Pennsylvania Rolls Out Plan to Fast-Track and Subsidize Hydrogen Power
AI data centers have spurred proposals to bring nuclear power plants out of retirement and develop small modular nuclear reactors.
Gov. Josh Shapiro's plan doesn't include the restart of the shuttered Three Mile Island nuclear power plant
HARRISBURG, Pa., Jan. 31, 2025 (AP) — Gov. Josh Shapiro said Thursday that he wants to fast-track the construction of big power plants in Pennsylvania and offer hundreds of millions of dollars in tax breaks for projects that provide electricity to the grid and use hydrogen.
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Shapiro's announcement comes a few days before he delivers his third budget proposal to lawmakers amid an energy crunch that threatens to raise electricity bills across Pennsylvania, the nation's second-biggest natural gas-producing state.
Shapiro, a Democrat, said he wants to start the “next chapter in Pennsylvania’s long story of energy leadership” and keep pace with other states that are attracting big projects, such as data centers and electric vehicle factories.
"Pennsylvania, it’s time for us to be more competitive. It’s time for us to act. We need to take some big and decisive steps right now, build new sources of power so Pennsylvania doesn't miss out,” Shapiro said at a news conference at Pittsburgh International Airport.
Shapiro said Pennsylvania is one of just 12 states that doesn't have an entity to fast-track siting decisions for energy projects. He wants to change that by creating the Pennsylvania Reliable Energy Siting and Electric Transition Board to streamline permitting and support for new energy projects.
"We need shovels in the ground now, not in the years to come," Shapiro said.
The tax credits Shapiro is proposing are aimed at large projects producing electricity, using hydrogen and making hydrogen-based aviation fuel.
A new power plant could qualify for up to $100 million per year for three years based on the amount of power the facility can produce, under Shapiro's plan.
The Shapiro administration said it would leave it to lawmakers to hammer out what sort of power plants would qualify for a tax credit, although they said it wouldn't include the proposed restart of the shuttered Three Mile Island nuclear power plant to feed data centers run by tech giant Microsoft.
At the federal level, former President Joe Biden's administration enacted rules last year as a centerpiece of his efforts to fight climate change by requiring coal and newer, higher-usage gas plants to slash their carbon dioxide emissions by 90% to reduce planet-warming greenhouse gases from a major source.
For the other tax credits, a user of hydrogen fuel could qualify for up to $49 million a year and an aviation fuel producer could qualify for up to $15 million a year, under Shapiro's plan. The hydrogen-related tax credits are an attempt to create demand for the two federally subsidized hydrogen-making projects in which Pennsylvania or some of its businesses and institutions play a role, another part of Biden’s agenda to slow climate change.
The plans would require approval from lawmakers. Republican lawmakers have been critical of Shapiro’s energy policy, saying it is a major hurdle for Pennsylvania to attract companies that want to build big new natural gas-fired power plants and stabilize the power grid.
Shapiro's plans elicited applause from renewable energy advocates, while business groups echoed Republican criticism, but said they were encouraged by Shapiro's focus on energy.
Shapiro's plan unveiled last year to make power plant owners in the nation’s third-biggest energy-producing state pay for their greenhouse gas emissions and require utilities to buy more electricity from renewable sources gained no traction in the Legislature.
One project Shapiro said he wants to help is a proposal by natural gas producer CNX Resources to build a $1.5 billion facility at Pittsburgh’s airport to make hydrogen-based fuels.
CNX has said it would only go through with it if the federal government allows coal mine methane to qualify for tax credits that were central to Biden's plan to fight climate change.
The rapid growth of cloud computing and artificial intelligence has fueled demand for energy-hungry data centers that need power to run servers, storage systems, networking equipment and cooling systems.
That’s spurred proposals to bring nuclear power plants out of retirement, develop small modular nuclear reactors and build utility-scale renewable installations or new natural gas plants.
However, the growth in energy demand comes at a time when the power supply is already strained by efforts to shift away from planet-warming fossil fuels and the closure of aging nuclear power plants.
In recent months, governors including Shapiro and state ratepayer advocates have pressured the operator of the mid-Atlantic electricity grid to reduce the amount of money it offers to power plant owners, warning that it will unjustifiably raise electricity bills across the region.
This article was written by Marc Levy of the Associated Press.
