HB 503 — 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.

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
 1   Establishing the Pennsylvania Climate Emissions Reduction
 2      Program; imposing powers and duties on the Environmental
 3      Quality Board, the Pennsylvania Public Utility Commission and
 4      the Department of Environmental Protection; and establishing
 5      the Consumer Protection Account, the Pennsylvania Energy
 6      Transformation Account, the Workforce Enhancement Fund, the
 7      Workforce Enhancement Fund Board and the Low-income Support
 8      Account.
 9      The General Assembly of the Commonwealth of Pennsylvania
10   hereby enacts as follows:
11   Section 1.   Short title.
12      This act shall be known and may be cited as the Pennsylvania
13   Climate Emissions Reduction Act.
14   Section 2.   Findings and purpose.
15      The General Assembly finds and declares as follows:
16          (1)   The Governor established a working group in April
17      2023 to evaluate the merits of Pennsylvania's membership in
18      the Regional Greenhouse Gas Initiative and to consider
19      proposed alternatives to that membership.
 1          (2)   The working group was comprised of representatives
 2      of organized labor, environmental stakeholders and the energy
 3      industry, including fuel production, electric utilities,
 4      fossil fuel and nuclear generation and consumer advocates.
 5          (3)   The working group was charged with ensuring that any
 6      recommendation be developed to protect and create energy
 7      jobs, take real action to address climate change and ensure
 8      reliable, affordable power for Pennsylvania's consumers over
 9      the long term.
10          (4)   The working group found that:
11                (i)    Reducing greenhouse gas emissions in this
12          Commonwealth is necessary.
13                (ii)    A cap-and-invest carbon regulation for the
14          power sector that generates revenue to support this
15          Commonwealth's energy transition would be the optimal
16          approach for this Commonwealth.
17                (iii)    A cap-and-invest program should include
18          policies and investment strategies which help avoid any
19          potential emissions leakage, higher localized pollution,
20          increased energy costs and job loss.
21          (5)   The purpose of this act is to establish this
22      Commonwealth as an energy leader by authorizing a
23      Pennsylvania-run cap-and-invest program.
24          (6)   Upon the establishment of a Pennsylvania-run cap-
25      and-invest program, this Commonwealth shall not participate
26      in any other carbon auction addressing emissions from the
27      electric generation sector unless specifically authorized by
28      act of the General Assembly.
29   Section 3.   Definitions.
30      The following words and phrases when used in this act shall

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 1   have the meanings given to them in this section unless the
 2   context clearly indicates otherwise:
 3      "Board."     The Environmental Quality Board.
 4      "Commission."     The Pennsylvania Public Utility Commission.
 5      "Department."     The Department of Environmental Protection of
 6   the Commonwealth.
 7      "Environmental justice area."        A geographic area
 8   characterized by increased pollution burden, and sensitive or
 9   vulnerable populations based on demographic and environmental
10   data as identified by the department.
11      "PACER."     The Pennsylvania Climate Emissions Reduction
12   Program established under this act.
13      "Regulatory Review Act."     The act of June 25, 1982 (P.L.633,
14   No.181), known as the Regulatory Review Act.
15   Section 4.    Pennsylvania Climate Emissions Reduction Program.
16      (a)     Establishment.--The Pennsylvania Climate Emissions
17   Reduction Program is established within the department for the
18   purpose of implementing a Pennsylvania-run CO2 Budget Trading
19   Program.
20      (b)     Pennsylvania-run auction.--Notwithstanding 25 Pa. Code §
21   145.401(a) (relating to auction of CO2 allowances), the
22   department shall conduct a Pennsylvania-run auction in
23   accordance with 25 Pa. Code § 145.401(b).
24      (c)     Implementation and administrative support.--The
25   department may delegate implementation and administrative
26   support functions for any CO2 allowance auction conducted under
27   25 Pa. Code §§ 145.401 through 145.409 (relating to approval of
28   auction results) to an agent qualified to conduct auctions
29   provided that the agent performs all functions under the
30   direction and oversight of the department.

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 1      (d)    Compliance.--Notwithstanding subsection (c), the
 2   department shall:
 3             (1)   Retain its authority to enforce compliance with 25
 4      Pa. Code Ch. 145 Subch. E (relating to CO2 Budget Trading
 5      Program) except as otherwise provided in this act.
 6             (2)   Retain control over the proceeds associated with the
 7      sale of Pennsylvania CO2 allowances.
 8             (3)   Deposit the proceeds in accordance with section 7.
 9      (e)    Other states.--
10             (1)   Allowances issued by the Pennsylvania-run auction
11      conducted in accordance with subsection (b) may be offered
12      for compliance purposes in another state if permitted by the
13      laws of that state.
14             (2)   Allowances issued by another cap-and-invest program
15      shall be accepted by the department for compliance with PACER
16      if the department determines that the CO2 emissions
17      represented by an allowance issued by another program are
18      approximately equal to or greater than the CO2 emissions
19      represented by an allowance issued by PACER.
20      (f)    Auction participation and monitoring.--
21             (1)   Notwithstanding any other provision of law, only the
22      following categories of parties shall be eligible to
23      participate in Pennsylvania-run auctions conducted under this
24      act:
25                   (i)    The owner or operator of an electricity
26             generator with a nameplate capacity equal to or greater
27             than 25 megawatts electrical.
28                   (ii)    A broker.
29                   (iii)    A financial or investment institution.
30                   (iv)    A market participant as specified in the notice

