Gov. Josh Shapiro said he would immediately pull Pennsylvania out of a multi-state carbon cap-and-trade program if the state Legislature passes his energy plan, which he said Wednesday would reduce carbon emissions while lowering energy costs and creating clean energy jobs.

Instead of participating in the Regional Greenhouse Gas Initiative (RGGI), Pennsylvania would set its own caps on carbon emissions and require power plants to buy credits to burn fossil fuels. The revenue generated would be returned to consumers as electricity bill rebates and invested in power plants and energy efficiency improvements for homes and small businesses, Shapiro said.

“We’ve got to reject the false choice between protecting energy jobs and protecting the planet. We can do both. We must do both. And doing nothing at this moment is not an option,” Shapiro said in an announcement Wednesday in Scranton, known as the Electric City for its early adoption of electrified street cars. 

In his announcement, flanked by labor and environmental officials, Shapiro called for two legislative measures to put his energy policy into law. 

The Pennsylvania Climate Emissions Reduction Act (PACER) would create a cap-and-invest program to incentivize reducing carbon emissions from electrical generation and produce revenue to support the state’s energy transition, the governor’s office said.

Shapiro also called on lawmakers to pass the Pennsylvania Reliable Energy Sustainability Standard (PRESS) to modernize and expand the commonwealth’s range of alternative energy sources to include next-generation nuclear, fusion, and carbon capture technologies. It would require 35% of Pennsylvania’s electricity to come from clean sources by 2035. The updated standard would open Pennsylvania to new investment and create 14,500 jobs, the governor’s office said.

Shapiro said the energy plan would capitalize on Pennsylvania’s legacy as an energy leader, noting at Wednesday’s press conference that the first U.S. coal mine was in nearby Pittston, and as the largest net exporter of energy in the country. More than 30% of the electricity produced in the commonwealth is sold to homes and businesses in other states, Shapiro said.

“That’s a unique position of strength. And it is a unique opportunity for all of us if we seize this moment. My plan takes advantage of that position to invest the money we get through this plan back into the good people of Pennsylvania,” Shapiro said.

Pennsylvania Democrats seek balance between environmental policy and loyalty to labor

Labor leaders from building and construction trades, steamfitters and laborers joined Shapiro for the announcement and praised his advocacy for energy sector workers. Pat Dolan, business manager for United Association Local Union 524, said energy policy is crucial to workers who maintain and improve power plants and upgrade schools and other buildings to make them more efficient.

“That’s job creation that is so key to everything that we do,” Dolan said.

Jackson Morris of the National Resources Defense Council said PACER and PRESS could make Pennsylvania a national leader with a “vibrant and equitable” clean energy economy.

“We – labor, environmentalists, and consumer interests – are all in this together. Because if we don’t act now, Pennsylvania will be left behind,” Morris said.

Gov. Tom Wolf’s administration entered Pennsylvania into the RGGI compact as its 12th state in 2022.  Opponents of Pennsylvania’s membership said it constituted an illegal tax on energy consumers and was an overreach of the governor’s executive authority. 

In November, a Commonwealth Court panel ruled in favor of power and coal companies and labor unions that sued the Wolf administration, saying the revenue generated by the sale of carbon credits through RGGI was an unconstitutional tax. 

The Shapiro administration is appealing the decision in the state Supreme Court. 

GOP lawmakers said after Shapiro’s announcement Wednesday that they are focused on energy policy but said Shapiro’s plan falls short of their goals.

“Instead of coming to Pennsylvanians with a mixed bag of half measures, Gov. Shapiro should immediately pull Pennsylvania out of RGGI and work with Republicans in the General Assembly on real and direct ways we can support Pennsylvania’s growing energy economy and lower costs on Pennsylvania’s families and businesses,” House Minority Leader Bryan Cutler (R-Lancaster) said. 

Cutler’s spokesperson said Republican energy policy for the last 13 years has included increased production of oil and gas in the commonwealth and enhancing the state’s electricity supply with an all-of-the-above strategy to improve grid reliability. House Republicans will continue their efforts with legislation this session, spokesperson Jason Gottesman said.

Shapiro says state will appeal Commonwealth Court’s RGGI decision

Senate Majority Leader Joe Pittman (R-Indiana) called on Shapiro to drop the state’s appeal of the Commonwealth Court ruling.

“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,” adding that a cap-and-trade program that applies only to Pennsylvania electricity producers “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. 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,” Pittman said in a statement. 

Shapiro convened a working group of environmental, energy and labor leaders last April to evaluate Pennsylvania’s membership in RGGI in the context of a three-part test considering the goals of protecting and creating energy jobs, action to address climate change, and ensuring affordable and reliable energy for consumers. 

It concluded in September that reducing greenhouse gas emissions was necessary and inevitable, and that a cap-and-trade regulation that generates revenue to support the commonwealth’s energy transition would be optimal. It didn’t reach a consensus on whether to pursue those goals through RGGI or an agreement with a smaller number of states. 

Shapiro said he would follow the working group’s recommendations to replace RGGI with either a cap-and-invest plan for Pennsylvania alone or incorporating the 13 states in the PJM Interconnect, which coordinates the distribution of wholesale electricity throughout the mid-Atlantic and beyond. 

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Clean energy business associations applauded the plan, saying the goal of 35% clean electricity would maximize the deployment of new energy sources while maintaining a strong foundation of legacy energy industries. 

“Gov. Shapiro’s proposal should help jump start conversations in Harrisburg about how best to bring clean energy’s massive economic and jobs benefits to Pennsylvania,” said Nick Bibby, Pennsylvania state lead for Advanced Energy United. “

Power PA Jobs Alliance, a coalition of about 30 local unions and coal-related companies, said that while Shapiro expressed skepticism about RGGI as attorney general and as a candidate, his proposal Wednesday was “virtually the same carbon tax on electric generation.” 

The group said Shapiro’s working group stressed that the commonwealth’s energy policy must not cause increased energy costs, job loss, higher localized pollution or allow carbon emitters to move their operations beyond the reach of regulation.

“A Pennsylvania specific carbon tax-and-trade program … would not avoid, but directly lead to these unfavorable environmental and economic outcomes for Pennsylvania,” the group said.