes, there is a huge economic competitiveness piece to this story, starting with the, the small and medium sized manufacturers. Something that I learned in the development of RISE PA about why it’s so important for small and medium sized manufacturers to decarbonize is they are in the supply chain of the larger companies most often. And so when you think about a large industrial facility and what smaller facilities may have products that lead into or feed into that larger production, that large facility, if they want to get to net zero, they have to address their scope three emissions, which are their supply chain emissions. So if the small guys, if the, the small companies are not decarbonizing, the large ones can’t fully decarbonize either, and the large ones may have international clientele or parent companies that have really strong ESG goals or, you know, something that will put them at a competitive disadvantage if they can’t do what their shareholders want and decarbonize because they can decarbonize their supply chain or they can’t decarbonize the emissions that they directly produce their Scope one emissions that will impact their ability to be competitive in international places, like thinking about carbon border taxes and those sorts of issues. Really, it behooves industrial companies to really start thinking about the decarbonizing seriously, because if it’s not already impacting their bottom line, it certainly will in the future as the world as a whole moves towards a decarbonized economy.

Josh Raulerson (54:23):

Well, Pennsylvania’s priority Climate Action plan is available on the DEP website, as you mentioned, and we’ll include a link in the episode description for this conversation on the PEC website. Louie, congratulations on meeting that very tight deadline. I’m sure it’s been a very busy couple of months or years for you. And I know you’ve got a lot more on your plate, so I’ll let you get back to your very important work. But thank you so much for investing some time in, in this conversation. Thanks for being on the show.

Louie Krak (54:48):

Thank you so much, Josh and, and PEC for having me. This was a blast. As I said industrial decarbonization is something I love to nerd out about. It’s something I’m passionate about. So I really hope that everyone enjoys this really interesting conversation we got to have today. So again, thank you.

Josh Raulerson (55:09):

You can find the link to Pennsylvania’s freshly minted Priority Climate Action Plan on the PEC website in the show notes for this episode at pecpa.org. That’s the PEC website where you can get caught up on all of PEC’s activities, not just on energy policy, but also in reforestation trails and outdoor recreation watershed restoration and health and conservation focused economic development. We’ll be taking some more deep dives into energy policy soon on the podcast and on the PEC website, where lately we’ve been exploring the promise and the pitfalls of the regional clean hydrogen hubs taking shape in Pennsylvania, looking at Governor Shapiro’s proposals for a cap-and-invest carbon market and updated energy portfolio standards and celebrating wins in the ongoing effort to cap Pennsylvania’s hundreds of thousands of orphan oil and gas wells. Find all that content on the PEC website at pecpa.org and keep it bookmarked because we will be rolling out much more of that in the weeks and months ahead. Again, pecpa.org. There you can find all of our past podcast episodes. Of course, you can also subscribe in your podcast app of choice. We always appreciate a rating and review. Back Friday after next with another edition of Pennsylvania Legacies. Until then, for the Pennsylvania Environmental Council, I’m Josh Raulerson.