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 1            of a Pennsylvania-run auction.
 2            (2)   A nonprofit entity shall be ineligible to
 3      participate in Pennsylvania-run auctions.
 4            (3)   The department shall select an independent market
 5      monitor, such as a certified public accounting firm or
 6      similar entity, to observe the conduct and outcome of each
 7      auction and the independent market monitor shall issue a
 8      report to the department in accordance with professional
 9      auditing standards addressing whether the auction was
10      conducted in accordance with all statutory and regulatory
11      requirements and whether there was any indication of
12      collusive behavior among auction participants or attempts at
13      market manipulation that impacted the results of the auction.
14            (4)   The department may prohibit an otherwise qualified
15      party from participating in a Pennsylvania-run auction under
16      this act if the department determines that conduct by the
17      party could compromise the integrity of the Pennsylvania-run
18      auction.
19   Section 5.     PACER emissions budget.
20      (a)   Review.--
21            (1)   Within 120 days of the effective date of this
22      paragraph, the department shall review the Pennsylvania CO2
23      Budget Trading Program base budget established in 25 Pa. Code
24      § 145.341 (relating to Pennsylvania CO2 Budget Trading
25      Program base budget) and consider the impact of the base
26      budget on jobs, consumers and the environment to determine
27      whether revisions to the base budget are needed.
28            (2)   In evaluating the impact of the base budget on jobs,
29      the department shall consider available studies regarding the
30      impact of a PACER emission budget on energy-related

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 1      employment and shall consult with representatives of
 2      organized labor.
 3            (3)   In evaluating the impact of the base budget on
 4      consumers, the department shall consider available economic
 5      modeling regarding the impact of a PACER emission budget on
 6      costs, if any, passed on to consumers, and shall consult with
 7      the Consumer Advocate of the Commonwealth and advocates for
 8      low-income Pennsylvanians and representatives of large energy
 9      users.
10            (4)   In evaluating the impact of the base budget on the
11      environment, the department shall consider available studies
12      and modeling regarding the impact of a PACER emission budget
13      on emissions and compliance with existing and proposed
14      Federal regulations of new and existing power plants, as well
15      as the impacts on vulnerable communities, and shall consult
16      with representatives of environmental nonprofit
17      organizations, environmental justice advocates, academic
18      institutions and the electric industry.
19      (b)   Revisions.--If the department determines that revisions
20   to the base budget are needed, the department shall recommend a
21   revised PACER emissions budget to the board.
22      (c)   Final omitted regulation.--The board may promulgate a
23   final-omitted regulation under the Regulatory Review Act to
24   amend 25 Pa. Code § 145.341 and adopt a PACER emissions budget
25   as recommended by the department under this section.
26      (d)   Set-aside allocations.--The department shall retain
27   allowance set-aside allocations, including the waste coal
28   allowance set-aside and the combined heat and power allowance
29   set-aside, in no less than the amounts specified in 25 Pa. Code
30   § 145.342 (relating to CO2 allowance allocations).

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 1   Section 6.     Prohibition.
 2      After the effective date of the regulation adopting a PACER
 3   emissions budget in accordance with section 5, the department is
 4   prohibited from joining or participating in a CO2 allowance
 5   auction addressing emissions from the electric generation sector
 6   other than the Pennsylvania-run program established by this act,
 7   unless an act of the General Assembly enacted after the
 8   effective date of this section specifically authorizes such
 9   joinder or participation.
10   Section 7.     Deposit of auction proceeds from PACER.
11      (a)   Proceeds and expenditures.--The auction proceeds
12   authorized and collected under section 4 shall be deposited into
13   the State Treasury as follows and may not be expended except as
14   provided in this section:
15            (1)   Seventy percent of the auction proceeds shall be
16      deposited into the Consumer Protection Account established
17      under subsection (b).
18            (2)   Ten percent of the auction proceeds shall be
19      deposited into the Pennsylvania Energy Transformation Account
20      established under subsection (c).
21            (3)   Ten percent of the auction proceeds shall be
22      deposited into the Workforce Enhancement Fund established
23      under subsection (d).
24            (4)   The balance of the auction proceeds shall be
25      deposited into the Low-Income Support Account established
26      under subsection (e).
27      (b)   Consumer Protection Account.--
28            (1)   The Consumer Protection Account is established in
29      the General Fund. The money in the Consumer Protection
30      Account is appropriated on a continuing basis to the

