Shapiro’s Carbon Tax Plan Is Unnecessary, Unpopular and Harmful

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Governor Josh Shapiro announced this month that he plans to implement what he calls the Pennsylvania Climate Emissions Reduction (PACER) Initiative, a “cap-and-trade” program that would tax carbon-emitting businesses. The tax scheme is both unpopular with voters and loaded with painful consequences for businesses and residents alike.

PACER is also strikingly similar to the Regional Greenhouse Gas Initiative (RGGI), a multi-state carbon cap-and-trade pact that Gov. Tom Wolf had previous tried and failed to unilaterally implement here in Pennsylvania. A Commonwealth Court ruled that RGGI is an illegal tax last November. PACER is merely a Shapiro rebrand of RGGI.

Shapiro nevertheless says that PACER aligns with his administration’s three key priorities for any new energy initiatives: (1) protect and create energy jobs, (2) reduce greenhouse gas emissions, and (3) ensure reliable, affordable energy for consumers.

Yet, the market is already achieving these goals, demonstrating the futility of RGGI or the governor’s homegrown PACER version. Pennsylvania’s energy sector is the commonwealth’s leading job creator, providing not only 93,000 jobs directly but also accounting in some way for more than 424,000 total jobs statewide.

PACER, Shapiro believes, would create 14,500 jobs – a modest figure compared to our current robust energy workforce. And his projection doesn’t factor in the jobs lost to PACER, a likely result when new taxes increase business costs for employers.

Pennsylvania has already significantly shrunk its carbon footprint. The Independent Fiscal Office (IFO) calculates that, between 2018 and 2023, the commonwealth reduced emissions by nearly 11% while expanding its energy output. In fact, IFO’s findings show Pennsylvania, alongside Ohio, as the only two states in the region to reduce emissions and boost generation – the best of both worlds.

What’s driving this drastic reduction in carbon emissions and increased production? The transition to natural gas is the primary reason. Carbon Brief, a website funded by the European Climate Foundation, called the national shift to natural gas “the largest driver” for carbon reduction. Between 2001 and 2022, U.S. gas generation “more than doubled while emissions dropped 38%, according to the International Energy Agency.

If Shapiro is genuinely committed to addressing and mitigating climate change, he must embrace – not further tax and regulate – Pennsylvania’s preeminent clean natural gas industry.

The only thing threatening to undermine this dynamic market is government bureaucracy.

Pennsylvania’s Alternative Energy Portfolio Standards Act (AEPS) mandates that energy suppliers produce certain percentages of their electricity from alternative sources, such as wind and solar. Shapiro wants to up this regulatory ante with the proposed Pennsylvania Reliable Energy Sustainability Standard (PRESS), which raises AEPS’s minimum standard to 35 percent, guaranteeing higher energy costs and threatening grid reliability.

Shapiro won’t publicly admit that his proposals will raise utility bills, but hardworking taxpayers can read between the lines.

About 70% of PACER revenue would go toward consumer rebates. By proposing such a giveback, Shapiro admits that consumer electricity rates will rise under PACER. Rather than subsidized rebates, Pennsylvania would be better served by avoiding artificially inflated prices.

PACER would funnel the other 30 percent of extracted revenue into a state bureaucracy for renewable-energy pet projects. This will amount to a corporate welfare scheme for renewable-energy companies and environmental special interests that donate to political candidates and lobby heavily for taxpayer-funded handouts.

Polling, released this week by the Commonwealth Foundation, reveals that Shapiro should tread lightly with his energy policies. Pennsylvania voters are far more concerned about rising energy costs than exaggerated environmental alarmism. Moreover, 81% listed energy affordability as a determining factor in their voting. Though he’s not up for reelection this year, Shapiro should weigh carefully what these polls reveal.

Shapiro, who frequently references his competitiveness, needs to reconsider his proposals. PACER and PRESS would only make Pennsylvania uncompetitive. By imposing a carbon tax and overregulating energy markets, Shapiro will effectively signal industry leaders to find friendlier investment and regulatory environments outside Pennsylvania.

Shapiro, like most Pennsylvanians, cares about protecting our environment and natural resources. But that does not mean he should force us all down an economically disastrous path. Instead, he should chart a new course that maintains Pennsylvania’s prominent position as a clean energy-exporting state and encourages market forces to provide jobs and reliable, affordable energy across the commonwealth.

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