Governor Josh Shapiro’s budget proposal has several new ideas for revenue to balance out spending increases, like cannabis and skill games. There’s still a gap though, with the state having to rely on its savings accounts to make up the difference.

No matter if you are talking to Republicans or Democrats, the unions or the business chambers— many in Harrisburg say the key to larger state revenues, and really overall economic health and stability, is to unlock the Commonwealth’s energy industry potential.

“We are powerful enough to develop common sense policies that will lower costs, protect and create jobs, and take meaningful action to address climate change,” Governor Josh Shapiro said in his budget address on Tuesday.

The governor announced a plan to spend $51.4 billion for the 2025/26 budget, with senior members of his administration saying the theme for this year’s budget is workforce development.

Energy industry reform is part of that plan.

Pennsylvania’s energy generation has been steadily increasing over the past five year. But since the start of 2020, website interconnection.fyi shows there have only been 6 natural gas power plant requests to join the grid from Pennsylvania. That’s compared to 19 requests in 2019 alone.

While Pennsylvania has seen hundreds of alternative energy requests like solar, battery, and wind power plants in that same time frame, many have struggled to get permission to join the grid in time to keep their funding.

Pennsylvania is the second largest energy exporter in the United States. Lawmakers in Harrisburg want to keep it that way. Many just have vastly different ideas on the best way to keep the lead.

Shapiro announced a 6 point “Lightning Plan” last week, ahead of the budget. Of those six policies, none require new spending allocations in the budget. They do require new laws.

Shapiro wants to reorganize existing tax credits. He wants to create a permitting fast track board for power plant proposals. Lastly, he wants to keep two energy policies he proposed last spring.

The Pennsylvania Reliable Energy Sustainability Standard (PRESS) would set new ratio goals for how much of the state’s energy comes from alternative and renewable energy sources.

The Pennsylvania Climate Emissions Reduction Act (PACER) would set a cap for how much carbon a power plant could produce. If the power plant goes over the cap, they have to pay a fee, creating a carbon-cap tax. Shapiro says 70% of the revenue from a carbon tax would be given to Pennsylvanians as a rebate on their electric bill.

While environmentalists say cutting back humanity’s carbon footprint is critical, other states that have implemented similar taxes have seen electricity rates go up.

The Shapiro administrations PACER program is reminiscent of the Regional Greenhouse Gas Initiative (RGGI), which Republicans and other energy advocates have heavily opposed for years. 

The Regional Greenhouse Gas Initiative (RGGI) is a carbon-cap tax that eleven states in the north east have joined. Former Governor Tom Wolf signed an executive order in 2019 to let Pennsylvania join the initiative. Republicans sued immediately. Held up in court, the order has never been enforceable.

(In 2023, the Commonwealth Court ruled that RGGI was essentially a tax, and that only the state legislature had authority to approve new taxes. The Supreme Court has yet to try the case.)

PACER aside, many Republican lawmakers say even the threat of RGGI is what has led to the significant decrease in new natural gas power plant proposals in the state. The party has proposed their own solutions to a stalling energy industry.

“We passed legislation to implement an independent office of energy, a watch dog of sorts,” Sen. Joe Pittman (R) said during a press conference this week. Pittman is the Majority Leader for the Senate Republicans. "We also made improvements to chapter 14 to protect [utility] consumers."

Negotiating changes to energy policy are often derailed because of how serious— or unserious— lawmakers take the threat of climate change.

Democrats see initial high costs of promoting new, climate friendly technology and infrastructure as worth the price tag.

Sen. Pittman, when asked about the threat of climate change, said the state’s contribution to any climate change is minimal and not worth the financial burden that can be placed on energy consumers.

The United State’s switch to natural gas over coal consumption has led to decreased carbon emissions. Environmentalists maintain decreased emissions is not the same as zero emissions. Arguments also remain over the safety of fracking. 

As lawmakers look to the year ahead, federal policies could have an impact. President Donald Trump authorized the use of liquid natural gas. There is also reference to de regulation at the federal level, which depending on a state’s own environmental protection regulations, could free up projects that were formerly stalled.