Lawmakers Should Take a Mulligan When Governor Wolf Vetoes Tax Credit for More Petro Plants

Stephen Herzenberg and Marc Stier |

HARRISBURG – Keystone Research Center economist Stephen Herzenberg and Pennsylvania Budget and Policy Center director Marc Stier issued the following statement in the wake of the Pennsylvania General Assembly’s approval yesterday of a multimillion-dollar tax credit for future petrochemical and fertilizer plants that use Pennsylvania natural gas as a feedstock.

“We strongly urge Governor Wolf to veto HB 1100, an  inadequately considered subsidy for petrochemical companies and then urge lawmakers of both parties to reconsider their support so that the governor’s veto is sustained. Doubling down on subsidies for petrochemical and plastics companies at this moment of history is like buying more deck chairs for the Titanic.”

“The minimum due diligence the Pennsylvania General Assembly should demand of itself is to ask the Independent Fiscal Office to evaluate the advisability of this subsidy, considering:

  • the consequences of expanding petrochemical production in western Pennsylvania for carbon emissions and other pollutants, and for cancer rates and public health.
  • the viability of Pennsylvania’s fracking industry, which has lost billions of dollars in the past decade, and without which future petrochemical plants will not have low-cost inputs.
  • the global plastic waste crisis and the likelihood that state and national bans of single-use plastic could curtail market growth.
  • the high subsidy cost per job and the limited job potential of capital-intensive petrochemical production. Even in Texas, the petrochemical industry is one out of every 650 jobs (versus one out of every 2,850 in Pennsylvania).
  • the jobs, environmental, and public health impacts of redeploying the same subsidy dollars towards renewable energy, energy efficiency, sustainable manufacturing, and other green industries.
  • the impact of foregone tax revenues on Pennsylvania’s ability to invest in public goods such as education and infrastructure.”

“The state has no business subsidizing a mature industry, especially given the negative externalities of petrochemical production which impose additional—and potentially much larger costs—on taxpayers. Instead, Pennsylvania should negotiate an agreement with West Virginia and Ohio not to subsidize petrochemical expansion.”

“The passage of this bill smacks of the increasing desperation—and lobbying ferocity—of a once-profitable petrochemical industry now desperate for subsidies. Even with subsidies, this industry is potentially headed for extinction. Lawmakers need to think much longer and harder about this bill when Governor Wolf gives them a chance to do that.”