I wrote several weeks ago about the challenge of transforming our economy to
reduce our dependence on carbon fuels. I hailed the promising cooperation
between the Governor, the Speaker and the Senate President around energy
issues.
I am pleased to report that their cooperation — and the efforts of many of
us in the legislature — have yielded two major pieces of legislation
which, if finally enacted, will put Massachusetts among the leading states
on energy and climate issues.
The first piece of legislation is the Green Communities Act. The House
passed the GCA last Thursday after 12 months of negotiation.
The GCA seeks to reduce both energy costs and carbon emissions from electric
power utilities and from the furnaces that heat homes and buildings.
The philosophy of the GCA is that environmental progress can be good for
Massachusetts businesses and workers — bringing down operating costs and
also creating new opportunities. A governing principle in its drafting was
to avoid new taxes or rate surcharges.
The key factual premise — shared by most energy scholars — is that most of
our electric and heating systems are still quite inefficient and that
investments in efficiency will payback more rapidly than investments in new
power generating capacity.
The GCA requires utilities to engage in a planning process to identify
cost-effective demand reduction measures before investing in any new
generating capacity.
For example, if a utility projects that electricity demand will soon
outstrip its current generating capacity, it might be cheaper for the
utility to go out and help homeowners install compact flourescent bulbs,
than to add a new power plant.
Complementing this provision in the GCA is a rate-making process ongoing
before the Department of Public Utilities. The DPU, which sets rates for
the investor-owned utilities that serve most of Massachusetts, is proposing
to “decouple” utility profits from the volume of energy sold. Rates would
be set so that utilities could also make money by investing in efficiency
and selling less power.
Secretary of Environmental and Energy Affairs, Ian Bowles, has suggested
that this new planning process in the GCA together with the new rate process
may lead to an increase in efficiency spending on the order of half a
billion dollars in Massachusetts — approximately a four fold increase,
while at the same time reducing rate-payer bills.
The other major thrust of the GCA is to increase investments in renewable
energy sources like wind and solar. The GCA upgrades the renewable
portfolio standard, requiring that utilities purchase more and more of their
power each year from renewable generators. It also requires utilities to
enter into long term contracts with renewable generators, giving them the
guaranteed revenue that they need to support capacity expansion.
For consumers directly, the GCA offers substantial new assistance for both
efficiency measures and the installation of renewables, notably requiring
that utilities allow consumers who install substantial generating capacity
of their own (for example, solar panels) to run their meters backwards and
sell power back to the grid.
The GCA also mandates major changes in the building code to require greater
energy efficiency and also creates financial rules which should make public
buildings more efficient.
The other major piece of legislation moved last week was the Global Warming
Solutions Act, which was reported out to the Senate with a favorable
recommendation by the Joint Committee on the Environment. The GWSA is not
as fully negotiated as the GCA, and is likely subject to more change by both
the House and the Senate before passage.
As currently drafted, the GWSA would adopt the emissions reduction targets
currently being advocated by many environmental organizations — a 20% cut
in carbon emissions below 1990 levels by 2020 and an 80% cut by 2050.
The GWSA puts some real teeth in these requirements. It requires a thorough
inventory of greenhouse gas sources in Massachusetts and careful monitoring
of progress. It gives the Secretary of Energy and Environmental Affairs a
charge to develop a plan that will lead to steady annual progress towards
the stated goals and also gives broad regulatory authority to enforce that
progress.
The GCA and the GWSA are both complex pieces of legislation. They both
recognize the need to move forward on many fronts simultaneously and include
many provisions which I have not mentioned in the summary above.
For a more detailed inventory of where Massachusetts stands on major
strategies to address energy and climate change visit the “page” captioned
“How is Massachusetts reducing fossil fuel dependence?” attached to my
newsletter group, accessible through www.willbrownsberger.com.
It will take several years after final passage to fully evaluate how well we
have done, but these bills are clearly bold steps.
One area only lightly touched by both bills is the transportation sector. I
believe that we need to give buyers of new vehicles much stronger incentives
to purchase fuel efficient vehicles — one amendment to the GCA which I
supported on Thursday but which was not adopted would have done this with
sales tax breaks, but there are many other approaches.