In October 2019, Pennsylvania’s Governor Tom Wolf signed an executive order directing the Pennsylvania Department of Environmental Protection (DEP) to develop and present to the Environmental Quality Board (EQB) a proposal for an ETS covering CO2 emissions from the electric power sector and its linkage to the Regional Greenhouse Gas Initiative (RGGI). The legal basis for developing an ETS is the state’s “Air Pollution Control Act”, which regulates air resources necessary for the protection of public health.
In April 2022, the final regulation to establish an ETS in Pennsylvania and to participate in RGGI was published. It set a base cap of 78 million short tons (70.8 MtCO2) if Pennsylvania was a participating state of RGGI as of 1 January 2022. The cap decreases by 3% annually to 58.1 million short tons (52.7 MtCO2) in 2030. The regulation includes the implementation of both emissions containment and cost containment reserves, as well as quarterly auctions to allocate allowances. It includes additional features such as set-aside accounts (accounts from which allowances may be transferred to the accounts of regulated units or retired on their behalf) for waste coal and cogeneration units (including combined heat and power systems), and a limited exemption for cogeneration units that supply less than 15% of their total energy to the electricity grid.
If Pennsylvania participates in RGGI, the Initiative’s carbon market would increase significantly, with Pennsylvania’s share comprising 44% of the 2023 RGGI cap.
In April 2022, the final regulation to establish an ETS in Pennsylvania and to participate in RGGI was published. Under the regulation, covered entities in Pennsylvania had to begin accounting for their emissions as of 1 July 2022.
Prior to its publication, the regulation was challenged by members of Pennsylvania’s legislature. That lawsuit resulted in the issuance of a preliminary injunction preventing implementation and enforcement of the regulation. The Pennsylvania DEP is currently appealing the Commonwealth Court’s injunction order in the Pennsylvania Supreme Court.
Shortly after its publication, the regulation was also disputed by a collection of local coal stakeholders, including power plant owners, coal mine owners, and workers’ unions, who filed a lawsuit in front of the Commonwealth Court. The final rulings in both cases are still pending and there is no defined deadline for issuance. The rulings by the Commonwealth Court could subsequently be appealed to the Pennsylvania Supreme Court. The regulation is also being separately challenged in Commonwealth Court by natural gas stakeholders, including power plant owners and operators.
Until legal proceedings are concluded, the Pennsylvania DEP will not take steps to implement or enforce the RGGI regulation.
Emissions & Targets
BY 2025: 26% below 2005 levels (Executive Order 2019-1)
BY 2050: 80% below 2005 levels (Executive Order 2019-1)
Pennsylvania Department of Environmental Protection (DEP): Government agency in charge of implementing, administering, and enforcing the CO2 Budget Trading Program (RGGI regulation)