By the Pennsylvania Manufacturers’ Association

Watch David Taylor, President of the Pennsylvania Manufacturers’ Association, discuss this issue and other issues on Behind the Headlines

Pennsylvania’s energy policy is at a crossroads, and the decisions made now will have lasting consequences for the state’s economy, workforce, and grid reliability. With the wrong moves, we’re looking at a future of higher costs, rolling blackouts, and businesses heading for the exits.

The Regional Greenhouse Gas Initiative (RGGI) is a dark cloud hanging over Pennsylvania’s energy sector, threatening an $800 million annual tax on electricity generation. Since Pennsylvania was dragged into this multi-state compact in 2019, investment in new baseload power generation has screeched to a halt. Why? Because no one wants to sink money into a state where energy production comes with a giant flashing “TAX ME” sign. Meanwhile, Governor Shapiro keeps the legal battle going, prolonging the uncertainty and making Pennsylvania an increasingly unattractive place to invest. If we can’t even keep our own lights on, how are we supposed to remain the country’s top electricity exporter?

The warning signs couldn’t be clearer. PJM Interconnection—the grid operator that keeps power flowing in Pennsylvania and 12 other states—is practically waving more red flags than a matador at a bull flight. Demand for power is climbing, but 21% of the current capacity is set to retire, with few new projects in the works to fill the gap. It’s a classic supply-and-demand disaster in the making.

Meanwhile, policymakers are on a turbocharged push to electrify everything—cars, stoves, furnaces, water heaters—without any real plan for where all this extra electricity will come from. Add in the surge of data centers, crypto-mining, and artificial intelligence sucking up terawatts of power, and you’ve got an energy crunch that’s as predictable as it is preventable.

Here’s the kicker: Pennsylvania has all the energy it could ever need. Sitting atop 214 trillion cubic feet of recoverable natural gas, the state should be leading the charge in cheap, reliable power. Instead of handcuffing our energy industry, we should be expanding natural gas-fired power plants, ramping up combined heat and power systems, and getting an LNG export facility up and running to ship American energy to allies like Germany and Japan—who, let’s be real, would rather buy from us than be dependent on Russia.

From 2010 to 2019, Pennsylvania was on a roll, bringing 12 natural gas-fired power plants online and adding nearly 11 gigawatts of power. That’s more than a fifth of the state’s 2023 summer capacity. The switch from coal and oil to natural gas also cut electricity generation emissions by 42%. But thanks to new tax threats, that momentum has hit a brick wall. No new baseload facilities have been proposed since the government started playing tax-and-regulate whack-a-mole with energy producers.

And it gets worse. Enter PACER and PRESS—two new plans from the Governor’s office that make RGGI look like just the opening act. PACER is basically RGGI 2.0, but with the tax revenue staying in-state instead of being shipped off as part of a multistate agreement. According to the plan, 70% of the proceeds would be rebated to ratepayers, but the other 30% would be funneled into “trendy” alternative energy projects that sound good in press releases but deliver little bang for the buck.

Then there’s PRESS, a plan to ramp up Pennsylvania’s Alternative Energy Portfolio Standard to a staggering 50%—requiring more solar panels, wind farms, and other intermittent sources that simply can’t provide the reliable power we need. Even more absurdly, the plan relies on technologies that don’t even exist yet, like commercial fusion energy and small modular nuclear reactors. If science fiction could keep the lights on, this might be a good plan—but reality begs to differ.

We’ve posed several critical questions to the administration, and so far, the silence is deafening:

• Which energy sources will provide how much electricity, and by when?
• How much land will be gobbled up by solar panels, and where?
• Where will the new transmission lines go, and will they be blocked like pipelines?
• What battery tech will be used for backup power, how much will be needed, and where will it be placed?
• How do we plan to clean up the mess when old solar panels and wind turbine blades start piling up?

Pennsylvania needs to slam the brakes on additional energy taxes, for good. The Commonwealth Court ruled on November 1, 2023, that RGGI is a tax—meaning Governor Wolf’s backdoor attempt to force it through without legislative approval was unconstitutional. And yet, here we are, still debating the issue while the $800-million energy tax threat looms over businesses and consumers alike. Governor Shapiro could put this to bed right now, drop the appeal, and let Pennsylvania’s energy sector do what it does best—powering our homes, businesses, and economy.

Nationally, energy independence is back on the priority list. Pennsylvania should be leading that charge by fast-tracking permits for new plants, pipelines, and transmission infrastructure. We also need to put pressure on neighboring states like New York and New Jersey to stop blocking pipelines that would open up new markets. And let’s not forget the potential for a southeastern Pennsylvania LNG export hub—sending tankers to friendly nations instead of letting adversaries like Russia dominate the market.

The bottom line? None of this happens if Pennsylvania keeps slapping new taxes and regulations on energy production. The future of our grid, our economy, and our manufacturing sector depends on common-sense policies that encourage investment, not drive it away. It’s time to cut the red tape, ditch the energy taxes, and let Pennsylvania’s energy industry fuel prosperity for decades to come.

Nothing contained here should be considered as an attempt to aid or hinder the passage of any legislation.

The views expressed here are those of the author and not necessarily those of the Susquehanna Valley Center for Public Policy