Pennsylvania Governor Ed Rendell

Pennsylvania Governor Ed Rendell

Pennsylvania Governor Ed Rendell initially provided hope to those interested Pennsylvanians who view solutions to climate change through economic lenses. Sadly, on Wednesday, September 2, 2009, Governor Rendell announced that he is giving up on a policy likely to maximize net social welfare. He has backed down on his proposed 5% severance tax on Marcellus Shale natural gas extraction .

According to the Environmental Protection Agency, natural gas extraction and burning emits nitrogen oxides, carbon dioxide and methane. There are also considerable land and water resource use problems involved with the extraction of natural gas including  deforestation and water pollution The proposed five percent severance tax could have ameliorated these environmental harms by using the revenue to offset these damages. Jan Jarrett, President and CEO of PennFuture, an environmental advocacy group in Pennsylvania, attributes Rendell’s policy change to the ongoing budget impasse, and powerful natural gas lobbies in Harrisburg .

So why is it important  that a fairly progressive Governor waffled on correcting the market’s failure to incorporate external environmental costs? If the Governor doesn’t view taxing environmentally harmful pursuits such as natural gas extraction as time sensitive (even though 39 other states tax extraction or other forms of energy extraction, who will? For now the PA Speaker of the House, Rep. Keith McCall (D-Carbon) and Majority Chair of the House Environmental Resources and Energy Committee, Rep. Camille George (D-Clearfield) say their plans for the severance tax are “alive and well” How do we know that the powerful interest groups and lobbyists who swayed Governor Rendell will not pressure McCall and George as well?


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