Josh Shapiro proposes state climate program to replace RGGI, and asks for new renewable energy goals

Shapiro estimates the proposals would save ratepayers $250 million over five years and create 14,500 jobs.

Pennsylvania Gov. Josh Shapiro speaks at a news conference at the United Association Local 524 union building in Scranton, Pa., on Wednesday, March 13, 2024.

Shapiro announced he would back legislation to make power plant owners in Pennsylvania pay for their planet-warming greenhouse gas emissions and require utilities in the nation's third-biggest power-producer to buy more electricity from renewable sources. (AP Photo/Michael Rubinkam)

This story originally appeared on StateImpact Pennsylvania.

Gov. Josh Shapiro is offering his own version of a controversial program to limit climate-warming pollution from power plants, and is setting new goals for how much energy Pennsylvania gets from renewable sources.

Shapiro estimates the two proposals would save ratepayers $250 million over five years and create 14,500 jobs.

The plans are getting praise from environmental and renewable energy groups, who have been pushing for a transition to cleaner energy sources, and pushback from industry groups and lawmakers who say the proposals will hurt the fossil fuel economy.

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Former Gov. Tom Wolf proposed joining the Regional Greenhouse Gas Initiative with 10 northeastern states in 2019. That effort is still tied up in court, as some Republican legislators and industry groups are trying to stop Pa. from joining.

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Now, Shapiro says he wants to create a Pennsylvania-specific program to cap carbon emissions and make power plants pay to pollute.

He’s calling it the Pennsylvania Climate Emissions Reduction (PACER) Initiative, and says it’s based on the conclusions of his RGGI working group.

That committee was made up of representatives from environmental, labor, and industry groups. It did not endorse a specific cap-and-trade program, but agreed that “reducing greenhouse gas emissions is necessary and inevitable, and that a cap-and-invest carbon regulation for the power sector that generates revenue to support the Commonwealth’s energy transition would be the optimal approach.”

The group also agreed any program should include measures to help avoid any potential emissions leakage, higher localized pollution, increased energy costs, and job loss.

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Under PACER, the state would determine a total pollution limit and power plants would need to buy credits to release emissions.

“We will set our own cap. We will set our own price for those carbon credits. And we won’t have any other state determining what is right for us here in Pennsylvania,” Shapiro said during a news event Wednesday at a Scranton union hall.

Shapiro said 70% of money raised through the program would go to electricity bill rebates.

Part of the remaining 30% would be used to help further lower bills for low-income Pennsylvanians and go toward clean energy and energy efficiency for homes and small businesses, Shapiro said.

According to a policy summary from the governor’s office, a share of the money could fund carbon capture and storage technology and retrofit natural gas plants with carbon capture equipment.

Shapiro said if the legislature passes this program, he will sign it into law and immediately pull Pennsylvania out of RGGI.

Environmental groups are encouraged by the move, but say they still support joining RGGI.

Jackson Morris, director of state power sector policy at the National Resources Defense Council and co-chair of Shapiro’s RGGI working group, said NRDC continues to believe that RGGI can deliver for Pennsylvania, and supports the defense of that regulation in court.

“But, we’re also open and eager to explore alternative approaches, such as what’s envisioned in the PACER legislation,” Morris said.

“We can and must forge a path forward together that tackles climate change, protects consumers, and creates family-sustaining jobs. With the tailwinds of the once-in-a-lifetime federal incentives for clean energy…there has literally been no better moment to seize this opportunity.”

Clean Air Council executive director Alex Bomstein said the plan shows the governor’s commitment to putting Pennsylvanians first.

“While we still view RGGI as the best power sector cap-and-invest program for Pennsylvania, we are excited to work with the Governor and the legislature on PACER to realize the greatest possible benefits for Pennsylvania residents, ratepayers, and workers alike,” Bomstein said.

In a statement, PennFuture said RGGI is a well-established program.

