Viewpoints: How clean energy can help save Connecticut’s budget
As the state’s budget battle continues, debate over cutting costs and raising revenue has not focused on a promising strategy – ramping up clean energy efforts to grow our way out of the budget problem. Deploying solar and increasing building energy efficiency cuts air pollution, reduces energy costs, creates jobs, and stimulates the state’s economy – all while putting more tax revenue in state coffers. We can help plug the budget gap by strengthening our clean energy economy. The two work together.
What we absolutely should not do is raid clean energy funds.
An essential part of Connecticut’s clean energy economy transition is the Regional Greenhouse Gas Initiative (RGGI), a multi-state cap-and-invest system to reduce carbon dioxide emissions from the electric power sector. Through RGGI auctions of carbon allowances, Connecticut has raised and reinvested $160 million in programs that help residents and businesses save money on electricity and heating bills—which means more disposable income to spend.
RGGI fund raids would cause consumers to lose out on significant savings on their energy bills, with every raided dollar costing consumers nearly three more. An Abt Associates analysis shows that by reducing air pollution, RGGI has decreased health impacts and saved lives, avoiding up to $300 million in healthcare costs in Connecticut.
Simply put: if RGGI funds are raided, Connecticut loses.
Similarly, Connecticut’s Energy Efficiency Fund (funded in part by RGGI proceeds) helps support nearly 34,000 jobs in technical fields like home performance and HVAC, and saved $3.5 billion for Connecticut households and businesses over the past decade.
Every dollar invested by Connecticut’s energy efficiency programs saves $3.89 on utility bills. Yet this fund – paid for by ratepayers for their benefit – is raided in the Senate Republican budget proposal still on the table. Sweeping money from these programs is shortsighted and would damage Connecticut’s economy, health, and quality of life for years to come.
Beyond protecting critical energy programs from budget raids, our state legislators and governor should be proactive. Here are four clean energy policies lawmakers and the administration can act on now to aid Connecticut’s fiscal health:
- Reduce state agencies’ energy expenditures. Expanding and extending Connecticut’s Lead by Example program, which lets agencies use future energy savings to finance efficient upgrades to aging facilities, could save about $45 to 60 million every year.
- Set up a full-scale shared solar program. According to Vote Solar, this proven approach can deliver more than 2,500 new jobs, $370 million in local economic benefits, and $80 million in property taxes. Similarly, expanding virtual net metering to help speed solar deployment will save municipalities hundreds of thousands of dollars a year in energy costs—badly-needed funds given the anticipated deep cuts to local aid.
- Allow electric vehicle manufacturers like Tesla to sell cars directly to in-state consumers. Tesla estimates it will generate $12 million in sales tax revenue if allowed to open six stores, and it is willing to pay any shortfall to the state after two years. Acadia Center analysis shows that this benefit would come at no cost to existing dealership jobs. Making electric vehicles easier to buy also helps the state tackle a major source of air pollution—cars and trucks—which causes respiratory ailments, imposing huge medical costs.
- Establish a regional policy to reduce transportation climate emissions while generating revenue for reinvestment. Acadia Center analysis shows that pricing CO2 emissions from the transportation sector could generate hundreds of millions of dollars annually. At a time when the state’s transportation funding is in crisis, these funds could put cleaner buses on the road and build a better-running rail system, improving community access to transportation.
The bottom line: a clean energy economy is one that is strong and growing. Both legislators and the governor have important roles to play in ensuring a forward-looking energy agenda, from robust funding for efficiency programs to an ambitious final Comprehensive Energy Strategy. With Connecticut’s frequent failing grades in both air quality and budget health, the state desperately needs to adopt a clean energy budget for the future.
Claire Coleman is Climate & Energy Attorney for Connecticut Fund for the Environment. Kerry Schlichting is Policy Advocate for Acadia Center.
This op-ed was published in the CT Mirror.
EnergyVision 2030 for Massachusetts
Massachusetts has a strong record addressing climate-changing pollution. In the early 2000s, Massachusetts was a founding partner in the Regional Greenhouse Gas Initiative (RGGI), a multi-state, bipartisan cooperative that has contributed to a 50% drop in power plant emissions. Passage of the Green Communities Act in 2008 led to nation-leading energy efficiency policies that reduce energy waste and save consumers billions of dollars. Last year, the Baker Administration and Legislature collaborated on landmark legislation to launch the U.S. offshore wind industry, enable further growth of onshore wind and solar power, import Canadian hydroelectricity, and place the Commonwealth at the forefront of the booming energy storage industry. Most recently, Gov. Baker committed Massachusetts to the United States Climate Alliance, a partnership of 13 states honoring the tenets of the Paris Agreement.
The Commonwealth must follow through on policies and commitments to achieve a 25% reduction in carbon pollution by 2020, which is legally mandated under the Global Warming Solutions Act (GWSA). The GWSA additionally requires an 80% reduction by 2050, which will require the replacement of virtually all fossil fuels with clean, renewable electricity to power and heat buildings, and to ‘fuel’ electric vehicles.
Acadia Center’s recently-released EnergyVision 2030 describes the technology and policy benchmarks that Massachusetts and the broader region will need to achieve over the next 13 years to stay on track for deep emissions reductions. Massachusetts is already making progress toward most of these goals, aided by declining technology costs, changes in consumer preferences, and policy leadership.
Here’s what needs to happen next:
Set Ambitious Renewable Energy Targets
The Renewable Portfolio Standard (RPS) determines the share of renewables in Massachusetts’ (and the region’s) energy mix, and should be doubled from the current 25% requirement by 2030 to 50% or more. Renewables displace carbon pollution from fossil fuel power plants and stabilize costs, and cleaner electricity provides greater emissions savings from electric vehicles and heat pumps (more below).
