Fact Sheet

rggi pennsylvania energy prices

RGGI Is a Destructive Policy for Pennsylvania

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Overview

  • The Regional Greenhouse Gas Initiative (RGGI) is a multi-state cap-and-trade program that imposes a carbon tax on power generators, resulting in a new, economy-wide energy tax.
  • RGGI would increase electrical bills to ratepayers as power-generating facilities pass on the cost of RGGI allowances.
  • RGGI will threaten grid reliability by forcing the early retirement of hydrocarbon power plants and stifling the production of new facilities.
  • Proponents of RGGI argue that it is essential to address climate change and reduce emissions. However, they ignore Pennsylvania’s success in achieving emission reductions while increasing energy production through market-driven shifts, such as transitioning from coal to natural gas—all without RGGI.
  • As the nation’s second-largest natural gas producer and leading power exporter, Pennsylvania holds a critical competitive edge in energy production and security. Cap-and-trade schemes like RGGI jeopardize this advantage, undermining industries that drive emissions reductions and provide stable jobs, affordable electricity, and an abundant, secure energy supply.

RGGI Will Increase Energy Costs

  • Some economic models estimate that RGGI would increase Pennsylvanians’ electric bills by 30 percent. Since RGGI allowances have increased since conducting these models, the actual cost is likely higher.[1]
  • RGGI states set a cap on emissions and require power generators to purchase allowances for every ton of CO2 emitted. The resulting price increases depend on the allowance costs/prices set by RGGI’s quarterly auction.
    • If Pennsylvania joins RGGI, the added cost of emission allowances will hit consumers through higher retail electricity rates. States that rely on hydrocarbon energy sources face higher compliance costs.
  • The Independent Fiscal Office (IFO) estimates that RGGI would collect around $800 million in new taxes for lawmakers to redistribute to government agencies and environmental special interest groups.[2]
  • Polling indicates that RGGI is an unpopular policy for Pennsylvanians, whose survey responses show that energy affordability is a higher priority for them than combating climate change (68 to 32 percent).[3]
    • Fifty-three percent outright oppose RGGI, while 75 percent said they would oppose RGGI if it increased utility costs.
    • Seventy-one percent oppose the governor’s creation of new energy taxes without the legislature’s consent.
    • And only 4 percent said they are willing to pay more for green energy projects.[4]

The Keystone State Is an Emissions Reduction Leader Without RGGI

  • IFO data demonstrates that Pennsylvania’s power sector has reduced carbon emissions while expanding power generation.
    • CO2 emissions decreased by 10.8 percent from 2022 to 2023—the most significant year-over-year decrease since the 1990s. The IFO credits this to the state’s transition from coal to natural gas.[5]
    • Between 2018 and 2023, Pennsylvania dropped nine million metric tons in its emissions, while New York only dropped one, and New Jersey dropped five. Maryland had similar results to Pennsylvania. New York, New Jersey, and Maryland are RGGI states.[6]
    • Pennsylvania and Ohio were the only states in the region listed by the IFO that reduced emissions while increasing power generation.[7]
    • The IFO data indicates that Pennsylvania’s abundant natural gas supply and power generation sector can help meet the increased demand for reliable power while responsibly lowering emissions.

RGGI Will Jeopardize the Reliability of Pennsylvania’s Grid

  • Pennsylvania’s electrical grid includes enough baseload and dispatchable power generation to keep the lights on and the grid stable.
    • The current power generation mix includes 96 percent from reliable energy sources (59 percent natural gas, 32 percent nuclear, and 5 percent coal).[8] That is exceptionally good for reliability.
    • The Pennsylvania-New Jersey-Maryland Interconnection (PJM), the grid manager for Pennsylvania, plus 12 other states and the District of Columbia, holds serious concerns about the deficient replacement of retiring thermal power generation and future capacity replacement.[9]
  • Pennsylvania is among the largest electricity-generating states and the most significant net power exporter in the United States, generating over 230 million MWh annually. Without reliable power from Pennsylvania, the entire PJM Interconnection is at risk of blackouts and brownouts. Notably, none of the 11 participating RGGI states are a major power exporter or primary energy producer—Pennsylvania would be the first and only.
  • The Keystone State’s primary comparative advantage in energy is natural gas—providing abundant and reliable energy for American energy security, a resilient Pennsylvania electrical grid, a robust economy, and lower emissions.
    • Pennsylvania produces about 7.5 trillion cubic feet of natural gas annually—second only to Texas.[10]
    • The United States dropped emissions by 38 percent from 2001 to 2022,[11] and data from the International Energy Agency shows that American natural gas power generation more than doubled during that time.[12]

