After Years of Sparring, Gov. Shapiro Abandons Pennsylvania’s Landmark Climate Initiative  

When the Republican minority leader of Pennsylvania’s state House took the podium, as final floor debate over the state’s months-delayed state budget kicked off, he was resolute: A landmark climate initiative — which he dismissed as a “specter” — was holding back the state.

“After today,” said Rep. Jesse Topper, who is from south central Pennsylvania, “that specter will be gone.” 

As he spoke, he celebrated what environmentalists and some Democratic lawmakers have for weeks been warning the state not to do: Leave the regional carbon-trading program that it set out to enter in 2019. 

A key pillar of former Democratic Gov. Tom Wolf’s climate legacy, the 10-state compact caps the amount of planet-warming emissions that power plants within it are allowed to release. It also requires the plants to purchase the ability to emit carbon via quarterly auctions, whose proceeds are invested in environmental initiatives like energy efficiency and renewable energy projects. Trade unions and fossil fuel industry trade groups have long argued that the carbon trading program would stymie the state’s energy industry and lead to higher utility bills. 

Environmentalists, meanwhile, saw the Regional Greenhouse Gas Initiative, known as RGGI, as an effective way to curb emissions from the power sector, though some argued the program did not go far enough. Pennsylvania is the fourth largest greenhouse gas emitter in the nation, and for years, RGGI was considered its landmark climate policy.

The state’s entry into the compact fueled years of partisan sparring and two unresolved lawsuits that await a verdict from the state Supreme Court. As part of the deal to drop out of the compact, Democratic Gov. Josh Shapiro’s administration, a party in both cases, is pulling out of the lawsuits. 

Democrats spent years staving off attacks from Republicans and the fossil fuel industry over the program.

To end a months-long budget impasse, Democrats did not just fold to these sustained attacks on Nov. 12, but conceded to offer RGGI as a “bargaining chip” to bring Republicans back to the bargaining table, Spotlight PA reported. Pennsylvania is now the first state with a Democratic governor to leave the regional climate program, which includes New York, New Jersey and Massachusetts. 

“It was a shocking reversal on a very significant climate policy,” said Jen Quinn, legislative and political director at the Pennsylvania chapter of the Sierra Club. “I don’t think there’s any other way to say it besides [we are] shocked and disappointed.” 

The move came as part of a $50.1 billion budget that Shapiro signed into law 135 days after the June 30 annual deadline to do so — ending a bitter impasse that left schools, counties and nonprofits without funding, and that overlapped with the 43-day federal government shutdown.

Gov. Shapiro’s office did not comment on the record regarding the move to pull out of RGGI. 

Tucked into the budget were a mixed bag of climate policies, including a renewed $25 million for a hotly demanded grant program to install solar panels on schools — the same appropriation the program received last year. The budget also repeals the hold state lawmakers put on the use of millions in federal funds for low-income residential solar projects last year. The Environmental Protection Agency under President Donald Trump has attempted to repeal those funds, a move that the Shapiro administration has countered with a lawsuit. Despite progress at the state level, the program is still in limbo. 

“It’s like a drop in the bucket,” David Masur, executive director of nonprofit PennEnvironment, said of the impact of solar funding in this year’s budget compared to the losses that come with eliminating RGGI (pronounced Reggie).

The deal also includes new provisions requiring state regulators to hit shorter deadlines throughout the permitting process for certain industrial projects, deeming some approved if those deadlines are missed — a move environmentalists fear could lead to projects being rubber-stamped. A spokesperson for the Shapiro administration told Capital & Main the measure amounts to “providing more certainty for businesses while still providing the environmental and public health protections that Pennsylvanians deserve.” 

The budget also includes a provision requiring state utility regulators to audit the way the region’s grid operator, PJM, calculates future demand on the grid, a process known as load forecasting. If PJM overanticipates demand, taxpayers could get stuck footing the bill for unneeded energy projects. If it underestimates it, they could see rolling blackouts. Getting it right is crucial, advocates say. 

Though she considers solar funding and increased attention to load forecasting as wins for consumers and the climate, Quinn, the Sierra Club legislative director, said this year’s budget package is, on the whole, “a step backwards.” 

Rep. Greg Vitali, Democratic chair of the House Environmental and Natural Resource Protection Committee, didn’t mince words. “Bad budget for the environment,” he told Capital & Main shortly after the budget deal was adopted Wednesday. 

Vitali, who is from Delaware County, north of Philadelphia, broke ranks with his party, one of just four House Democrats to do so, in voting against a key budget bill which contained the language removing Pennsylvania from RGGI. He was despondent on the House floor in the minutes leading up to the vote. 

