HARRISBURG, Pa. — Governor Josh Shapiro expressed his intentions on Thursday to expedite the development of large power generation facilities in Pennsylvania, coupled with offering substantial tax incentives for projects that contribute electricity to the grid while utilizing hydrogen as part of their operational processes.
This announcement arrives just days prior to Shapiro’s delivery of his third budget plan to the state legislature, during a period of energy instability that could lead to increased electricity costs throughout Pennsylvania, recognized as the second most significant natural gas producer in the United States.
Shapiro, a member of the Democratic Party, articulated a vision to initiate “the next chapter in Pennsylvania’s long history of energy innovation,” aiming for the Commonwealth to remain competitive with other states that are currently luring in substantial projects, including electric vehicle manufacturing sites and data centers.
“Pennsylvania, it’s our moment to enhance our competitiveness. We must take action. It’s essential that we implement significant and determined measures immediately to establish new energy sources, so that Pennsylvania doesn’t lose out,” Shapiro stated during a press briefing at Pittsburgh International Airport.
The governor pointed out that Pennsylvania is one of the mere 12 states lacking a dedicated entity to accelerate the decision-making process for energy project siting. To address this gap, he proposed the establishment of the Pennsylvania Reliable Energy Siting and Electric Transition Board to facilitate permitting and assistance for new energy initiatives.
“We need to get shovels in the ground now rather than waiting for years,” Shapiro emphasized.
The proposed tax incentives are targeted towards major electricity-producing projects that make use of hydrogen and those involved in crafting hydrogen-based aviation fuel. According to the details of Shapiro’s proposal, a new power facility could be eligible for as much as $100 million annually for three successive years, contingent on the volume of power generated.
The Shapiro administration clarified that the specifics of which kinds of power plants would be eligible for these tax credits will be determined by lawmakers. However, they noted that this would not extend to the suggested revival of the now-defunct Three Mile Island nuclear power plant, which would be utilized to supply energy to data centers operated by Microsoft.
At the federal level, recent regulations introduced during former President Joe Biden’s administration mandated that coal-fired and newer, more energy-intensive gas plants significantly reduce their carbon dioxide emissions by 90%. Such measures aim to mitigate greenhouse gas emissions, which are a major contributor to climate change.
Under Shapiro’s proposed tax framework, businesses that utilize hydrogen fuel could potentially qualify for tax credits of up to $49 million each year, while producers of aviation fuel generated from hydrogen could access credits reaching $15 million annually. These hydrogen-related incentives aim to stimulate demand for the two federally supported hydrogen production projects currently involving Pennsylvania’s businesses and institutions, aligning with Biden’s broader initiatives to combat climate change.
These initiatives would still require legislative approval. Republican lawmakers expressed skepticism towards Shapiro’s energy policies, arguing that they present significant obstacles for Pennsylvania to attract companies interested in constructing large natural gas-fired power facilities and stabilizing the power grid.
Renewable energy advocates welcomed Shapiro’s proposals, while business organizations echoed Republican criticisms but found some reassurance in the governor’s emphasis on energy development. Earlier proposals by Shapiro to enforce greenhouse gas payments from power plant owners in Pennsylvania, which is the nation’s third-largest energy-producing state, and require energy utilities to procure more renewable energy had not gained traction in the state legislature.
One specific project that Shapiro is keen to advance is a $1.5 billion plan by CNX Resources, a natural gas firm, to create hydrogen-based fuels at Pittsburgh’s airport. CNX has indicated that this endeavor hinges on federal regulations permitting coal mine methane to qualify for the tax incentives central to Biden’s climate strategy.
The surging demand driven by advancements in cloud computing and artificial intelligence has escalated the need for energy-intensive data centers, which rely heavily on substantial power supplies to manage their servers, storage, networking systems, and cooling operations. This evolving landscape has sparked ideas to revive retired nuclear power facilities, explore small modular reactors, and establish large-scale renewable energy plants or new natural gas facilities.
However, the escalating demand for energy coincides with current supply constraints resulting from efforts to phase out fossil fuels that contribute to global warming, coupled with the decommissioning of aging nuclear plants.
In recent months, governors, including Shapiro, along with state consumer advocates, have urged the operator of the regional electricity grid to lower compensation for power plant operators, cautioning that it could unjustifiably inflate electricity bills for residents across the region.
