The Pennsylvania Supreme Court last week heard arguments over whether the state’s entry into the Regional Greenhouse Gas Initiative (RGGI) constitutes an unconstitutional tax. This case has significant implications for energy producers and ratepayers across the Commonwealth.

 

RGGI is a multi-state cap-and-trade program designed to reduce carbon emissions from the energy sector. Under the program, power generators would be required to purchase allowances (or “credits”) through quarterly auctions, the proceeds of which would fund clean energy and efficiency initiatives.

 

The controversy dates to 2019, when then-Gov. Tom Wolf moved to enter Pennsylvania into RGGI by executive action, bypassing the General Assembly and triggering years of legal and legislative pushback.

 

The PA Chamber has argued that RGGI’s economic impact would be devastating, including higher electricity costs, severe job losses, and the risk of Pennsylvania losing its status as a leading net exporter of power.

 

The Supreme Court’s review of the case centers on whether RGGI’s requirement that power plant operators purchase carbon credits constitutes a regulatory “fee,” as the Department of Environmental Protection contends, or a tax that would require legislative approval.

 

In 2023, the Commonwealth Court sided with GOP lawmakers, ruling that RGGI includes a tax that was unlawfully enacted by regulation, not the legislative process. Gov. Josh Shapiro appealed the decision.

 

The PA Chamber previously joined a coalition of business groups in an amicus brief supporting the lower court’s ruling. The brief argues that the cost of compliance is excessive, bears no relation to the program’s administrative costs, and should therefore be classified as a tax.

 

Also last week, the PA Chamber’s Environmental Policy Council hosted presentations by the lead attorneys (and PA Chamber Environmental Policy Council Members) who argued before the PA Supreme Court on the Regional Greenhouse Gas Initiative, offering a firsthand, exclusive look at what’s next for the case and the businesses it impacts. All PA Chamber Investor Members are invited to participate on any of our 11 policy councils, including the Environmental Policy Council, as these forums provide Investor Members with direct access to key decision makers and a seat at the table as the PA Chamber develops its policy strategy.

 

The Supreme Court’s decision, expected later this year, will determine the future of energy regulation in Pennsylvania. The PA Chamber will continue monitoring the case and advocating for energy policies that balance environmental goals with our economic competitiveness.