A climate initiative to place limits on carbon dioxide pollution from Pennsylvania’s power sector was found unconstitutional Wednesday by the Commonwealth Court.
Under former Gov. Tom Wolf, Pennsylvania joined the Regional Greenhouse Gas Initiative (RGGI) in 2019. Entry into RGGI means power plants pay for each ton of carbon dioxide they produce. Wolf’s unilateral decision to enter the multi-state RGGI via an executive order and minus input from the state legislature was deemed by state Republicans and industry groups to be unconstitutional.
The court agreed with Pennsylvania’s Republican Senators and energy interests, and in its ruling stated it reaffirms its determination that the tax was imposed by the state’s Department of Environmental Protection (DEP) and Environmental Quality Board (EQB) “in violation of the Pennsylvania Constitution.”
The ruling from the five-judge panel was met with varying responses.
Luke Bernstein, president and CEO of the Pennsylvania Chamber of Business and Industry, said in a statement that the chamber agreed with the court’s conclusion that joining RGGI would result in a tax on energy producers and that the power to tax lies only the state legislature. Bernstein said this point was emphasized in an amicus brief the chamber submitted with various other groups.
Bernstein said the PA Chamber also shared the concerns of businesses, labor, consumers, and lawmakers that entry into RGGI would threaten to significantly increase energy prices.
“Policymakers should embrace abundant domestic energy production, facilitate building new infrastructure, support competitive markets, and set long-term policies that encourage innovation and prioritize reliability,” Bernstein said. “This comprehensive approach is congruent with emissions reductions goals, and Pennsylvania – which is second nationally in the reduction of greenhouse gas emissions since 2005 – should continue these efforts.”
Bernstein said the regulation did not sufficiently protect Pennsylvania’s electricity and manufacturing sectors, and it failed to guard against the potential for a significant run-up in electricity or commodity prices. Businesses, he added, need affordable energy and long-term certainty.
“We encourage the governor (Josh Shapiro) to let the court’s decision stand and continue working with stakeholders and the General Assembly on policy that leverages our state’s strengths for the benefit of our economy, national security, and the environment,” said Bernstein.
Pennsylvania Senate Appropriations Committee Chair Scott Martin, R-Strasburg, called the court’s ruling a win for Pennsylvanians.
“The real winners today are Pennsylvanians who will not suffer from even higher electricity bills, fewer jobs, and less investment in our communities as a result of the RGGI carbon tax scheme,” Martin said in a statement.
Martin said the ruling affirms that RGGI is a tax on energy that can only be enacted by the General Assembly, not unilaterally imposed by the Executive Branch.
“With that question settled, we are hopeful Governor Shapiro will make good on his campaign promise to work toward creating an energy strategy that supports the responsible development of our natural resources, protects grid reliability and maintains Pennsylvania’s status as a worldwide leader on energy,” said Martin.
Shapiro created a work group to find if RGGI would address climate change, create and protect energy jobs, and assure affordable power for consumers. The group did not come to a unanimous decision on RGGI but did state its support for a cap-and-trade program.
The court’s decision is a setback to environmental activists who believe joining the RGGI would propel Pennsylvania toward more climate-friendly energy sources.
The Environmental Defense Fund (EDF) issued a statement calling RGGI the optimal path for Pennsylvania to cut climate pollution, protect consumers, and win jobs in the new clean economy.
Executive Director Amanda Leland said in a statement that the EDF is “deeply disappointed” with the court’s decision to strike down the state’s RGGI regulation.
“EDF has moved to intervene in the case and is reviewing the decision now,” Leland stated. “RGGI is a long-proven, flexible cap-and-invest program to reduce power plant air pollution. The Pennsylvania Department of Environmental Protection has clear authority to limit carbon pollution from the power sector.”
Leland said that if Pennsylvania were currently participating, RGGI would have already started cutting power plant emissions and would have provided support for programs that can clean the air to protect Pennsylvanians from pollution.
Leland noted that earlier this year, Shapiro’s RGGI Working Group found that a program to limit pollution and invest in Pennsylvania’s future is the “optimal” approach for the state and that cutting air and climate pollution from power plants was both inevitable and necessary.
“We agree with (Shapiro) that the state’s Environmental Rights Amendment, which enshrines the right to clean air and pure water for all Pennsylvanians, is a guiding principle we should all follow and that is consistent with what RGGI can provide,” Leland said.
Climate change advocacy group Evergreen Action called the court’s decision the wrong one in that it further delays Pennsylvania’s participation in RGGI. Evergreen Action Deputy State Policy Director Julia Kortrey said it marked “a disappointing setback” for Pennsylvania’s economy, communities, and climate.
“But this is not the end of the story,” Kortrey said in a statement. “To protect the economy, grow clean jobs, and safeguard public health, we trust Governor Shapiro will appeal immediately.”
Kortrey said that Pennsylvania communities and businesses have seen state and federal clean energy investments blocked by red tape and lawsuits.
“Republicans in the state legislature are keeping Pennsylvania mired in litigation instead of ensuring their constituents benefit from participation in RGGI,” Kortrey stated. “Their obstruction is responsible for these unnecessary delays and today’s misguided ruling by the Pennsylvania Commonwealth court.”
Kortrey cited findings from a report independently produced for Evergreen Collaborative and Ceres exploring the economic benefits of Pennsylvania’s participation in RGGI. The findings were reported by Synapse Energy Economics and included the following:
- An estimated $1.5 billion reduction in energy costs for Pennsylvania’s residents, businesses, and industrial sector.
- A net decrease of $24 annually for the average household in utility bills.
- $930 million of additional federal funding coming to Pennsylvania through Inflation Reduction Act (IRA) tax credits for solar, wind, and storage projects.
Kortrey said full participation in RGGI is crucial for Pennsylvania to maintain economic competitiveness across the region, bring in clean energy jobs, and reduce climate pollution.
“Governor Shapiro’s administration has rightly defended Pennsylvania’s authority to participate in RGGI throughout this year,” Kortrey said. “We strongly urge the governor to continue doing so and swiftly appeal this decision to the Pennsylvania Supreme Court.”
Shapiro and the DEP have 30 days to appeal the decision.