Pennsylvania Governor Unveils Tax Credit Plan to Fast-Track Energy Projects, Boost Production

Pennsylvania Gov. Josh Shapiro speaks during a news conference in Philadelphia on July 30, 2024. Matt Rourke/AP Photo

Pennsylvania Gov. Josh Shapiro said on Thursday that he wants to fast-track the construction of large power plants and provide hundreds of millions of dollars in tax breaks for projects that provide electricity to the grid and use hydrogen.

Shapiro unveiled the plan at a news conference held at Pittsburgh International Airport, which is the site of a $1.5 billion proposed partnership between KeyState Energy and CNX Resources to produce hydrogen-based fuels.

“Pennsylvania has long been a national energy leader, from Ben Franklin to today, but right now, we’re letting other states outcompete us and we’re losing out on jobs, new investment, and innovation—that has to change,” Shapiro said.

Shapiro said his energy plan will power Pennsylvania forward by “incentivizing the building of next generation energy projects in the Commonwealth.”

The governor’s proposal includes funding, via an updated Pennsylvania Economic Development for a Growing Economy (EDGE) manufacturing tax credit, for new projects that produce electricity, use hydrogen, and make hydrogen-based aviation fuel.

It includes a credit of up to $100 million for three years for power plants focused on adding reliable energy sources to the grid and up to $49 million annually for regional hydrogen projects, with lower thresholds to qualify.

Up to $15 million per year will be made available to sustainable aviation fuel producers who make a $250 million capital investment and create 400 jobs, according to Shapiro’s plan.

Pennsylvania is one of only 12 states that doesn’t have an entity to fast-track siting decisions for key energy projects, Shapiro said.

He plans to create the Pennsylvania Reliable Energy Siting and Electric Transition (RESET) Board to streamline the permitting process for building energy projects.

The governor said he wants to encourage communities to lower utility bills through shared energy resources and increase rebates for energy-efficient appliances to help reduce household energy costs.

Shapiro’s office said the governor’s new plan builds upon his administration’s ongoing work to bolster energy security in Pennsylvania.

In March 2024, he announced an emissions reduction plan that included a carbon “cap-and-invest program” to make power plant owners in the state pay for their greenhouse gas emissions. The plan also required utilities to buy more electricity from renewable sources.

These initiatives are projected to save Pennsylvania energy customers $664 million by 2040 and generate $11.4 billion in clean, reliable energy investments, Shapiro’s office said.

The governor said he looks forward to working with the General Assembly to “get this commonsense plan to my desk so that we can lower costs for consumers, create more jobs, and position the Commonwealth to continue to be a national energy leader for decades to come.”

‘Band-Aid for a Broken Bone’

Shapiro’s plan requires approval from lawmakers and is likely to face difficulties in a divided legislature.

Republicans have criticized the governor’s energy policy amid concerns it will hinder Pennsylvania’s efforts to attract companies that want to build new natural gas-fired power plants and stabilize the power grid.

“The questionable agreements & feel-good programs being considered as part of the governor’s energy plan are nothing but a band-aid for a broken bone,” Pennsylvania state Sen. Gene Yaw said in a post to social media platform X. “Until he abandons RGGI, it is difficult to take seriously any statement claiming he wants to ease the power deficit PA is facing.”

The governor’s announcement comes just days before he’s set to deliver his third budget proposal to Pennsylvania lawmakers amid an energy crunch that threatens to raise electricity bills across the state.

The Associated Press contributed to this report.