As states grapple with rising electricity prices, lawmakers struggle to strike a balance between affordable energy and responsible environmental stewardship.
Achieving both may seem impossible, but Pennsylvania proves otherwise. Over the last decade, the Keystone State has aptly demonstrated that states do not need to sacrifice energy development in favor of heavy-handed Green New Deal-style restrictions.
Pennsylvania lawmakers arrived at this conclusion on the heels of a four-month budget impasse. The months’ long stalemate ended when Gov. Josh Shapiro and the General Assembly agreed to a significant compromise: The Keystone State would formally resign from the Regional Greenhouse Gas Initiative (RGGI).
RGGI, commonly referred to as “Reggie,” is a multistate cap-and-trade program. Under RGGI, states cap a specific amount of carbon emissions and then auction off emissions allowances to energy producers.
Pennsylvania has had a long and complicated history with RGGI.
In 2019, Gov. Tom Wolf unilaterally entered Pennsylvania without a legislative mandate. However, since only the Pennsylvania General Assembly has the legal authority to tax, the Commonwealth Court ruled that the carbon tax was unconstitutional. Shapiro, despite stating his “real concerns” about RGGI on the campaign trail, sued to stay in the compact. However, thanks to Pennsylvania Republicans who fought tooth and nail during budget negotiations to codify a RGGI exit, that appeal won’t see its day in court.
Like most “green” energy proposals, RGGI would have come with significant costs. One economic model estimated that RGGI would increase Pennsylvanians’ electric bills by 30 percent. Indeed, this model is somewhat dated: RGGI allowances have increased since its publication, so the actual cost is likely higher.
RGGI has already wreaked havoc outside of Pennsylvania. One estimate suggests that RGGI would add more than $1.8 billion in annual costs to the 13 states (including Pennsylvania) and the District of Columbia that comprise the regional grid managed by PJM Interconnection.
Considering these costs, Pennsylvania, which generates nearly one-fifth of PJM’s net electricity and leads the nation in electricity exports, couldn’t afford to compromise its robust energy sector.
The Keystone State serves as a great case study against RGGI. In 2025, Pennsylvania’s Independent Fiscal Office (IFO)—an independent nonpartisan agency that analyzes statewide policies—revealed that, between 2019 and 2024, carbon emissions in Pennsylvania decreased by 9 percent while the commonwealth’s electricity generation increased by 5 percent.
Yes, you read that right: Pennsylvania increased production and decreased emissions—all without RGGI.
How did the commonwealth pull this off? Two words: natural gas.
The Marcellus Shale boom propelled Pennsylvania into one of the nation’s largest producers of natural gas — second only to Texas. Since natural gas burns cleaner than coal, Pennsylvania’s emissions dropped precipitously.
Pennsylvania isn’t alone. Natural gas has been a leading national driver in emissions reductions. Between 2005 and 2019, the United States removed about 819 million metric tons of carbon dioxide. Of that total, the U.S. Energy Information Administration attributes nearly two-thirds of the reduction to natural gas.
Meanwhile, RGGI states come nowhere close to matching Pennsylvania’s numbers. RGGI states have not so much cut emissions as they have exported them. A 2018 Congressional Research Service report found that electricity generation in non-RGGI states increased by 8 percent during the first years of RGGI auctions.
Due to their decreased in-state generation, RGGI states have relied on electricity-exporting states to make up the difference. A Cato Institute study found that, between 2007 and 2015, RGGI states doubled their electricity imports.
RGGI was, at best, a solution in search of a problem. The cap-and-trade program hampers affordable energy generation, jeopardizes grid reliability, and stalls out economic competition.
Meanwhile, Pennsylvania’s exit from RGGI couldn’t have come at a better time. With abundant and affordable energy readily available, the Keystone State is well-positioned for next-generation technology and industry—namely, artificial intelligence (AI).
Considering the energy needed to power the massive data-processing infrastructure that AI demands, unleashing Pennsylvania energy from the restraints of heavy-handed policies makes the most financial sense. By choosing to focus on market-driven energy solutions rather than cap-and-trade schemes, Pennsylvania has maintained its competitive edge in hosting these future industries and leading the nation in energy innovation.
Pennsylvania offers a clear roadmap. Exiting RGGI will prove to be a smart stride forward into an energy-abundant, innovation-driven future. Pennsylvania has demonstrated that states can have it all: They can lower emissions, increase electricity generation, export power, and build cutting-edge industries—all at once. Most importantly, they don’t need a top-heavy regulatory environment to do so.
States on the fence about their RGGI membership—Virginia in particular—should follow Pennsylvania’s lead.
Andrew Lewis is President and CEO of the Commonwealth Foundation, Pennsylvania’s free-market think tank.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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