By Rachel Gass – 1/7/2026
Goodbye RGGI, Hello Lightning Plan:
Pennsylvania’s Blueprint to Cut Carbon Emissions and Lower Energy Bills
PA Withdrawal from RGGI
The Regional Greenhouse Gas Initiative (RGGI) is a multi-state cap-and-invest program designed to reduce power-sector emissions while generating revenue for energy efficiency, consumer bill relief, and clean energy investments. On November 12, 2025, Pennsylvania lawmakers voted to withdraw the state from RGGI as part of negotiations to pass a long-overdue state budget. This withdrawal represents one of the most consequential environmental policy rollbacks in the Commonwealth’s history.
Opponents of RGGI argued that participation could undermine Pennsylvania’s competitiveness in attracting data centers, advanced manufacturing facilities, and new power generation. However, multiple independent analyses found that RGGI would have delivered substantial in-state economic investment and measurable emissions reductions with minimal impact on retail electricity prices. Since 2005, the ten states participating in RGGI have cut power-sector emissions by 50 percent, nearly 50 percent faster than the U.S. as a whole, while raising approximately $9.7 billion to reinvest in local communities.
An ongoing legal dispute had prevented Pennsylvania from participating in RGGI since former Governor Tom Wolf directed the state to join the program in 2019. Republican lawmakers argued that the emissions cap functioned as an unconstitutional tax enacted without legislative approval, a challenge that ultimately reached the state Supreme Court. Following passage of the state budget, the Shapiro administration withdrew its appeal.
Pennsylvania, the fourth-highest emitting state in the nation, is now without a binding carbon cap on power generation, raising urgent questions about how, or whether, the Commonwealth will pursue alternative strategies to meet its climate and energy goals.
Looking Towards the Lightning Plan
With RGGI no longer under consideration, Governor Josh Shapiro has urged lawmakers to focus on advancing his “Lightning Plan,” a comprehensive package of energy legislation intended to create jobs, cut consumer costs, and curb climate change. “It’s time to look forward,” Shapiro said, signaling that his administration would aggressively push for policies that expand clean energy development and lower electricity costs for Pennsylvanians.
Some advocates view the end of RGGI litigation as a turning point, expressing optimism that congressional leaders, who delayed action pending a ruling on RGGI, will now more seriously consider the Lightning Plan. Others remain skeptical, arguing Shapiro’s administration has prioritized industry concerns over constituents’ health with no clear pathway to replacing the emissions reductions RGGI was expected to deliver.
Nonetheless, in RGGI’s absence, the Lightning Plan represents the most comprehensive climate and energy framework currently under consideration in Harrisburg. As energy prices rise and federal climate momentum slows, the package offers a critical opportunity for Pennsylvania to act to protect its constituents, economy, and environment.
PACER: A Pennsylvania-Specific Carbon Cap
At the center of the Lightning Plan is the Pennsylvania Climate Emissions Reduction program (PACER; HB 503, SB 503), informed by a working group convened by Governor Shapiro and composed of representatives from labor, environmental organizations, and industry. The group concluded that a cap-and-invest program that reinvested its revenue would be the “optimal approach” to reducing greenhouse gas emissions in the state.
Under PACER, fossil-fuel power plants larger than 25 megawatts would purchase allowances equivalent to the tons of CO₂ they emit annually. Unlike RGGI, PACER would be administered entirely at the state level, with Pennsylvania setting its own emissions cap and retaining all program revenues.
Seventy percent of PACER revenue would be returned directly to consumers as electric bill rebates, with projected savings of $252 million over the program’s first five years. The remaining funds would support a year-round energy assistance program for low-income households and finance investments in emerging and transitional energy technologies like carbon capture, hydrogen technology, and power plant upgrades. State projections estimate the program could support 14,500 clean energy jobs statewide.
PRESS: Developing Clean, Reliable, and Affordable Energy
Operating alongside PACER, the Pennsylvania Reliable Energy Sustainability Standard (PRESS; (HB 501, SB 501) would modernize the state’s electricity portfolio requirements to incentivize the development of clean, reliable, and affordable energy sources.
PRESS would require that 50 percent of Pennsylvania’s electricity come from low-carbon, in-state sources by 2035, including 35 percent from solar and wind, 10 percent from large hydropower and battery storage, and 5 percent from ultra-low emission fuels. The legislation also expands eligibility to include nuclear power, hydrogen, geothermal energy, and energy storage, reflecting a more modern electric grid with a need for dispatchable, clean power.
Under PRESS, qualifying resources would be organized into three tiers:
| Tier I (35%) | Low-impact hydro, geothermal, wind, solar, coal methane, small modular reactors, fusion energy |
| Tier II (10%) | Fuel cells, biomass, co-located energy storage, high-percentage hydrogen power plants, combined heat and power systems, hydro, distributed generation systems, demand-side management |
| Tier III (new; 5%) | Waste coal, municipal solid waste, integrated coal gasification, wood pulping, lower-percentage hydrogen power plants |
Projected Impacts of The Lightning Plan
Consumer Costs
Multiple independent analyses find that PACER and PRESS would deliver modest but meaningful electricity bill savings for consumers while improving financial outcomes relative to the existing Alternative Energy Portfolio Standards (AEPS), making them a net positive for ratepayers.
A study conducted for the Pennsylvania Department of Environmental Production (DEP) and U.S. Department of Energy’s Grid Deployment Office found that the Lightning Plan would reduce average residential electricity bills by approximately $1 per month statewide. Low-income households—nearly half of all residential ratepayers—would see savings of roughly $3 per month. By comparison, Pennsylvania’s AEPS is estimated to have increased residential electricity bills by $1 to $3 per month between 2019 to 2023, indicating that the Lightning Plan would reverse these cost impacts and provide direct financial relief to consumers.