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 1    commission for the purpose of paying rebates to electric
 2    ratepayers calculated on a per-kilowatt-hour basis.
 3          (2)   The commission shall promulgate a final-omitted
 4    regulation under the Regulatory Review Act to establish a
 5    system under which money from the Consumer Protection Account
 6    is payable to electric ratepayers, including customers of
 7    electric cooperative corporations, as direct credits on their
 8    electric bills.
 9          (3)   The commission shall require that entities receiving
10    payment from the Consumer Protection Account on behalf of
11    ratepayers provide the amount of the direct credit on a line
12    on each customer's bill with the title "PACER Bill Credit."
13    (c)   Pennsylvania Energy Transformation Account.--
14          (1)   The Pennsylvania Energy Transformation Account is
15    established in the General Fund. The money in the
16    Pennsylvania Energy Transformation Account is appropriated on
17    a continuing basis to the department for administering PACER
18    and for grant programs to support projects that eliminate air
19    pollution and for other purposes authorized under this
20    subsection. No less than 40% of money in the account shall be
21    allocated to projects located in environmental justice areas.
22          (2)   Eligible projects for the grant program shall
23    include:
24                (i)    Cost-effective carbon capture utilization and
25          storage.
26                (ii)    Abandoned oil and gas well plugging.
27                (iii)    Mass transit and electric vehicle
28          transportation.
29                (iv)    Agricultural conservation.
30                (v)    Forest stewardship.

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 1              (vi)    Process electrification.
 2              (vii)    Fuel switching.
 3              (viii)    Combined heat and power.
 4              (ix)    Demand response and reduction.
 5              (x)    Energy efficiency, including HVAC and building
 6        envelope improvements.
 7              (xi)    Cost-effective carbon capture utilization and
 8        storage.
 9              (xii)    Clean and renewable energy investments,
10        including biomass, geothermal, hydropower, energy storage
11        and solar and wind technologies.
12              (xiii)    Projects that contribute to the reduction or
13        elimination of greenhouse gas pollution.
14        (3)   The department may enter into a memorandum of
15    understanding with the Department of Community and Economic
16    Development to allocate money available under this subsection
17    to the State Weatherization Assistance Program.
18        (4)   Up to 5% of the unencumbered and uncommitted balance
19    of the account may be used for the department's costs to
20    administer PACER. The department shall submit to the Governor
21    each fiscal year, for approval or disapproval, estimates of
22    the amount of money to be expended from the account for
23    administration of PACER as part of the department's annual
24    budget request in accordance with Article VI of the act of
25    April 9, 1929 (P.L.177, No.175), known as The Administrative
26    Code of 1929.
27        (5)   The State Treasurer may not issue a warrant for
28    payment from the account for the purpose described in
29    paragraph (4) in excess of the amount approved by the
30    Governor under paragraph (4).

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 1          (6)   The department shall submit an annual report to the
 2    General Assembly related to the projects under this
 3    subsection, including information on the projects located in
 4    environmental justice areas and the percentage of the account
 5    used for the projects.
 6    (d)   Workforce Enhancement Fund.--
 7          (1)   The Workforce Enhancement Fund is established as a
 8    nonlapsing fund in the State Treasury for energy projects.
 9    All interest earned from the investment or deposit of money
10    accumulated in the Workforce Enhancement Fund shall be
11    deposited into the fund for the same use. All money deposited
12    into the Workforce Enhancement Fund shall be held in trust,
13    shall not be considered general revenue of the Commonwealth,
14    shall be used only to effectuate the purposes of this
15    subsection, as determined by the Workforce Enhancement Fund
16    Board, and shall be subject to audit by the Auditor General.
17    The money in the fund is appropriated on a continuing basis
18    to the department.
19          (2)   A grantee awarded money under this subsection must
20    pay at least the prevailing wage rate for workers on the
21    project.
22          (3)   No less than 40% of money in the fund shall be
23    allocated to projects located in environmental justice areas.
24          (4)   The money in the fund may be used for grant programs
25    to support energy investments, including the following:
26                (i)   Projects to identify new uses for legacy coal
27          and natural gas sites such as small modular reactor
28          development and construction, geothermal, battery
29          storage, natural gas with carbon capture and
30          manufacturing.

