PA Supreme Court Must Strike Down Shapiro’s Energy Tax

Tomorrow, the Pennsylvania Supreme Court will begin oral arguments about an energy tax looming over utility bills in the commonwealth: the Regional Greenhouse Gas Initiative (RGGI). Pennsylvanians are already paying some of the highest electricity costs nationally and face economic uncertainty with this new massive energy tax – unless the courts stop it.

RGGI, a multistate cap-and-trade program, functions more like a backdoor carbon tax. By imposing added costs on carbon-emitting power plants, RGGI jacks up electricity costs, resulting in economy-wide price hikes for already-burdened ratepayers.

Pennsylvania’s entry into RGGI was legally dubious from the start. In 2005, Gov. Tom Wolf forced Pennsylvania into RGGI via an unconstitutional executive order, bypassing the Pennsylvania General Assembly. The Commonwealth Court ruled that Wolf’s action enacted an unconstitutional tax without legislative approval. Gov. Josh Shapiro appealed the decision, bringing us to this moment.

Ironically, as a gubernatorial candidate, Shapiro was skeptical about RGGI. Calling the compact not “real action,” then-candidate Shapiro expressed genuine concerns about RGGI’s effectiveness, costliness, and legality. Unfortunately, Shapiro flip-flopped on RGGI, abandoning his campaign skepticism to appease environmental and green energy special interest groups.

But Shapiro’s initial distrust of RGGI was warranted.

RGGI is costly. Economic modeling shows it could raise electric bills by more than 30 percent—a burden falling hardest on seniors and low-income households​. The Independent Fiscal Office (IFO) projects $800 million in new energy taxes annually, funneling taxpayer money into environmental programs. These may now be conservative estimates, as some of the data inputs from these reports are from before RGGI allowances increased.

Moreover, RGGI is also wildly unpopular. Seven out of ten Pennsylvanians oppose governors creating energy taxes without legislative approval, and 75% reject RGGI once learning its economic implications. Considering that RGGI carbon tax would only raise costs, cut jobs, and diminish grid reliability, it’s no wonder that Pennsylvanians never warmed up to RGGI.

RGGI is a solution searching for a problem. Pennsylvania emissions have been steadily declining; power generation, however, has steadily increased. Pennsylvania’s grid is cleaner and more reliable today than when Wolf signed his unconstitutional executive order – something RGGI would undermine by punishing reliable forms of energy.

RGGI has failed to meaningfully reduce emissions in participating states. In fact, Pennsylvania has outperformed other RGGI states in reducing emissions – all without RGGI. Between 2018 and 2023, Pennsylvania emissions dropped by 9 million metric tons. Meanwhile, New York and New Jersey, two neighboring RGGI states, decreased only 1 million and 5 million metric tons, respectively.

So, how did Pennsylvania cut emissions while not sacrificing energy production? Two words: natural gas. The IFO credits Pennsylvania’s drop in emissions to the state’s transition to natural gas, which burns cleanly and emits nearly half as much carbon as coal.

Natural gas is Pennsylvania’s leading competitive advantage. The Keystone State is currently the second-largest natural gas producer and leads the nation in electricity exports. Energy production and power generation, especially natural gas, give Pennsylvania an economic edge – and RGGI undermines it.

Natural gas elevated Pennsylvania and the nation. Thanks to the Marcellus Shale boom, the United States became a net exporter of oil and gas for the first time in half a century.

And like Pennsylvania, the United States experienced a steep decline in emissions. Between 2005 and 2019, U.S. carbon emissions dropped by more than 800 million metric tons. The U.S. Energy Information Administration credits nearly two-thirds of that reduction to natural gas.

Yet, despite the benefits of natural gas, electricity demand is quickly outpacing supply.

The ravenous energy appetite of artificial intelligence and data centers will increasingly stress the grid. PJM Interconnection, the regional transmission organization responsible for the grid of 13 states (including Pennsylvania), has warned about impending blackouts. PJM cited the early retirement of gas- and coal-fired plants as a leading cause for these shortfalls, which is precisely what RGGI incentives.

Tomorrow’s oral arguments should illuminate RGGI’s ineffectiveness, costliness, and illegality. Ideally, the Pennsylvania Supreme Court will affirm the lower court’s decision and strike down RGGI. If the court rules in favor of Shapiro, the administration could implement RGGI almost immediately, triggering costly changes to energy pricing and investment.

Pennsylvania lawmakers and voters must be prepared to defend affordable and reliable energy. Moreover, they must hold Shapiro accountable and assert that Pennsylvania’s energy future must rely on good governance through the legislative process, not executive fiat.

RGGI is wrong for Pennsylvania. Energy policy should not prop up luxury beliefs that have real-world consequences. RGGI punishes working families, burdens ratepayers across the commonwealth, weakens grid reliability, and forfeits Pennsylvania’s energy leadership.