Josh Shapiro announces new plan to cap emissions in Pennsylvania

Speaking in Scranton on Wednesday, Gov. Josh Shapiro promised to pull Pennsylvania out of the Regional Greenhouse Gas Initiative – a controversial regional cooperative designed to reduce emissions from the electric generation sector – if state lawmakers can agree on a state-specific plan to control and reduce those same emissions.

The announcement came during a press conference in the Electric City where Shapiro unveiled a two-part energy proposal that calls for the creation of a new program to cap carbon emissions specifically designed for Pennsylvania, as well as a separate plan to increase the percentage of electricity generated from alternative sources. 

The governor said both proposals would need to be approved by the General Assembly, and that they would simultaneously help the state fight climate change and create jobs. 

“Pennsylvania’s energy industry has long created jobs, spurred growth and innovation and ensured consumers have reliable affordable power. But unfortunately … in recent years, we have failed to fully capitalize on that, and other states are moving fast to catch up and try and overtake us,” Shapiro said. “We need to be more competitive again in Pennsylvania.” 

One way Shapiro hopes to do that is through a new program to regulate emissions from the power sector called the Pennsylvania Climate Emissions Reduction Act, or PACER. Under the program, Shapiro said, the Pennsylvania Department of Environmental Protection would be in charge of setting emissions caps for the state’s 50-plus power plants, which would have to purchase credits from the state to offset their emissions.

“Let me be clear: This plan is tailored for Pennsylvania. We will not take direction from anyone outside of this commonwealth. This initiative will be established by us, run by us, and benefit us,” the governor said. We will set our own cap and price for those carbon credits, and we won't have any other state determining what is right for us here in Pennsylvania.”

Shapiro said the plan was inspired by the work of his RGGI Working Group, which was formed in 2023 to evaluate both the state’s planned entrance to RGGI and potential alternatives. In September, the group released a memo that included the finding that a cap-and-invest regulation for the power sector that generates revenue for the state “would be the optimal approach for the Commonwealth to meet the Governor’s charge to benefit the environment by reducing emissions.” However, the group did not reach consensus on how exactly to implement a cap-and-invest plan, though Shapiro’s PACER proposal offers a new way forward.

In 2019, then-Gov. Tom Wolf signed an executive order directing his administration to develop a cap-and-trade framework to limit carbon emissions from electric power generators in a manner that aligned with states participating in the Regional Greenhouse Gas Initiative. However, that regulation failed to take effect after the Commonwealth Court ruled that Wolf lacked the power to enter RGGI without legislative approval. “Stated simply, to pass constitutional muster, the Commonwealth’s participation in RGGI may only be achieved through legislation duly enacted by the Pennsylvania General Assembly,” Commonwealth Court Judge Michael Wojcik wrote in a November 2023 opinion.

The Commonwealth Court’s decision to void Wolf’s cap-and-invest effort is currently being appealed to the Pennsylvania Supreme Court, though Shapiro promised to pull Pennsylvania out of the cooperative entirely if lawmakers approve legislation adopting his state-specific approach. 

“If the legislature passes my plan, known as PACER, I will sign it and immediately remove the Commonwealth of Pennsylvania from RGGI,” he said. “Instead, we will have in its place a Pennsylvania-made and Pennsylvania-run system.”

Shapiro said Wednesday that 70% of the revenues from emissions credits will go toward electric bill rebates for Pennsylvanians, pledging that “no one in Pennsylvania will pay more for their electricity because of PACER.” He said the other 30% will go toward investments in communities with large energy production facilities, and said the revenues will also help fund clean energy and energy efficiency initiatives.

He also detailed a separate proposal, dubbed the Pennsylvania Reliable Energy Sustainability Standard, or PRESS, which he said would build on the state’s Alternative Energy Portfolio Standards Act – a law that requires electricity generators to generate a portion of their power from alternative energy sources. 

“PRESS calls for 35% clean energy by the year 2035,” Shapiro said. “It expands the number of zero-emission sources that could qualify. It won’t only be solar and wind, but also methane digesters, new fusion technologies (and) small modular nuclear reactors – all things that Pennsylvania has actually invested in in recent years, all things that we can be proud of, all things that are creating jobs and economic opportunity across Pennsylvania.”While Shapiro pitched his energy plan as something that could electrify Pennsylvania’s economy, it was met with a mix of responses from legislators, environmental advocates and the state’s business community. 

Democratic leaders in the Pennsylvania House welcomed the plan and praised Shapiro for focusing on clean energy. 

“Tackling the growing climate crisis demands a comprehensive approach – one that balances protecting our environment, strengthening our economy and cutting costs for families,” House Democratic leaders said in a joint statement. “Gov. Shapiro recognizes that Pennsylvania can and should be a clean energy leader, and House Democrats commend him on his leadership and for prioritizing this critical issue.”

Others were more skeptical. State Senate Majority Leader Joe Pittman, a Republican from Indiana County  who has said that Pennsylvania needs an “all-of-the-above strategy” on energy, said Wednesday that the “best way to swiftly advance meaningful discussions around energy policy is for Gov. Shapiro to remove the anvil of RGGI and drop his appeal to the Pennsylvania Supreme Court.”  

“It now appears the governor agrees with the Commonwealth Court’s ruling asserting a cap-and-trade program for electric generation is a tax on electricity and would require legislative approval,” Pittman said in a statement. “The governor correctly points out it is time we stop losing to Ohio, however, any cap-and-trade program applying solely to electric generation in Pennsylvania and not our competitors does not fit the bill.

“Families are feeling the strain of inflation and increased household expenses, which must be a chief concern when implementing any changes to energy policy,” Pittman continued. “Pennsylvania needs to put electric generation, grid reliability and consumer affordability first, and our Senate Republican majority will continue to focus on initiatives to promote investment and innovation here in Pennsylvania.”

David N. Taylor, president and CEO of the Pennsylvania Manufacturers’ Association, said Shapiro’s plan would cause “widespread destruction in every industry” in the state. “Pennsylvania is the largest exporter of electricity, second-largest producer of natural gas, and third-largest producer of coal in America,” Taylor said in a statement. “We power the grid, and our production is essential to American energy leadership and national security. Governor Shapiro’s energy tax will stifle Pennsylvania’s energy production, which will weaken America.”

Shapiro, however, suggested at Wednesday’s press conference that doing nothing to combat pollution and add new sources to the state’s energy mix would be a disservice to the state. 

“If they choose to do nothing, they’re choosing to be less competitive in an environment that demands us to bring excellence to the table every single day. They’re choosing to fall behind if they choose to do nothing. I’m sick and tired of falling behind other states on energy on economic development and creating jobs and economic opportunity for folks,” he said. “It’s time to do better.”