“I understand that environmental protection is not highly valued in this General Assembly,” he told his colleagues. “I also understand that my words will not affect any, or many, votes.” 

Though he waffled on RGGI while on the campaign trail in 2022, after taking office the following year Gov. Shapiro convened a working group that brought together parties that were historically on opposite sides of the debate over the controversial program — environmentalists, labor unions, consumer advocates and energy producers. 

Masur, the nonprofit director, was part of that working group and left those talks feeling optimistic. Watching RGGI’s repeal felt like “a pretty big tectonic shift,” he said. 

After nine meetings, the working group concluded in 2023 that a cap-and-invest program was the best way to reduce emissions from the power sector while generating funds for renewable energy. In response, Shapiro introduced the Pennsylvania Climate Emissions Reduction Act, known as PACER, which would require power plants to pay for the greenhouse gasses they emit — funds that would be rebated on consumer’s utility bills and go toward pollution reduction programs. It was introduced in the 2023-2024 legislative session, then again in 2025 as part of a package of bills the governor dubbed the “Lightning Plan.”

No components of the Lightning Plan were part of this year’s final budget deal. In fact, PACER has stalled for close to two years. Had it reached the governor’s desk and been signed, it would then have removed the state from RGGI in favor of the state-run alternative. 

That Democrats did not secure an alternative to RGGI, or another meaningful climate program, in exchange for pulling out of the compact marked a wasted opportunity, environmentalists say. 

“The RGGI repeal was shocking and disappointing,” Masur said. “I think it’s made worse by the fact that it wasn’t really like there was some quid pro quo.” 

The move comes as the state is preparing for a slate of new power plants to come online to provide energy to data centers for the artificial intelligence sector, likely increasing residents’ utility rates in the process. 

Republicans applauded the withdrawal from RGGI as a win for consumers’ electricity bills. The Commonwealth Foundation, a right-wing thinktank, alongside industrial labor unions and the energy industry have asserted that RGGI would increase consumer bills by 30%. 

Environmentalists say this is a fallacy. For instance, in 2023, the University of Pennsylvania Kleinman Center for Energy Policy found that the state would gain as much as $148 million in 2030 by participating in RGGI, with no impact on consumer electricity rates or employment levels. Others have estimated that the state lost out on closer to $1 billion in a single year. At least one analysis from 2019 found electricity prices had dropped across RGGI member states while raising money for projects like energy efficiency and renewables, which environmentalists argue will save consumers money in the long run. 

Though Pennsylvania was technically part of the compact, its participation was halted by a 2022 injunction and has since been tied up in litigation. Pennsylvania has never participated in an RGGI auction. Shapiro’s administration, meanwhile, has defended the program in state court, spending millions in the process. At question in these cases is whether RGGI constitutes a tax or a fee, which would determine whether the Wolf administration overstepped in entering the compact by executive order instead of seeking approval from the legislative branch, which was then controlled by Republicans. The day after the state budget was signed, the Shapiro administration filed applications to discontinue its involvement in both court cases.

Robert Routh, policy director of climate and energy at the Natural Resources Defense Council, said that in crafting the budget deal, the administration was taking a gamble on the likelihood that the state Supreme Court would strike the program down on its own. Such a gamble is shortsighted, he said. A Supreme Court verdict could help shape climate policy for years to come. 

“We don’t know how the case would have been decided, but there were key legal issues pending to determine how this administration and future administrations design rules to control air pollution in Pennsylvania,” he said. Now, “We won’t have that guidance or clarity.”  

Shortly before signing the series of budget bills into law, including the fiscal code that struck down RGGI, Shapiro said at a press conference that the move would alleviate a sticking point that had long hampered negotiations. 

“For years, Republicans who have led the Senate have used RGGI as an excuse to stall substantive conversations about energy,” Shapiro said. “Today, that excuse is gone. 

“I’m looking forward to aggressively pushing for policies that create more jobs in the energy sector, bring more clean energy onto our grid and reduce the cost of energy for all Pennsylvanians,” he vowed. 

Environmental watchdogs remain dubious. Many of these policies require buy-in from the divided state Legislature — the lack of which caused the ultimate demise of RGGI in Pennsylvania. “It’s pretty clear, in this General Assembly, no meaningful legislation is going to be passed to address climate change,” Vitali said on the House floor ahead of the budget vote.   

Quinn agreed that none of Shapiro’s past climate pitches have seemed to come with much political capital. But she said she hopes to hold him to his promise nonetheless. 

“We don’t have anything similar on the books,” she said. “We want to see that come from him.”

---

Copyright Capital & Main 2025