How Pennsylvania Plans to Price Carbon (with a Dividend!)

Pennsylvania Gov. Josh Shapiro has received international attention recently as Kamala Harris’s runner-up candidate for vice president. As the popular Democratic governor of a populous swing state, he is an up-and-coming star with national ambitions.

Largely unreported in all the recent coverage is Shapiro’s proposal earlier this year for a statewide carbon pricing program called the Pennsylvania Climate Emissions Reduction Act (PACER). The proposal would pull Pennsylvania out of the somewhat desultory 11-state Regional Greenhouse Gas Initiative and impose a “cap and invest” program somewhat akin to the ambitious system Washington state put into effect last year.

But Shapiro, a smart politician and reformer, isn’t making the same mistake that Gov. Inslee made in Washington, where residents and consumers see none of the revenue directly. Washington’s “cap and invest” law faces possible repeal by disgruntled voters this November.

Instead, Shapiro’s announcement stressed,

The benefits of PACER will be passed on directly to Pennsylvania consumers. Under PACER, 70% of the revenue will be directed back to Pennsylvania residents as a rebate on their electric bill – more than any other cap-and-invest program in the nation – resulting in long-term, price relief on energy costs.

In addition to reducing emissions and saving Pennsylvanians money on their bills, PACER will support projects that reduce air pollution in Pennsylvania; further lower costs on energy bills for low-income Pennsylvanians; and invest in new job-creating clean energy projects – such as carbon capture and storage, geothermal deployment, and clean hydrogen – in energy communities that have hosted coal, oil, or gas infrastructure.

PACER allows Pennsylvania to chart its own energy future, independent from the influence both from foreign oil and other states’ energy policies. PACER leverages Pennsylvania’s strengths to lower costs, create jobs, and protect our environment.

There you have all the powerful selling points spelled out clearly: lower costs, cleaner air, more jobs, and energy security. That’s a winning message.

24593_gov_energyPlan_03.jpeg
Shapiro pitches carbon cap-and-invest plan to capitalize on Pennsylvania's energy exports • Pennsylvania Capital-Star (penncapital-star.com)

In addition, Shapiro proposed enacting a Pennsylvania Reliable Energy Sustainability Standard (PRESS), which would mandate cleaner forms of energy “to build out a more diverse, reliable, and affordable energy sector.”

Attentive to the influence of fossil fuel interests in the state, he adopted a carefully balanced approach: “PRESS requires Pennsylvania to get 50% of its electricity from a diverse range of energy resources by 2035, including 35% from the clean energy sources of today and the future like solar, wind, small modular reactors, and fusion, 10% from sustainable sources like large hydropower and battery storage, and 5% from ultra-low emission forms of natural gas and other traditional fuels.”

Last but not least, “Governor Shapiro’s plan includes commonsense protections for consumers against unfair practices like excessive reconnection fees and greater access to medical waivers, along with other measures that protect Pennsylvanians and help them pay their utility bills.”

In all, his office declared that the proposal would save energy consumers a quarter billion dollars in the first five years and create nearly 15,000 new energy jobs.

Despite his carefully balanced plan, many state Republican legislators are critical of what some call “cap and tax.” Passing the plan through Pennsylvania’s divided legislature will take some heroic maneuvering—or perhaps a decisive voter revolt against MAGA in November. Either way, CCL volunteers should take note of this critically important state initiative.

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