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Shapiro’s proposals – rolled out during an appearance with climate advocates and union officials in Scranton – would create a Pennsylvania -specific system to force energy producers to pay for the greenhouse gasses they put into the atmosphere, and would also overhaul the state’s energy portfolio standards so that 50% of Pennsylvania’s energy would be sourced from zero or near-zero emissions sources by 2035.
Shapiro proposed the plan as a way to both address climate change and provide an economic stimulus, saying Pennsylvania’s leaders must “reject a false choice between protecting energy jobs and protecting the climate” and challenging legislators to move past the deadlock over the Regional Greenhouse Gas Initiative, or RGGI.
“If the legislature passes my plan, known as PACER, I will sign it and immediately remove the Commonwealth of Pennsylvania from RGGI,” Shapiro said. “Instead, in its place, we will have a Pennsylvania -made and Pennsylvania -run system.”
Shapiro, a Democrat, said bills for the new proposals are expected to be introduced in the legislature next week. But leaders of the Republican-controlled Senate – which has stressed concerns that carbon-pricing programs could hamper natural gas development – indicated Wednesday they are unlikely to take the deal.
“I am asking Gov. Shapiro to immediately drop the lawsuit that keeps RGGI in place, and then we can begin to have a real and inclusive conversation about the future of Pennsylvania’s energy sector,” Senate President Pro Tempore Kim Ward , R- Westmoreland County , wrote in a statement.
“The plan presented by the governor today bears many similarities to RGGI and raises many of the same concerns,” said Senate Appropriations Chair Scott Martin , R- Lancaster County , who, along with Senate Majority Leader Joe Pittman , R- Indiana County , also called for Shapiro to immediately drop the RGGI case.
PACER is the Pennsylvania Climate Emissions Reduction Act, which Shapiro said would operate under the same premise as RGGI, capping the emission of carbon-based pollutants and requiring power plants to buy allowances up to that limit, which they could trade based on output needs and fuel prices.
The sale of carbon allowances creates revenue for the state issuing them; 70% of these revenues would go toward electricity rebates for consumers that would save Pennsylvanians $252 million on their electricity bills in the first five years, Shapiro said, with the other 30% used to subsidize clean energy projects.
The second prong of Shapiro’s plan is an overhaul of the state’s energy portfolio standards, which require electricity suppliers to get their power from a certain mix of sources.
Under Shapiro’s plan, Pennsylvania would, by 2035, source 35% of its energy from wind, solar, and small-scale nuclear, another 10% from hydropower and emerging battery-storage technology, and an additional 5% from what the administration described as “ultra-low emission forms of natural gas and other traditional fuels.” Shapiro also encouraged the legislature to move forward on standards for carbon-capture technology that could cut pollution from fossil fuel generators.
The current portfolio standards, which date from 2007, require only an 8% mix of renewable sources, and are not universally-applicable. Natural gas-fired plants currently account for 55% of Pennsylvania’s electricity generation, according to federal data, with another 37% from nuclear and only 4% each from renewables and coal, the use of which has declined rapidly over the past dozen years with the arrival of cheap natural gas.
The two-piece proposal “will lower costs for consumers, reduce pollution in our communities, and protect and create energy jobs,” Shapiro said, and – as opposed to RGGI - “we won’t have any other state deciding what is right for us here in the commonwealth.”
RGGI is a cap-and-trade program operated by a group of northeastern states, including several of Pennsylvania’s neighbors. Shapiro’s predecessor, Tom Wolf , attempted to enter Pennsylvania into the system but was blocked in court by Republican lawmakers who said the carbon fees constituted a tax that needed legislative approval.
Shapiro appealed the case in what he said was the interest of preserving executive authority, and formed a working group to explore alternatives now contained in his plan.
The governor made his announcement at a union meeting hall, and while union membership may not be on board with everything in Shapiro’s plan, “at the end of the day, we have to get started,” said Rob Bair , president of the Pennsylvania State Building and Construction Trades Council .
Pennsylvania once led the nation in green energy buildout on the heels of the 2007 portfolio standards. But no major revisions have been made since, and the commonwealth now ranks near the bottom nationally on renewable energy construction, which often includes lucrative work for union tradespeople.
“When the governor told you we can’t afford to do nothing, he’s 100% correct,” Bair said.
Shapiro did not provide the fine details of his cap-and-trade program, such as exactly how the emissions limits and pricing would be determined. But the numbers he used were roughly in line with RGGI, which was expected to bring in $663 million to Pennsylvania in its first year, according to numbers in last year’s budget proposal.
Modeling done by Penn State in 2020 concluded that RGGI would cost consumers about $2 billion in the first nine years – but would be countered by $3.5 billion in revenues the state could use to offset energy bills, likely resulting in a net savings for the average household.
Fossil fuel advocates said Wednesday they feared Shapiro’s proposals would further squeeze coal and natural gas, the latter of which is largely responsible for Pennsylvania vying with Texas as the nation’s leading energy exporter.
Putting additional fees on power plants in Pennsylvania would incentivize importation of even dirtier energy from elsewhere on the interstate grid, and thus Shapiro’s plan “not only imposes economic harm on Pennsylvania’s reliable energy resources but incentivizes reliable energy production and future investments in surrounding states,” the PA Coal Alliance said Wednesday.
Environmental groups lauded Shapiro’s proposal as a sign of progress, praising the new portfolio standards and expressing optimism about the cap-and-trade, although many said they would need to see further details on how it compares to RGGI.
“We are open to exploring with the governor and the legislature other cap-and-invest options that would meet or exceed the benefits of Pennsylvania’s participation in RGGI,” the Clean Power PA Coalition wrote, adding that it’s “time for those in the legislature who continually create obstacles to RGGI and other measures to come to the table to help put an effective solution in place.”
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