At the same time that congressional Democrats were trying to wrangle their way out of the weekslong government shutdown impasse on Capitol Hill, Pennsylvania Gov. Josh Shapiro (D) faced his own standoff in Harrisburg.
In early November, Pennsylvania was the only state in the country that had not passed a budget. Republicans controlled the state Senate; Democrats, the House. New education funds, fixes for Philadelphia’s mass transit, possible tax hikes, and more had been debated, put off for another day, or taken off the table. But there was a program hanging over the negotiations, one that Republicans had wanted gone for years even though it wasn’t subject to a state appropriation.
To get to yes, Shapiro capitulated and agreed to axe Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI), the multistate emissions control system. Molly Parzen, executive director of the Conservation Voters of Pennsylvania, compared Republican state lawmakers posturing on RGGI to the congressional Republicans’ position on the expiring ACA subsidies: “They don’t want Obamacare, they don’t want universal health care, but they also don’t want to propose anything else or anything different. That’s kind of been the lay of the land here in Pennsylvania for a while, with Republicans in Harrisburg being violently against RGGI but not being willing to discuss or propose anything else.”
Under the 14-year-old pact, the ten Northeastern states had implemented a cap-and-trade program to curb carbon dioxide emissions in the power generation sector. These states set a cap on carbon emissions from power plants, and required plant owners to buy an allowance at regular auctions for each ton of carbon dioxide they emit. That provides an incentive for utilities to switch away from fossil fuel power, and some $8.6 billion that has been invested in local projects. The cap also decreases over time—power emissions from the ten states have decreased by half since 2005.
But after multiple lawsuits, the Commonwealth Court, which handles state regulatory affairs cases, ruled in 2023 that former Gov. Tom Wolf’s 2019 executive order was an unconstitutional exercise of executive power. Targeted by Republicans almost from the outset, RGGI had never generated much enthusiasm from Shapiro.
Under the 14-year-old pact, the ten Northeastern states had implemented a cap-and-trade program to curb carbon dioxide emissions in the power generation sector.
In years past, RGGI was equally unpopular among Republicans in Virginia. In 2022, Virginia Gov. Glenn Youngkin (R) countered with an executive order that pulled the plug on the program, citing increased charges to ratepayers and “benefits of RGGI [that] have not materialized.”
Virginia Democrats had criticized that decision ever since, so it was no surprise that Gov.-elect Abigail Spanberger campaigned on a specific pledge to rejoin RGGI. Last year, a county circuit court judge ruled that Youngkin’s action had been unlawful since only the Virginia General Assembly had the authority to repeal the statute, but the state had yet to rejoin the pact as Youngkin appealed.
RGGI has become a marker of climate credibility in the two states. Spanberger has embraced RGGI and its revenue-generating potential, a decision made easier by the commanding Democratic majorities she’ll have in both the state Senate and the House of Delegates next year. Returning to RGGI won’t be a heavy lift and should only take a few months, says Noah Sachs, the director of the Merhige Center for Environmental Studies at the University of Richmond School of Law. “It’s going to take a new regulation from our state air pollution control board that will essentially restore the original regulation,” he says.
Shapiro has a different set of calculations to make. Though he’s touted his “we stayed at the table” negotiating chops in the state budget episode, his role in the RGGI exit will hover over his 2026 re-election run and may potentially throw a wrench in his near-certain plan to run for the White House. Both governors will have to illuminate how they plan to address climate concerns in an affordability debate dominated by consumers’ fears about rising energy costs.
SHAPIRO HAD PROPOSED HIS OWN RGGI ALTERNATIVE after secretive and hotly criticized “working group” meetings on RGGI with oil and gas officials, along with labor leaders and environmentalists. Those meetings helped produce PACER, the Pennsylvania Climate Emissions Reduction Act, a state-level program with many of the same goals as RGGI. Under PACER, a portion of the revenues would have been returned to residents as rebates on electricity bills. But PACER hasn’t impressed Republicans any more than RGGI did. The legislature has never agreed to any of the PACER components.
