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PRINTER'S NO. 1480
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 503
Session of
2025
INTRODUCED BY ABNEY, WAXMAN, GIRAL, SAPPEY, HILL-EVANS, HOWARD,
MADDEN, SCHLOSSBERG, PIELLI, OTTEN, MALAGARI, NEILSON,
SANCHEZ, BELLMON, O'MARA, RIVERA, CEPEDA-FREYTIZ, K.HARRIS,
DONAHUE, BOYD, FRANKEL, McNEILL, KHAN, FRIEL, PROKOPIAK,
STEELE, SALISBURY AND BOROWSKI, APRIL 23, 2025
REFERRED TO COMMITTEE ON ENERGY, APRIL 23, 2025
AN ACT
Establishing the Pennsylvania Climate Emissions Reduction
Program; imposing powers and duties on the Environmental
Quality Board, the Pennsylvania Public Utility Commission and
the Department of Environmental Protection; and establishing
the Consumer Protection Account, the Pennsylvania Energy
Transformation Account, the Workforce Enhancement Fund, the
Workforce Enhancement Fund Board and the Low-income Support
Account.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Pennsylvania
Climate Emissions Reduction Act.
Section 2. Findings and purpose.
The General Assembly finds and declares as follows:
(1) The Governor established a working group in April
2023 to evaluate the merits of Pennsylvania's membership in
the Regional Greenhouse Gas Initiative and to consider
proposed alternatives to that membership.
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(2) The working group was comprised of representatives
of organized labor, environmental stakeholders and the energy
industry, including fuel production, electric utilities,
fossil fuel and nuclear generation and consumer advocates.
(3) The working group was charged with ensuring that any
recommendation be developed to protect and create energy
jobs, take real action to address climate change and ensure
reliable, affordable power for Pennsylvania's consumers over
the long term.
(4) The working group found that:
(i) Reducing greenhouse gas emissions in this
Commonwealth is necessary.
(ii) A cap-and-invest carbon regulation for the
power sector that generates revenue to support this
Commonwealth's energy transition would be the optimal
approach for this Commonwealth.
(iii) A cap-and-invest program should include
policies and investment strategies which help avoid any
potential emissions leakage, higher localized pollution,
increased energy costs and job loss.
(5) The purpose of this act is to establish this
Commonwealth as an energy leader by authorizing a
Pennsylvania-run cap-and-invest program.
(6) Upon the establishment of a Pennsylvania-run cap-
and-invest program, this Commonwealth shall not participate
in any other carbon auction addressing emissions from the
electric generation sector unless specifically authorized by
act of the General Assembly.
Section 3. Definitions.
The following words and phrases when used in this act shall
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have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Board." The Environmental Quality Board.
"Commission." The Pennsylvania Public Utility Commission.
"Department." The Department of Environmental Protection of
the Commonwealth.
"Environmental justice area." A geographic area
characterized by increased pollution burden, and sensitive or
vulnerable populations based on demographic and environmental
data as identified by the department.
"PACER." The Pennsylvania Climate Emissions Reduction
Program established under this act.
"Regulatory Review Act." The act of June 25, 1982 (P.L.633,
No.181), known as the Regulatory Review Act.
Section 4. Pennsylvania Climate Emissions Reduction Program.
(a) Establishment.--The Pennsylvania Climate Emissions
Reduction Program is established within the department for the
purpose of implementing a Pennsylvania-run CO2 Budget Trading
Program.
(b) Pennsylvania-run auction.--Notwithstanding 25 Pa. Code §
145.401(a) (relating to auction of CO2 allowances), the
department shall conduct a Pennsylvania-run auction in
accordance with 25 Pa. Code § 145.401(b).
(c) Implementation and administrative support.--The
department may delegate implementation and administrative
support functions for any CO2 allowance auction conducted under
25 Pa. Code §§ 145.401 through 145.409 (relating to approval of
auction results) to an agent qualified to conduct auctions
provided that the agent performs all functions under the
direction and oversight of the department.
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(d) Compliance.--Notwithstanding subsection (c), the
department shall:
(1) Retain its authority to enforce compliance with 25
Pa. Code Ch. 145 Subch. E (relating to CO2 Budget Trading
Program) except as otherwise provided in this act.
