New NRDC Analysis: PA Needs RGGI and a Stronger AEPS

Now officially sworn into office, Governor Shapiro and his team are quickly rolling up their sleeves and getting to work in Pennsylvania. Charting a course for the state’s clean energy future should be a top priority for the new administration. They already have two critical policy drivers on hand for accelerating that transition: 1) successfully defending—and smartly implementing—the Regional Greenhouse Gas Initiative (RGGI); and 2) reviving and reforming the state’s overarching renewable energy policy (known as the Alternative Energy Portfolio Standard [AEPS] in its current form).

New NRDC analysis paints a picture of what the future might look like if Pennsylvania pursues both policies in earnest—and just as importantly, how bleak (and dirty) the future would look without meaningful action on both fronts.

Analysis Purpose

NRDC’s new modeling shows that by (1) implementing the Department of Environmental Protection (DEP)’s RGGI regulation, and (2) enhancing and expanding the state’s Alternative Energy Portfolio Standards Act (AEPS), Pennsylvania will both cut pollution from its electric power sector and drive significant near- and medium-term renewable energy development.

These results aren’t a surprise: they’re consistent both with past modeling by NRDC, as well as ongoing real-world trends in the rapid deployment of renewables—particularly in states with strong policies on the books. They also demonstrate the importance of both policies at a critical juncture for their survival: Pennsylvania’s RGGI participation is threatened by politically motivated court challenges from fossil-fuel aligned interests. Meanwhile, it’s time for Governor Shapiro to deliver on his campaign promise to increase the renewables targets in the AEPS to 30 percent by 2030. The new administration must seize this opportunity to protect and improve these cornerstone climate programs.

What We Modeled

NRDC analyzed three policy scenarios using ICF’s power sector planning model known as the Integrated Planning Model (IPM). More details on the model can be found at the end of this blog.

The following policy scenarios were compared to a “business-as-usual” reference scenario, where Pennsylvania does not implement the RGGI regulation or expand the AEPS:

1. A “RGGI-only” scenario in which Pennsylvania implements the RGGI regulation, as enacted by DEP in 2022, but the existing AEPS is not expanded.
2. An “AEPS-only” scenario in which Pennsylvania does not implement the RGGI regulation, but instead raises the Tier I (renewables) goal in the AEPS to 30 percent in 2030, with 10 percent from in-state solar projects, as proposed by Senate Bill 300 from the 2021-22 legislative session.
3. A “RGGI + AEPS” scenario in which Pennsylvania both implements the RGGI regulation and raises the AEPS Tier I goal to 30 percent by 2030.

The Results: To Cut Emissions and Drive Renewable Growth, Pennsylvania Needs Both RGGI and Stronger Renewables Requirements

• Without RGGI, existing policies fail to meaningfully cut carbon emissions and criteria pollution from power plants.
• Pennsylvania’s moribund existing AEPS is not ambitious enough to drive critical renewables development over the next two decades.
• Stronger together: By complementing RGGI with more ambitious renewables goals, Pennsylvania can diversify its power sector and reduce Pennsylvanians’ exposure to fossil fuel volatility.

This modeling confirms what we already knew about RGGI’s benefits, based on learnings from the past thirteen years of the initiative. By pairing binding, declining regional carbon emissions limits and technology-based incentives, states can design a collective energy market that better serves consumers by diversifying the electricity resource portfolio, promoting cleaner air, and mitigating climate change. Every RGGI state has come away from this period with stronger renewable portfolio standards and improved energy efficiency programs. This complementary policy approach has resulted in economic development, job growth, and billions of dollars of investment into their states as well as savings for their residents, businesses and communities. RGGI is a critical tool for Pennsylvania to cost-effectively address climate change.

While RGGI’s declining carbon limits can ensure emission reductions, Pennsylvania also needs a stronger, explicit renewables goal to realize near-term investments in its renewable energy economy. NRDC’s modeling finds that an expanded AEPS is necessary to drive in-state renewables growth before 2040. It is not until after 2040 that the renewables tax credits in the Inflation Reduction Act ensure that renewables account for most new generation in the Commonwealth. Implementation of the RGGI regulation alone will reduce fossil fuel-powered generation, but will not drive significant in-state investment in wind and solar beyond business-as-usual projections. With a 30-percent-by-2030 AEPS, Pennsylvania can deliver the economic development and job creation benefits associated with the flourishing renewables economy to its residents now.

Likewise, a stronger AEPS will encourage more renewable development, but without the binding, declining carbon limits provided by RGGI, the state’s power sector carbon emissions and associated air pollution will continue to increase dramatically over the next decade.

The good news? Governor Shapiro and the General Assembly are not facing a zero-sum game when it comes to passing climate policies. Energy portfolio standards with strong renewables and the RGGI regulations are tested, well-studied policy mechanisms with a proven track record of economic, health, and emissions benefits. By implementing both in tandem, the Shapiro administration can make Pennsylvania a nation-leading climate state while delivering more jobs, cleaner air, and a brighter future for the Commonwealth.  

Full modeling results can be found in this slide deck.

A Note on the Integrated Planning Model: A Planning Tool for the Power Sector

In the power sector world, computer models are used to help forecast and understand the environmental and economic effects of different energy policies. The modeling in this blog represents assumptions developed by NRDC based on consultation with energy experts, partners, and industry. The modeling of NRDC’s assumptions was performed by ICF using its Integrated Planning Model (IPM®). IPM is a detailed power sector model commonly used by the U.S. Environmental Protection Agency (EPA), utilities, and state regulators.