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 1              (ii)    Projects to advance carbon capture utilization
 2        and storage technology, including development and
 3        deployment at existing facilities and sites.
 4              (iii)    Clean hydrogen production, consumption and
 5        electric generation project development.
 6              (iv)    Solar projects, particularly rooftop solar, on
 7        schools and warehouses and community solar.
 8              (v)    Methane well capping and capture projects.
 9              (vi)    Establishment of training programs to ensure
10        workers are local and plugging is done to fully mitigate
11        emissions.
12              (vii)    Projects to improve compliance with Federal
13        and State environmental requirements at existing
14        generating units, including control technology to reduce
15        air emissions.
16        (5)   The Workforce Enhancement Fund Board is established
17    and shall administer the fund for the purposes specified
18    under this subsection.
19        (6)   The Workforce Enhancement Fund Board shall consist
20    of the following members:
21              (i)    The Governor or a designee who must be
22        designated in writing prior to serving as designee.
23              (ii)    The Secretary of Community and Economic
24        Development or a designee who must be an employee of the
25        Department of Community and Economic Development and
26        designated in writing prior to serving as designee.
27              (iii)    The Secretary of Environmental Protection or a
28        designee who must be an employee of the department and
29        designated in writing prior to serving as designee.
30              (iv)    The Secretary of Labor and Industry or a

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 1        designee who must be an employee of the Department of
 2        Labor and Industry and designated in writing prior to
 3        serving as designee.
 4              (v)    Five members appointed by the Governor as
 5        follows:
 6                     (A)    Four of which members must be chosen from a
 7              list of candidates recommended by the president of
 8              the Pennsylvania Building and Construction Trades
 9              Council and one of whom shall be designated as chair.
10                     (B)    One of which member must be the executive
11              director or a member of the State Workforce
12              Development Board.
13              (vi)    One member appointed by the President pro
14        tempore of the Senate.
15              (vii)    One member appointed by the Minority Leader of
16        the Senate.
17              (viii)       One member appointed by the Speaker of the
18        House of Representatives.
19              (ix)    One member appointed by the Minority Leader of
20        the House of Representatives.
21        (7)   Initially, from the appointees under paragraph (6)
22    (v), three members shall be appointed for terms of two years
23    and two members shall be appointed for terms of four years.
24    The terms of the members' successors shall be four years
25    each, except that any person appointed to fill a vacancy
26    shall serve only for the unexpired term. A member's term
27    shall extend until the member's successor is appointed and
28    qualified. An appointed member of the board shall be eligible
29    for reappointment.
30        (8)   The board shall hold its first meeting within 90

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 1    days of the effective date of this paragraph.
 2        (9)    The members of the board may not be compensated for
 3    service as members but shall be entitled to reimbursement for
 4    all necessary expenses incurred in connection with the
 5    performance of their duties as members. Reimbursements shall
 6    be allocated from money available from the fund established
 7    under this subsection.
 8        (10)    The board shall provide for the holding of regular
 9    and special meetings at least biannually at the call of the
10    chair. Seven members shall constitute a quorum for the
11    transaction of any business and a majority of the members
12    present shall be required to adopt any action.
13        (11)    The board has the power and duty, including:
14               (i)    Adopt bylaws, if necessary.
15               (ii)    Make, execute and deliver contracts and grant
16        agreements.
17               (iii)    Develop, within one year of the board's
18        establishment and biennially thereafter, a State plan for
19        the availability and distribution of money from the fund
20        established under this section. The board shall make the
21        State plan available on its publicly accessible Internet
22        website.
23               (iv)    Administer and award grants from the fund to
24        eligible energy community projects and monitor the
25        expenditure of money in the fund.
26               (v)    Perform other operational activities necessary
27        or appropriate to further the purpose of this section.
28               (vi)    Submit an annual report to the General Assembly
29        detailing grant programs, activities and outcomes. The
30        annual report shall include information on the projects

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 1            located in environmental justice areas, including the
 2            percentage of the fund used for such projects.
 3            (12)    Administrative support for the board shall be
 4      provided by the Department of Labor and Industry.
 5            (13)    The following acts shall apply to the board:
 6                   (i)    The act of July 19, 1957 (P.L.1017, No.451),
 7            known as the State Adverse Interest Act.
 8                   (ii)    The act of February 14, 2008 (P.L.6, No.3),
 9            known as the Right-to-Know Law.
10                   (iii)    The provisions of 65 Pa.C.S. Chs. 7 (relating
11            to open meetings) and 11 (relating to ethics standards
12            and financial disclosure).
13      (e)   Low-Income Support Account.--The Low-Income Support
14   Account is established in the General Fund. Money deposited into
15   the Low-Income Support Account shall be used, in accordance with
16   law, to supplement Low-Income Home Energy Assistance Program
17   grants or other grants that provide cooling assistance for
18   eligible customers who seek financial resources to cover cooling
19   expenses.
20   Section 8.      Effective date.
21      This act shall take effect immediately.




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