(2) Retain control over the proceeds associated with the
sale of Pennsylvania CO2 allowances.
(3) Deposit the proceeds in accordance with section 7.
(e) Other states.--
(1) Allowances issued by the Pennsylvania-run auction
conducted in accordance with subsection (b) may be offered
for compliance purposes in another state if permitted by the
laws of that state.
(2) Allowances issued by another cap-and-invest program
shall be accepted by the department for compliance with PACER
if the department determines that the CO2 emissions
represented by an allowance issued by another program are
approximately equal to or greater than the CO2 emissions
represented by an allowance issued by PACER.
(f) Auction participation and monitoring.--
(1) Notwithstanding any other provision of law, only the
following categories of parties shall be eligible to
participate in Pennsylvania-run auctions conducted under this
act:
(i) The owner or operator of an electricity
generator with a nameplate capacity equal to or greater
than 25 megawatts electrical.
(ii) A broker.
(iii) A financial or investment institution.
(iv) A market participant as specified in the notice
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of a Pennsylvania-run auction.
(2) A nonprofit entity shall be ineligible to
participate in Pennsylvania-run auctions.
(3) The department shall select an independent market
monitor, such as a certified public accounting firm or
similar entity, to observe the conduct and outcome of each
auction and the independent market monitor shall issue a
report to the department in accordance with professional
auditing standards addressing whether the auction was
conducted in accordance with all statutory and regulatory
requirements and whether there was any indication of
collusive behavior among auction participants or attempts at
market manipulation that impacted the results of the auction.
(4) The department may prohibit an otherwise qualified
party from participating in a Pennsylvania-run auction under
this act if the department determines that conduct by the
party could compromise the integrity of the Pennsylvania-run
auction.
Section 5. PACER emissions budget.
(a) Review.--
(1) Within 120 days of the effective date of this
paragraph, the department shall review the Pennsylvania CO2
Budget Trading Program base budget established in 25 Pa. Code
§ 145.341 (relating to Pennsylvania CO2 Budget Trading
Program base budget) and consider the impact of the base
budget on jobs, consumers and the environment to determine
whether revisions to the base budget are needed.
(2) In evaluating the impact of the base budget on jobs,
the department shall consider available studies regarding the
impact of a PACER emission budget on energy-related
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employment and shall consult with representatives of
organized labor.
(3) In evaluating the impact of the base budget on
consumers, the department shall consider available economic
modeling regarding the impact of a PACER emission budget on
costs, if any, passed on to consumers, and shall consult with
the Consumer Advocate of the Commonwealth and advocates for
low-income Pennsylvanians and representatives of large energy
users.
(4) In evaluating the impact of the base budget on the
environment, the department shall consider available studies
and modeling regarding the impact of a PACER emission budget
on emissions and compliance with existing and proposed
Federal regulations of new and existing power plants, as well
as the impacts on vulnerable communities, and shall consult
with representatives of environmental nonprofit
organizations, environmental justice advocates, academic
institutions and the electric industry.
(b) Revisions.--If the department determines that revisions
to the base budget are needed, the department shall recommend a
revised PACER emissions budget to the board.
(c) Final omitted regulation.--The board may promulgate a
final-omitted regulation under the Regulatory Review Act to
amend 25 Pa. Code § 145.341 and adopt a PACER emissions budget
as recommended by the department under this section.
(d) Set-aside allocations.--The department shall retain
allowance set-aside allocations, including the waste coal
allowance set-aside and the combined heat and power allowance
set-aside, in no less than the amounts specified in 25 Pa. Code
§ 145.342 (relating to CO2 allowance allocations).
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Section 6. Prohibition.
After the effective date of the regulation adopting a PACER
emissions budget in accordance with section 5, the department is
prohibited from joining or participating in a CO2 allowance
auction addressing emissions from the electric generation sector
other than the Pennsylvania-run program established by this act,
unless an act of the General Assembly enacted after the
effective date of this section specifically authorizes such
joinder or participation.
Section 7. Deposit of auction proceeds from PACER.
(a) Proceeds and expenditures.--The auction proceeds
authorized and collected under section 4 shall be deposited into
the State Treasury as follows and may not be expended except as
provided in this section:
(1) Seventy percent of the auction proceeds shall be
deposited into the Consumer Protection Account established
under subsection (b).
