Pennsylvania bailed on a carbon market to appease Republicans
Last month, Pennsylvania Governor Josh Shapiro withdrew from the Regional Greenhouse Gas Initiative, or RGGI (pronounced “Reggie”), a cap-and-trade program that sets a regional limit on carbon emissions from power plants located in the Northeast.
Here’s how RGGI works: Each year, credits allowing power plants to emit a certain amount of carbon dioxide, up to the cap, are auctioned. Proceeds from these auctions go to RGGI member states, who can reinvest them in clean energy and consumer affordability programs. Basically, the emissions cap gradually decreases over time, theoretically ensuring that total emissions continue on a downward trend.
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Pennsylvania is a giant within the program because it has higher electric sector emissions than all the other RGGI states – Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Delaware and District of Columbia – combined, so Shapiro’s exit sent a shockwave through the system. The Democrat withdrew from the package as part of a compromise aimed at convincing Republicans in the Legislature to pass the state budget, which has been delayed since June, forcing schools and public transportation to dip into rainy day funds or take on debt to support services.
As he signed the withdrawal bill, Shapiro said state Republicans had used RGGI “as an excuse to block substantive conversations about energy.” (Although Pennsylvania joined the regional compact in 2022, the move was immediately tied to ongoing litigation at the time of Shapiro’s withdrawal, meaning the state had not yet actually participated in the auction.)
“Today, that excuse is gone,” Shapiro added. “It’s time to look to the future – and I’m going to be aggressive in pushing for policies that create more energy jobs, bring more clean energy to the grid, and lower the cost of energy for Pennsylvanians.”
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But other Democrats and environmental advocates say the governor has essentially given away the store. “I would describe it as Faustian, except Faust got a lot more out of his deal with the devil,” Nikil Saval, a Democratic state senator, told Spotlight PA. Jackson Morris, senior director of state policy at the Natural Resources Defense Council, said Shapiro lost a chance to claim credit for a substantial environmental victory in a possible presidential campaign, which he is rumored to be considering.
Democrats “have basically been turned around,” Morris said. “The political calculus of all this is confusing. »
Pennsylvania first decided to join RGGI in 2019 through executive action by then-Governor Tom Wolfe, but the program immediately drew pushback from Republicans. A 2022 court order blocked the state from officially joining RGGI that year, then the Commonwealth Court ruled Wolfe’s executive action unconstitutional in 2023. That decision is currently being reviewed by the state Supreme Court, where Democrats retained their majority in last month’s election. But Shapiro’s decision renders that process moot.
“To add insult to injury here,” Morris said, “we were about to get the answer from the court. And now we’ll never get it, because they gave up.”
“It’s not just that we missed the ball on the 1-yard line, but then [we] I picked it up and sent it to the other end zone,” said Patrick McDonnell, president and CEO of the environmental group PennFuture of Pennsylvania. (The governor’s office declined to speak on the record with Grist.)
The RGGI has generated approximately $8.6 billion for participating states to date. Virginia, fresh off the victory of Democratic Governor-elect Abigail Spanberger, is currently on the verge of rejoining the program after being forced out by current Republican Governor Glenn Youngkin. When the court ruled Youngkin’s withdrawal illegal, Spanberger campaigned to return to the pact.
Some are more cautious in their criticism of Shapiro. “This decision [on RGGI] it doesn’t seem definitive to me,” said Dallas Burtraw, a senior researcher at the nonprofit research organization Resources for the Future.
In early 2025, Shapiro unveiled his “Lightning Plan,” a jobs and energy proposal that included what is known as the Pennsylvania Climate Emissions Reduction Program. Known as PACER, it is essentially a Pennsylvania-specific version of RGGI – a cap-and-trade program that gradually reduces emissions, creates tradable carbon credits that would be (theoretically) interchangeable with those of RGGI member states, and reinvests the profits to reduce consumer electricity costs. “Pennsylvania is an elephant compared to the rest of RGGI,” Burtraw said, explaining why the state would want to create its own program and later tie it into RGGI.
“It would have been amazing to see Pennsylvania join RGGI,” he said. “But I think we could chart a course that turned out for the better.”
Others are less convinced. Joining the RGGI was only possible, they say, because it was implemented through executive action. The chances of something like PACER making it through the Republican-controlled state Senate are slim.
“Pennsylvanians need and deserve serious plans to reduce greenhouse gas emissions, lower energy bills, and generate revenue,” Senator Saval said in a statement to Grist. “So far, Senate Republicans have shown little interest in even meager efforts along these lines. It’s hard to imagine that repealing RGGI would help them, so to speak, find religion on this front.”
Editor’s note: The Natural Resources Defense Council is a Grist advertiser. Advertisers have no role in Grist’s editorial decisions.
