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Pa. Governor Proposes State Carbon Cap Program, More Renewables

Updated: Mar 21

Pennsylvania Gov. Josh Shapiro recently announced a new two-pronged energy plan that would establish the state's own carbon emission reduction limits for power plants and update renewable energy requirements with ambitious new standards.

The plan proposes the Pennsylvania Climate Emissions Reduction Act (PACER) to establish a state-specific cap-and-invest program that will replace Pennsylvania’s controversial efforts to join the Regional Greenhouse Gas Initiative. RGGI is an initiative of 11 New England and Mid-Atlantic states to cap and reduce their power sector carbon dioxide (CO2) emissions by setting a regional cap, or limit, on emissions from electric power plants in the participating states. Allowances, equal to tons of CO2 that will enter the atmosphere from power plants, are auctioned quarterly, and electricity generators must buy the amount needed to cover their emissions, with the proceeds going to the states.

Shapiro’s predecessor, Tom Wolf, was a proponent of joining RGGI but the effort was tied up with legal challenges that argued he could not do so through regulation, and that legislative action was needed.

Shapiro said under the PACER program, Pennsylvania will determine its own limit on pollution from power plant emissions and set its own price for credits for those emissions that plant operators will have to buy. Under PACER, 70% of the revenue will be used to provide rebates to state residents on their electric bills, more than any other state in the U.S. Part of the remaining 30% will go to help lower bills for low-income residents and for energy efficiency projects.

The plan would save consumers $252 million in electric bills in the first five years, while generating more than $5 billion in investment in clean energy sources, a release states.

Shapiro plans to introduce legislation for the PACER program, and said when he signs it into law he will immediately remove Pennsylvania from RGGI.

The second part of the energy plan would update the state’s renewable energy standards with ambitious new goals. Pennsylvania was a national leader 20 years ago when it adopted the Alternative Energy Portfolio Standards (AEPS), which required an increasing percentage of the state’s electricity provided to consumers to be generated from renewable sources. The state has met the requirement, which is now 18%, and it has not been updated since 2004.

Shapiro’s proposed Pennsylvania Reliable Energy Sustainability Standard (PRESS) keeps all the elements of AEPS, but adds nuclear power and other forms of clean energy generation, like fusion and clean forms of natural gas. It will attract millions in new economic investment to the state and create 14,500 jobs, while improving energy reliability, a release states.

It will require the state to get 50% of its electricity from a range of energy sources by 2035, including 35% from Tier I sources that include solar, wind, hydropower, geothermal, small modular nuclear reactors, nuclear fusion and captured fugitive emissions from landfills and coal mines. Another 6-10% will come from Tier II sources that include large-scale hydropower, natural gas or coal used with 80% clean hydrogen, fuel cells, and biomass. Tier III sources, including waste coal, natural gas or coal used with 20% clean hydrogen, and solid waste, will represent 3.8-5% of the mix.

Shapiro said his plan also recognizes the “critical importance” of carbon capture, utilization, and storage (CCUS) to help reduce emissions. This emerging technology involves capturing carbon emissions at their source and injecting them deep underground into rock formations. The Washington & Jefferson College Center for Energy Policy and Management will hold a free webinar on this topic at 11 a.m. April 10. Registration is now open.

The plan predictably received a wide range of reaction, with environmental groups supporting it and fossil fuel industry groups expressing opposition. It will now be up to the state’s legislature to take the next step on whether to implement the ambitious plan.

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