(2) Ten percent of the auction proceeds shall be
deposited into the Pennsylvania Energy Transformation Account
established under subsection (c).
(3) Ten percent of the auction proceeds shall be
deposited into the Workforce Enhancement Fund established
under subsection (d).
(4) The balance of the auction proceeds shall be
deposited into the Low-Income Support Account established
under subsection (e).
(b) Consumer Protection Account.--
(1) The Consumer Protection Account is established in
the General Fund. The money in the Consumer Protection
Account is appropriated on a continuing basis to the
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commission for the purpose of paying rebates to electric
ratepayers calculated on a per-kilowatt-hour basis.
(2) The commission shall promulgate a final-omitted
regulation under the Regulatory Review Act to establish a
system under which money from the Consumer Protection Account
is payable to electric ratepayers, including customers of
electric cooperative corporations, as direct credits on their
electric bills.
(3) The commission shall require that entities receiving
payment from the Consumer Protection Account on behalf of
ratepayers provide the amount of the direct credit on a line
on each customer's bill with the title "PACER Bill Credit."
(c) Pennsylvania Energy Transformation Account.--
(1) The Pennsylvania Energy Transformation Account is
established in the General Fund. The money in the
Pennsylvania Energy Transformation Account is appropriated on
a continuing basis to the department for administering PACER
and for grant programs to support projects that eliminate air
pollution and for other purposes authorized under this
subsection. No less than 40% of money in the account shall be
allocated to projects located in environmental justice areas.
(2) Eligible projects for the grant program shall
include:
(i) Cost-effective carbon capture utilization and
storage.
(ii) Abandoned oil and gas well plugging.
(iii) Mass transit and electric vehicle
transportation.
(iv) Agricultural conservation.
(v) Forest stewardship.
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(vi) Process electrification.
(vii) Fuel switching.
(viii) Combined heat and power.
(ix) Demand response and reduction.
(x) Energy efficiency, including HVAC and building
envelope improvements.
(xi) Cost-effective carbon capture utilization and
storage.
(xii) Clean and renewable energy investments,
including biomass, geothermal, hydropower, energy storage
and solar and wind technologies.
(xiii) Projects that contribute to the reduction or
elimination of greenhouse gas pollution.
(3) The department may enter into a memorandum of
understanding with the Department of Community and Economic
Development to allocate money available under this subsection
to the State Weatherization Assistance Program.
(4) Up to 5% of the unencumbered and uncommitted balance
of the account may be used for the department's costs to
administer PACER. The department shall submit to the Governor
each fiscal year, for approval or disapproval, estimates of
the amount of money to be expended from the account for
administration of PACER as part of the department's annual
budget request in accordance with Article VI of the act of
April 9, 1929 (P.L.177, No.175), known as The Administrative
Code of 1929.
(5) The State Treasurer may not issue a warrant for
payment from the account for the purpose described in
paragraph (4) in excess of the amount approved by the
Governor under paragraph (4).
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(6) The department shall submit an annual report to the
General Assembly related to the projects under this
subsection, including information on the projects located in
environmental justice areas and the percentage of the account
used for the projects.
(d) Workforce Enhancement Fund.--
(1) The Workforce Enhancement Fund is established as a
nonlapsing fund in the State Treasury for energy projects.
All interest earned from the investment or deposit of money
accumulated in the Workforce Enhancement Fund shall be
deposited into the fund for the same use. All money deposited
into the Workforce Enhancement Fund shall be held in trust,
shall not be considered general revenue of the Commonwealth,
shall be used only to effectuate the purposes of this
subsection, as determined by the Workforce Enhancement Fund
Board, and shall be subject to audit by the Auditor General.
The money in the fund is appropriated on a continuing basis
to the department.
(2) A grantee awarded money under this subsection must
pay at least the prevailing wage rate for workers on the
project.
(3) No less than 40% of money in the fund shall be
allocated to projects located in environmental justice areas.
(4) The money in the fund may be used for grant programs
to support energy investments, including the following:
(i) Projects to identify new uses for legacy coal
and natural gas sites such as small modular reactor
development and construction, geothermal, battery
storage, natural gas with carbon capture and
manufacturing.