Findings from the Natural Resources Defense Council (NRDC) corroborate these findings, projecting that PACER and PRESS would lower electricity bills by an average of 1.3 percent annually over the next two decades, with savings increasing up to 2.4 percent annually by the mid-2030s. Through 2042, these reductions would amount to approximately $329 in cumulative savings for the average Pennsylvania household.
Consumer rebates are critical to achieving these outcomes. Electricity market modeling conducted after the repeal of clean energy tax credits under the Inflation Reduction Act (IRA) shows that, in states with renewable portfolio standards but no carbon pricing like Pennsylvania, cap-and-invest programs that return revenues directly to households can reduce emissions while delivering energy cost savings that exceed those projected under the IRA alone. Together, these findings underscore that the Lightning Plan’s rebate structure is essential to achieving both affordability and emissions reductions.
Carbon Emissions
Analyses of the Lightning Plan project substantial reductions in power-sector emissions, with one study estimating that PACER and PRESS would reduce in-state CO₂ emissions by 38 percent between 2025 and 2040. By 2040, Pennsylvania’s electric sector emissions would fall to roughly 15 million short tons, an 82 percent reduction relative to 2022 levels.
Regionally, the policies are projected to avoid approximately 138 million short tons of CO₂ emissions, exceeding the total emissions from all of Pennsylvania’s coal-fired power plants between 2020 and 2022. Notably, even amid continued growth in electricity demand, modeling suggests a cumulative 4 percent reduction in carbon emissions across the PJM region over the study period, indicating that carbon cap programs can meaningfully curb emissions even as electricity usage rises.
A separate analysis by the NRDC corroborates these findings, estimating that Shapiro’s energy plan would reduce carbon emissions from Pennsylvania’s fossil fuel fleet by roughly 30 million tons annually throughout the 2030s.
Crucially, because these models were developed before Pennsylvania withdrew from RGGI, actual future emissions are likely to exceed business-as-usual projections, meaning that the incremental emissions benefits of PACER and PRESS may be larger than current estimates suggest. Existing modeling thus also likely underestimates both the environmental and economic risks of inaction.
Investment and Grid Reliability
Beyond consumer savings and emissions reductions, modeling indicates that PACER and PRESS would catalyze significant in-state clean energy investment while preserving a reliable electricity grid. Analyses project approximately $8 billion in additional capital investment and the deployment of 4.1 gigawatts (GW) of PRESS-eligible resources beyond what would occur from the now mostly eliminated federal clean energy tax credits alone. This expansion represents a ten-fold increase in PRESS-eligible capacity by 2040, sufficient to meet even high-load growth scenarios within the PJM interconnection.
Across the PJM region, forecasts anticipate substantial additions of new generation capacity by 2040, including natural gas, solar, wind, battery storage, and nuclear resources, alongside the retirement of approximately 24 GW of coal-fired power. In this context, PACER and PRESS are projected to contribute roughly 14 GW of incremental regional capacity, providing critical support during a period of significant resource turnover and accelerated clean energy deployment.
Within Pennsylvania, total electricity generation remains stable under the policy scenario, averaging 241 terawatt-hours (TWh) per year. Modeling results show no material differences in grid reliability relative to the business-as-usual scenario. Together, these findings indicate that PACER and PRESS can support much-needed system reliability in a grid that faces rising capacity costs and fell short of its reliability target in its most recent capacity auction.
Economy and Jobs
PACER is projected to generate substantial public revenue for both bill rebates and energy technology investments. Estimated revenues total approximately $940 million annually from 2025 to 2035 and $410 million per year from 2036 to 2040 as resource build constraints ease. On average, PACER would generate $780 million annually, with more than 95 percent of revenue available for consumer rebates or energy investments.
Analyses project that PACER and PRESS would increase electricity generation and installed capacity in Pennsylvania by accelerating near-term renewable deployment. This expanded buildout would strengthen Pennsylvania’s position as an energy exporter, with net exports growing to almost 120 TWh annually under the policy scenario while declining under business-as-usual assumptions. By the 2030s, Pennsylvania could export roughly twice as much electricity as the next-largest exporting state, generating critical revenue for the Commonwealth.
Lightning Plan Outlook
Despite its projected economic and environmental benefits, the Lightning Plan faces an uncertain legislative trajectory. To advance in the Senate, the legislation must pass through the Environmental Resources and Energy Committee chaired by State Senator Gene Yaw (R., Lycoming), who has publicly opposed cap-and-trade programs.
Uncertainty also remains about key program elements, including the total emissions budget, allowance pricing mechanisms, cap-reduction schedules, and auction structures. To secure broader political support, lawmakers may seek to limit the DEP’s ability to set a carbon cap, making PACER less effective relative to more established multistate programs.
Nevertheless, any legislative progress would represent a meaningful improvement over the present circumstances, since Pennsylvania currently lacks an enforceable statewide limit on power-sector carbon emissions. In this context, the Lightning Plan would both address a gaping need for carbon policies at the state level and fill a hole left by the withdrawal of federal support for renewable energy programs.
Indeed, even absent federal policies, Pennsylvania lawmakers can still shape the state’s clean energy future. PACER and PRESS offer Pennsylvania legislators an opportunity to respond to energy affordability challenges while both lowering emissions and incentivizing renewable energy, leading to cleaner air, cheaper electricity, and enhanced economic opportunities for the Commonwealth.