Governor Josh Shapiro recently presented his proposals for Pennsylvania’s state budget, reviving past initiatives with new measures like the Pennsylvania Climate Emissions Reduction Act (PACER). This act, a carbon cap-and-trade program, aims to tax carbon dioxide emissions from energy sources, positioning it as a localized alternative to the Regional Greenhouse Gas Initiative (RGGI), previously advocated by former Governor Tom Wolf.
PACER proposes to maintain emission control through a trading system of allowances, akin to RGGI, which capped emissions and allowed energy producers to trade allowances at auction. Despite initial auction prices under RGGI being projected around $3.57, recent figures have surged to $20.05 per allowance. The Pennsylvania Independent Fiscal Office warned that such costs, potentially leading to $781 million annually, would likely be passed onto consumers and might adversely affect the state’s electricity production.
Shapiro, who has been critical of RGGI, suggests that PACER would keep all generated revenues within Pennsylvania. He plans to use 70% of these funds to reduce consumer electricity bills, with the remainder supporting clean energy projects.
The initiative emerged from the governor’s RGGI Working Group, established in 2023 to evaluate the state’s involvement in RGGI and explore alternatives. The group, while not endorsing RGGI, showed some receptiveness to a cap-and-trade model involving Pennsylvania and its neighbors.
However, critics argue that such programs merely shift energy production and associated emissions to states outside the cap-and-trade system, potentially harming local economies and job markets. A 2021 analysis suggested that a carbon tax could cost Pennsylvania up to $2 billion in annual electricity sales, 22,000 jobs, and $7.7 billion in economic activity.
Senate Republicans have expressed skepticism about PACER, emphasizing the negative economic impacts similar to those projected under RGGI. They argue for a non-punitive approach to energy policy that avoids jeopardizing the state’s baseload electricity generation.
As the debate continues, concerns about the reliability of the energy grid loom large, with significant reductions in baseload capacity anticipated due to current policies. Critics urge immediate action to address potential shortages in reliable energy generation, advocating for investment in facilities capable of meeting future demands.