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(ii) Projects to advance carbon capture utilization
and storage technology, including development and
deployment at existing facilities and sites.
(iii) Clean hydrogen production, consumption and
electric generation project development.
(iv) Solar projects, particularly rooftop solar, on
schools and warehouses and community solar.
(v) Methane well capping and capture projects.
(vi) Establishment of training programs to ensure
workers are local and plugging is done to fully mitigate
emissions.
(vii) Projects to improve compliance with Federal
and State environmental requirements at existing
generating units, including control technology to reduce
air emissions.
(5) The Workforce Enhancement Fund Board is established
and shall administer the fund for the purposes specified
under this subsection.
(6) The Workforce Enhancement Fund Board shall consist
of the following members:
(i) The Governor or a designee who must be
designated in writing prior to serving as designee.
(ii) The Secretary of Community and Economic
Development or a designee who must be an employee of the
Department of Community and Economic Development and
designated in writing prior to serving as designee.
(iii) The Secretary of Environmental Protection or a
designee who must be an employee of the department and
designated in writing prior to serving as designee.
(iv) The Secretary of Labor and Industry or a
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designee who must be an employee of the Department of
Labor and Industry and designated in writing prior to
serving as designee.
(v) Five members appointed by the Governor as
follows:
(A) Four of which members must be chosen from a
list of candidates recommended by the president of
the Pennsylvania Building and Construction Trades
Council and one of whom shall be designated as chair.
(B) One of which member must be the executive
director or a member of the State Workforce
Development Board.
(vi) One member appointed by the President pro
tempore of the Senate.
(vii) One member appointed by the Minority Leader of
the Senate.
(viii) One member appointed by the Speaker of the
House of Representatives.
(ix) One member appointed by the Minority Leader of
the House of Representatives.
(7) Initially, from the appointees under paragraph (6)
(v), three members shall be appointed for terms of two years
and two members shall be appointed for terms of four years.
The terms of the members' successors shall be four years
each, except that any person appointed to fill a vacancy
shall serve only for the unexpired term. A member's term
shall extend until the member's successor is appointed and
qualified. An appointed member of the board shall be eligible
for reappointment.
(8) The board shall hold its first meeting within 90
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days of the effective date of this paragraph.
(9) The members of the board may not be compensated for
service as members but shall be entitled to reimbursement for
all necessary expenses incurred in connection with the
performance of their duties as members. Reimbursements shall
be allocated from money available from the fund established
under this subsection.
(10) The board shall provide for the holding of regular
and special meetings at least biannually at the call of the
chair. Seven members shall constitute a quorum for the
transaction of any business and a majority of the members
present shall be required to adopt any action.
(11) The board has the power and duty, including:
(i) Adopt bylaws, if necessary.
(ii) Make, execute and deliver contracts and grant
agreements.
(iii) Develop, within one year of the board's
establishment and biennially thereafter, a State plan for
the availability and distribution of money from the fund
established under this section. The board shall make the
State plan available on its publicly accessible Internet
website.
(iv) Administer and award grants from the fund to
eligible energy community projects and monitor the
expenditure of money in the fund.
(v) Perform other operational activities necessary
or appropriate to further the purpose of this section.
(vi) Submit an annual report to the General Assembly
detailing grant programs, activities and outcomes. The
annual report shall include information on the projects
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located in environmental justice areas, including the
percentage of the fund used for such projects.
(12) Administrative support for the board shall be
provided by the Department of Labor and Industry.
(13) The following acts shall apply to the board:
(i) The act of July 19, 1957 (P.L.1017, No.451),
known as the State Adverse Interest Act.
(ii) The act of February 14, 2008 (P.L.6, No.3),
known as the Right-to-Know Law.
(iii) The provisions of 65 Pa.C.S. Chs. 7 (relating
to open meetings) and 11 (relating to ethics standards
and financial disclosure).
(e) Low-Income Support Account.--The Low-Income Support
Account is established in the General Fund. Money deposited into
the Low-Income Support Account shall be used, in accordance with
law, to supplement Low-Income Home Energy Assistance Program
grants or other grants that provide cooling assistance for
eligible customers who seek financial resources to cover cooling
expenses.
Section 8. Effective date.
This act shall take effect immediately.
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