“RGGI has always served as a successful baseline policy,” PennFuture said. “This is why Pennsylvania developed its RGGI rule years ago, and why it should be the standard by which we judge all other proposals.”

Groups that have fought the state joining RGGI are also rejecting Shapiro’s alternative.

The Pennsylvania Coal Alliance said the plan puts Pennsylvania at a disadvantage and would shutter the few remaining traditional coal-fired plants in the state. The two largest remaining coal-fired plants are Conemaugh Generating Station in Indiana County and Keystone Generating Station in Armstrong County. Both have a capacity of more than 1,800 megawatts. Other large power plants have converted to natural gas or can switch between gas and coal.

The group said the only acceptable program would cover all the states Pennsylvania shares an electric grid with, including Ohio and West Virginia, because that would keep states in the region on the same playing field.

The Power PA Jobs Alliance, whose members have challenged the RGGI regulation and which the coal alliance belongs to, said a Pennsylvania-specific program would be similar to RGGI in that it would directly lead to unfavorable environmental and economic outcomes. The Alliance says those outcomes include job loss, higher localized pollution, and increased energy costs.

A Penn State analysis found joining RGGI could raise ratepayers’ electricity bills by about $43 per year.

State Senate President Pro Tempore Kim Ward (R-Westmoreland) said Shapiro should drop his court defense of RGGI before trying to have this conversation about Pennsylvania’s energy sector.

“Our Commonwealth needs to be focused on unleashing our energy potential, not taxing it,” Ward said.

Shapiro is also proposing an update to the state’s renewable energy goals.

The Alternative Energy Portfolio Standards, set in 2004, required the state to get 8% of its energy from Tier I renewable sources and 10% from Tier II sources, such as waste coal, by 2021. The state hit that goal and the standards have not been updated since.

Shapiro’s proposed Pennsylvania Reliable Energy Sustainability Standard (PRESS) increases the share of clean energy to 35% by 2035. It also restructures the classes of incentivized energy into three tiers.

Under his proposal, Tier I sources are solar, wind, low-impact hydropower, geothermal, small modular nuclear reactors, nuclear fusion technology, and fugitive emissions from coal mines and landfills. These would make up the 35% clean energy goal.

Tier II includes large-scale hydropower, natural gas or coal co-fired with 80% clean hydrogen, fuel cells, and biomass energy. This tier would start at 6% and rise to 10% by 2033.

The new Tier III includes waste coal, natural gas or coal co-fired with 20% clean hydrogen, and municipal solid waste. This tier starts at 3.8% and grows to 5% by 2032 under the plan.

Electricity used to create crypto currency would not be eligible for PRESS credit.

The Power PA Jobs Alliance also criticized this piece of Shapiro’s energy plan. It noted more than 80% of wind and solar power sold in Pennsylvania is generated outside the state, meaning money paid for those bills flows outside the state.

“Increasing the wind and solar mandate from 8 to 30 percent…will only serve to make this problem worse,” the alliance said.

Others who have been pushing for an update to the AEPS celebrated the announcement.

“We are thrilled that the Governor is now putting the weight of his office behind this initiative that will create tens of thousands of jobs. We look forward to working with the legislators on the details of the policy to maximize the benefits for homeowners, schools, nonprofits, farms, and businesses to go solar and save money on their utility bills,” said Sharon Pillar, executive director of the Pennsylvania Solar Center.

Sierra Club Pennsylvania chapter director Tom Schuster thanked Shapiro for proposing the largest increase in renewable energy in the state’s history.

“Pennsylvania has fallen woefully behind in clean energy development to the detriment of our air, water, and climate. The introduction of PRESS is such an important step that will begin to put Pennsylvania back on track to meeting our climate and clean energy goals and is a critical complement to a robust cap and invest program for climate pollution from the power sector,” Schuster said. “This package isn’t perfect and still includes some dirtier energy sources, but we can’t wait for perfection.”

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