Two Democratic state senators, Katie Muth (D-Chester/Montgomery/Berks) and Nikil Saval (D-Philadelphia), voted no on the budget precisely because of the agreement to exit RGGI. By his own admission, Saval “has opposed every attempt to abrogate RGGI” and says that every legislative attempt to curb pollution from power plants, increase clean-energy sources, and cut ratepayers’ energy costs has run into roadblocks. “Every effort to do any of these things, Republicans have obstructed,” he says. “I would be pleasantly surprised if the removal of RGGI as an obstruction results in them finding religion on this issue.”
Republican lawmakers can be persuaded on some smaller things and have been amenable to minor climate projects. For the second year in a row, they’ve appropriated funds, $25 million this year, for the Solar for Schools grant program that helps public K-12 schools, community colleges, and technical schools fund solar energy projects. But RGGI’s aggressive, market-driven approach is obviously a philosophical bridge too far.
No matter how Shapiro spins it, exiting RGGI is a problematic climate concession. Pennsylvania, one of the country’s largest energy-producing states, obtains only 3 percent of its energy from clean or renewable sources.
With RGGI out of the picture, he’s turned to concentrating on proposals like the Pennsylvania Reliable Energy Sustainability Standard, or PRESS, that aims to ensure that the state is getting more clean and renewable energy in its energy mix, as well as requiring that data centers provide their own power sources, thus easing price pressure on ratepayers.
Environmental groups have criticized his capitulation on RGGI, as well as his failure to live up to his green campaign promises in areas like fracking. The Acadia Center, a clean-energy advocacy group, estimated that the state has lost more than $5 billion in estimated RGGI allowance revenues since 2022. Due to legal challenges filed almost immediately after Wolf signed his executive order joining the pact, Pennsylvania never generated any revenues, since the state never participated in the carbon credit auctions.
The Conservation Voters of Pennsylvania supported Shapiro’s 2022 candidacy and supports proposals like PRESS. But the group was dismayed by his stance on RGGI. But Parzen, the executive director, says that while Republicans have had RGGI in their sights during past budget negotiations, after the “blue tsunami” 2025 elections in New Jersey, Virginia, and Georgia, plus the affordability-heavy campaigning the Democrats embraced, the governor actually had more leverage. “It was, while maybe not surprising, very disappointing and frustrating, that it was a trade that our allies in the governor’s administration and in the state House were willing to make,” she says.
Shapiro remains popular in Pennsylvania, with a 60 percent approval rating, and his likely Republican opponent, state Treasurer Stacy Garrity, already concedes that he “won’t be easy” to beat. His re-election campaign may very well float above his mixed record on energy and the environment, in a state where the oil and gas industry are heavy hitters. But that same record poses problems on the national stage.
Shapiro’s energy and environmental record, marked by lowlights like RGGI and the state Department of Environmental Protection speedily permitting the country’s largest natural gas plant despite local opposition, won’t help him with Democratic primary voters. Young people and women, for example, may lean toward other likely presidential contenders: California’s Gavin Newsom, Illinois’s JB Pritzker, and Michigan’s Gretchen Whitmer, all of whom have had more impressive legislative successes during their tenures.
HOW EFFECTIVE WAS RGGI IN VIRGINIA? The state took in about $800 million in revenues from the sale of allowances. Those funds were directed to energy efficiency programs and community flood preparedness programs. Nate Benforado, a senior attorney at the Southern Environmental Law Center, says that whilemonopoly utilities may claim that RGGI does not work for them, compliance with RGGI regulations leaves the choice of how they comply up to the power generator.
“What we have seen when you don’t have market signals for monopoly utilities, they make decisions that are good for their bottom line, but maybe not best for their customers,” says Benforado. “When we were in RGGI, our emissions dropped by 22 percent, basically because we had put a price on carbon, which reflects the harms that carbon and the associated air pollution is causing.”
The major tests for Spanberger will be whether she can deliver on energy savings in the affordability program that she has vowed to pursue next year, which will hinge on two factors: how she navigates energy producers like Dominion Energy, the state’s bigfoot utility, and whether she proposes or supports regulatory plans to contain cost pressures posed by the state’s electricity-guzzling data centers.
Renewable energy is quite obviously going to be much cheaper over the long term, but it will require a difficult transition period and much investment to unlock those savings. If Spanberger can thread that needle, her climate cred will skyrocket.