The Commonwealth Court ruled on Wednesday that Pennsylvania cannot enter into the Regional Greenhouse Gas Initiative (RGGI), a multi-state initiative to limit carbon emissions, saying it violates the state Constitution.

​RGGI is a ​cooperative, market-based effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York,  Pennsylvania, Rhode Island, Vermont, and Virginia to cap and reduce CO2 emissions from the power sector. It represents the first cap-and-invest regional initiative implemented in the United States.

Guided by shared commitments to reducing CO2 and allowing flexibility and autonomy among the states, the RGGI requires electric generation plants in participating states to purchase one allowance for each ton of CO2 they emit. Maryland has participated in RGGI since its inception.

Pennsylvania entered the interstate compact under former Governor Tom Wolf’ in April 2022. But in its decision, the appellate court said that Pennsylvania’s participation in RGGI must be approved through the General Assembly and that the Pennsylvania Department of Environmental Protection does not have the authority to impose a tax.

According to a memorandum decision issued by Judge Wojcik:

Stated simply, to pass constitutional muster, the Commonwealth’s participation in RGGI may only be achieved through legislation duly enacted by the Pennsylvania General Assembly, and not merely through the Rulemaking promulgated by DEP and EQB.”

RGGI is structured as a “cap and invest” program, with a regional cap or limit on CO2 emissions that declines by a certain amount annually. The states establish individual emission budgets, which they distribute as “allowances,” permitting the holder to emit one short ton (2,000 lbs.) of CO2 per allowance.

The regional cap consists of the sum of the states’ emission budgets. Each participating state has developed its program and regulations based on the blueprint provided by the RGGI Model Rule. States sell a majority of emission allowances at regional quarterly auctions, and auction proceeds then fund various state and local programs that promote consumer benefits like energy efficiency, renewable energy, and bill assistance.

Last year, Maryland reached the billion-dollar mark in money raised through a regional program to cap and reduce fossil fuel energy use and the emissions that cause climate change. Those proceeds help speed the deployment of renewable energy technologies and consumer programs to improve energy efficiency.

According to NPR, interest groups that support RGGI have said they expected the state to appeal if the Commonwealth Court ruled against Pennsylvania joining the program. But current Pennsylvania Governor Josh Shapiro has raised concerns about RGGI.

[Governor Shapiro] has said it’s not clear RGGI will address climate change while protecting energy jobs and ensuring affordable power. A working group he brought together on the issue recently released a report that said a cap-and-invest program would be optimal in supporting an energy transition that can benefit the environment and reduce emissions. But it did not endorse RGGI as the best option.

The Administration has 30 days to appeal to the state Supreme Court.

Stay tuned to Conduit Street for more information.