Last month, Pennsylvania Governor Josh Shapiro withdrew the state from the Regional Greenhouse Gas Initiative (RGGI), a multistate cap-and-trade program designed to curb carbon emissions from power plants across the Northeast. The initiative operates by auctioning annual emissions allowances to power producers, with revenues flowing back to participating states for investment in clean energy and consumer cost-reduction programs. The cap tightens each year, aiming to steadily cut overall emissions.
Pennsylvania has long been viewed as a heavyweight in the program due to its power sector producing more carbon emissions than all other RGGI jurisdictions combined including states like New York, Massachusetts, Vermont, and the District of Columbia. As a result, Shapiros withdrawal sent shockwaves through the regional system.
The governor, a Democrat, made the move as part of a budget negotiation with Republican lawmakers. The state budget had been stalled since June, forcing schools and transit agencies to rely on emergency funds or take on debt. Signing the withdrawal bill, Shapiro argued that GOP leaders had used RGGI as an excuse to stall substantive conversations about energy, insisting the decision opens the door for new policy discussions. He pledged to pursue measures that expand clean-energy jobs, improve grid reliability, and reduce energy costs for residents.
However, many Democrats and environmental advocates say the concession was far too costly. State Senator Nikil Saval described the decision as Faustian, while Jackson Morris of the Natural Resources Defense Council said Shapiro surrendered a major climate achievement that could have bolstered a rumored future presidential run. Democrats basically got rolled, Morris argued, calling the political strategy puzzling.
Pennsylvania first attempted to join RGGI in 2019 under former Governor Tom Wolf, but legal challenges quickly arose. A 2022 court order blocked formal entry, and in 2023 the Commonwealth Court ruled Wolfs executive action unconstitutional. That ruling is currently under review by the state Supreme Court, where Democrats recently maintained their majority. Shapiros withdrawal effectively nullifies the pending decision. Environmental groups expressed frustration, saying the state abandoned the effort just as the legal fight neared resolution.
RGGI has generated roughly $8.6 billion for participating states to date. Elsewhere, Virginia appears poised to rejoin the program following the election of Democratic Governor-elect Abigail Spanberger, who campaigned on reversing the prior Republican administrations withdrawal.
Some policy experts are more cautious in their criticism of Shapiro. Dallas Burtraw of Resources for the Future noted that the governors decision may not be final, pointing to Shapiros recently announced Lightning Plan, unveiled in early 2025. Central to that plan is the Pennsylvania Climate Emissions Reduction program, or PACER a state-specific cap-and-trade system modeled on RGGI. Under the proposal, Pennsylvania would issue tradable emission credits compatible with those of RGGI states and reinvest revenue in lowering electricity costs.
Burtraw suggested Pennsylvanias large emissions profile gives it incentives to develop its own system before linking it to RGGI. While he said full RGGI participation would have been ideal, he believes the state may still be on a productive long-term path.
Other legislators and advocates remain skeptical. They argue that Pennsylvania only approached RGGI through executive authority because the Republican-controlled Senate was unwilling to support such legislation and that a new program like PACER would face the same obstacles. Senator Saval emphasized that residents need real emissions-reduction strategies, lower energy costs, and stable revenue streams, but said Senate Republicans have shown little interest in pursuing even modest steps in that direction.
This article was originally published by Grist under the title Pennsylvania bailed on a carbon market to appease Republicans.
