While labor, environmental, and consumer protection groups have met Shapiro’s proposal with optimism, state Senate Majority Leader Joe Pittman (R., Indiana) has pushed back, saying that any form of cap-and-trade program would be “a very difficult piece to support.”
He expressed openness to changing the state’s renewable energy standards but said that ultimately, “once the House sends it to us … understanding what those details are will be extremely helpful.”
One cornerstone of the plan is the Pennsylvania Climate Emissions Reduction Act, which would allow the state to cap the amount of carbon power plants can produce and force them to pay to emit pollution.
The idea is similar to the Regional Greenhouse Gas Initiative, a multistate cap-and-trade program championed by Wolf; Shapiro has not embraced it because he is unsure it would benefit consumer interests.
The other bill, dubbed the Pennsylvania Reliable Energy Sustainability Standards Act, would increase the amount of power electricity companies have to buy from renewable energy sources.
Here’s what you need to know about Shapiro’s proposals and their likelihood of passing the state legislature:
What is PACER?
During his run for governor, Shapiro declined to say whether he’d keep Pennsylvania in the Regional Greenhouse Gas Initiative.
RGGI is a cooperative of nearly a dozen states that agree to limit carbon emissions. These limits vary, but states coordinate them so that total reductions meet the initiative’s agreed-upon environmental goals.
Participating states require most power plants that operate within their borders to buy allowances to emit carbon, which can be purchased at quarterly auctions. Price floors and ceilings are set by the states. Each state recoups revenue, which can then be used for climate mitigation projects, for driving down consumer costs, or for other purposes.
Wolf made Pennsylvania a member through executive action, but the state’s participation has so far been blocked by courts.
A few months after taking office, Shapiro convened a working group to evaluate RGGI and possible alternatives. The group recommended the state pursue cap-and-trade to meet Shapiro’s goals to meaningfully address climate change while also protecting jobs and consumers.
PACER would give the commonwealth the ability to set its cap on carbon emissions, rather than use one determined by the RGGI program participants collectively. The program would be run by the Department of Environmental Protection, Shapiro said.
The state would be free to decide what to do with the revenue, and Shapiro wants to use the bulk of it to fund electric bill rebates. (Because of the way Wolf justified Pennsylvania’s entry into RGGI, the state would be required to put allowance revenue into the Clean Air Fund, which supports pollution reduction efforts.)
Shapiro has said that if the legislature passes PACER, he will pull out of RGGI.
Groups that favor cutting emissions have largely come out in support of PACER, but have expressed concerns about the lack of key details.
Namely, they want to know how DEP would determine how much carbon polluters can emit and how much they would have to pay to emit. How the carbon auctions will be administered and how frequently auctions would take place are also among environmentalists’ concerns.
Rob Routh, a policy director at the Natural Resources Defense Council, wonders if PACER will use the same cap on carbon emissions as RGGI. If lawmakers limit DEP’s ability to set a carbon cap to appeal to energy companies or state Senate Republicans, PACER could prove less effective than its interstate counterpart.
Routh also questioned whether out-of-state energy companies would be able to participate in PACER’s carbon allowance auctions. RGGI’s auctions are regional, meaning an energy company in Connecticut can buy an allowance from Rhode Island, for example, which creates a large market.
Routh added that he broadly supports Shapiro’s initiative “so long as any cap-and-invest program can deliver equivalent or superior benefits” to RGGI.
Currently, two other states have their own cap-and-trade programs: California and Washington. They set carbon caps, which apply to power plants, fuel distributors, and other related industries, and they host quarterly auctions.
One clear difference between RGGI and PACER is the way Shapiro proposes to spend revenue. Rather than automatically funneling it into the Clean Air Fund, as RGGI would do, Shapiro says he wants PACER revenue to go toward programs that would cut utility costs.
Shapiro calls for 70% of the revenue to be returned to consumers in a rebate that would be deducted from residents’ electric bills, which he projected would…
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