Conclusions

  • RGGI is a tax on modern life that punishes energy consumers, fosters degrowth, and arbitrarily shifts the market in ways that do more harm to our economic environment with no clear positive impacts on our natural environment.
  • Pennsylvania’s energy sector, particularly natural gas, competes with other non-RGGI states. The resulting uneven playing field from entering RGGI incentivizes industries to shift operations or investments to states without additional energy taxes. Pennsylvania stands to lose a critical economic and environmental advantage should RGGI be implemented.
  • RGGI is a harmful and unnecessary energy tax. It would undermine Pennsylvania’s role as a top-energy-producing state and drastically lower the commonwealth’s standard of living.
  • Lawmakers should reject RGGI and similar carbon tax schemes in Pennsylvania and prioritize people-first, market-driven policies that deliver grid reliability, affordable electricity, and responsible environmental conservation without harming families and businesses within the commonwealth.

[1]Power PA Jobs Alliance, “RGGI Will Impose an $800 Million Tax on PA Electricity Customers, RGGI Will Increase Family Electricity Costs by 30+ Percent, RGGI’s Biggest Victim? Low and Fixed Income Households, Especially Seniors,” n.d., https://bipac-momentum-media.s3.amazonaws.com/Media/assets/000/034/043/original/RGGI%20IMPACT%20ON%20FAMILIES.pdf; RGGI Inc., “The Regional Greenhouse Gas Initiative, Auction Results,” accessed January 7, 2024, https://www.rggi.org/auctions/auction-results.

[2]Matthew Knittel, “Testimony on RGGI Modeling Assumptions Joint Hearing of the Senate Environmental Resources and Energy Committee and Community, Economic and Recreational Development Committee,” Independent Fiscal Office, March 29, 2022, http://www.ifo.state.pa.us/download.cfm?file=Resources/Documents/IFO_Testimony_RGGI_Nov_4_2022.pdf; Commonwealth Foundation, “Corporate Welfare in the 2024–25 Budget,” March 7, 2024, https://commonwealthfoundation.org/research/corporate-welfare-2024-25-pa-budget/.

[3]Commonwealth Foundation, “Common Ground in the Commonwealth Poll, Q3 2024 Survey,” September 2024, https://commonwealthfoundation.org/wp-content/uploads/2024/10/Common-Ground-in-the-Commonwealth-Q3-2024-Survey-Analysis-.pdf.

[4]Commonwealth Foundation, “Common Ground in the Commonwealth Poll, Q3 2024 Survey.”

[5]Jesse Bushman, “Pennsylvania Electricity Update,” Pennsylvania Independent Fiscal Office, March 7, 2024, http://www.ifo.state.pa.us/download.cfm?file=Resources/Documents/Electricity_Update_2024.pdf.

[6]Bushman, “Pennsylvania Electricity Update.”

[7]Bushman, “Pennsylvania Electricity Update.”

[8]Bushman, “Pennsylvania Electricity Update.”

[9]PJM, “Energy Transition in PJM: Resource Retirements, Replacements and Risks,” February 24, 2023, https://www.pjm.com/-/media/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx; Ethan Howland, “Up to 58 GW Faces Retirement in PJM by 2030 without Replacement Capacity in Sight: Market Monitor,” Utility Dive, March 14, 2024, https://www.utilitydive.com/news/pjm-coal-gas-power-plant-risk-retirement-market-monitor/710518/#:~:text=from%20your%20inbox.-,Up%20to%2058%20GW%20faces%20retirement%20in%20PJM%20by%202030,grid%20operator’s%20market%20monitor%20said.

[10]Daniel Raimi, “Fracking and Politics in Pennsylvania: Assessing the Economic Impact of the Shale Revolution in Pennsylvania,” Resources, October 10, 2024, https://www.resources.org/common-resources/fracking-and-politics-in-pennsylvania-assessing-the-economic-impact-of-the-shale-revolution-in-pennsylvania/#:~:text=Regardless%20of%20these%20practicalities%2C%20fracking,only%20Texas%20(Figure%201).

[11]Statista, “Carbon Dioxide Emissions from Energy Consumption in the United States from 1975 to 2023,” March 2024, https://www.statista.com/statistics/183943/us-carbon-dioxide-emissions-from-1999/.

[12]International Energy Agency, “IEA 50: United States, Natural Gas Supply,” accessed December 1, 2024, https://www.iea.org/countries/united-states/natural-gas.