Bulk Up on Clean Energy
Large-scale long-term contracts are needed to finance the up-front cost of developing clean energy projects and move energy to demand centers. Massachusetts is implementing separate procurements for 1) land-based renewables and hydroelectricity, and 2) offshore wind. Partnering with neighboring states to implement these procurements will achieve greater economies of scale, and encouragingly, Rhode Island and Connecticut have taken steps to join the solicitation issued by Massachusetts utilities to develop the region’s world-class offshore wind resource. Additionally, Massachusetts should jump-start efforts to build a renewable-ready bulk transmission grid to unlock potential for onshore wind in northern Maine and New York, and to facilitate continued development of offshore wind as more states commit to harvesting the abundant energy resource and capturing a share of the economic development that will follow.
Set Solar Free
Caps on solar net metering (the rate compensation mechanism for solar energy sent back to the grid) are stifling deployment and should be removed. 2016 legislation made changes including reducing solar incentive payments to account for lower technology costs and providing options for the Department of Public Utilities to establish payment mechanisms to support grid maintenance. Acadia Center takes issue with some of these changes, but regardless of policy details, lower incentives and assured payments for grid upkeep mean that net metering caps are no longer justified.
Put a Price on Pollution
Climate pollution imposes significant costs on society, and pricing pollution to reflect these costs will drive changes in market behavior while raising revenue to reinvest in complementary programs and/or rebate to consumers. By charging power plants for pollution permits, the successful RGGI program has helped clean up the air while raising billions of dollars for Massachusetts and other states to reinvest in energy efficiency programs. Building on this success, Massachusetts should continue leading regional partners to set ambitious targets for the program through 2030. Pollution pricing must also be expanded beyond the power sector. This can be achieved through innovative carbon pricing proposals that packed a Statehouse auditorium at a recent hearing. Regional progress on transportation emissions can simultaneously be achieved through the Transportation Climate Initiative, a multi-state collaborative to reduce transportation climate pollution through market-based policy and other means.
Get Off Gasoline
With current sources of electric generation, driving on electricity already reduces pollution, and as the share of renewable generation increases the climate benefits of electric vehicles increase in step. Massachusetts has committed to putting 300,000 EVs on the road by 2025. To achieve this target and accelerate uptake of EVs through 2030, the Commonwealth will need to ensure long term funding for consumer rebates, implement a robust public charging network, and enact discounted “off-peak” electricity rates, which will both reduce strain on the grid and lower fueling costs for EV drivers.
Modern, efficient heat pumps—a form of efficient electric heating for residential and commercial buildings—are now capable of heating buildings during the coldest New England winters, providing a substitute for natural gas and oil. Heat pumps are also more efficient than traditional air conditioners, providing year-round savings. Heat pumps are offered within MassSave energy efficiency programs and through state grants, and the benefits of this mature clean technology should be extended to more customers through targeted low-income programs, contractor education, and through inclusion in the Alternative Energy Portfolio Standard. Switching from oil to heat pumps does not require expensive and disruptive construction of natural gas mains, and by drawing ‘fuel’ from an increasingly clean grid, heat pumps produce significant GHG reductions.
Modernize the Grid
Massachusetts needs a modern, flexible grid that can accommodate new consumer-based resources and can rely on clean local technologies over centralized power stations and traditional utility infrastructure. Utility financial incentives set by regulators should be structured to promote innovation, consumer empowerment, and reduction in overall energy system costs. Forward-looking utility proposals for electric vehicle charging infrastructure and energy storage should be encouraged within the context of broader efforts to modernize the grid. Massachusetts’ existing Grid Modernization proceeding has produced inadequate and inconsistent utility proposals. Legislation to promote local energy investment and infrastructure modernization would ensure consistent state-wide planning for a modern grid and level the playing field for clean, local energy resources.
Avoid Unnecessary Pipelines
Putting Massachusetts and the region on the EnergyVision 2030 track would reduce demand for natural gas heating and demand for electricity from natural gas power plants such that no additional pipeline capacity would be needed. By lessening the region’s dangerous overreliance on natural gas, the Commonwealth would reduce pollution and protect consumers from risks of cost overruns, price volatility, and stranded expenditures associated with subsidized natural gas pipelines.
We have the technologies, and we know the policies needed to achieve a sustainable, low-pollution energy system. 2030 will be here before we know it, so let’s get to work.
This post was also published on CommonWealth magazine.
Massachusetts must fill void left by U.S. withdrawal from Paris Agreement (Guest viewpoint)
Op-ed by Daniel Sosland and Peter Rothstein in Mass Live.
Since President Trump announced his decision to withdraw from the Paris climate accord, business leaders, environmental organizations and public officials across the nation have expressed concern for the impact on our climate and economy. The momentum we’ve achieved in building our nation’s renewable and clean energy sector must now be picked up by forward-looking states, cities and businesses around the country. Massachusetts is in a unique position to be a leader in this effort.
Massachusetts has a long history of using policy to bolster renewable and advanced clean energy deployment and innovation. Massachusetts was one of the first states in the nation to enact a comprehensive regulatory program to address climate change with 2008’s Global Warming Solutions Act (GWSA). Last year, the Commonwealth built upon this leadership with the Energy Diversity Act, supporting offshore wind and other clean energy generation.
These progressive policies and investments in the state’s growing clean energy hub have paid off with strong economic results. A report from the Massachusetts Clean Energy Center found that the Commonwealth’s clean energy economy currently employs more than 105,000 people at over 6,700 companies, representing $11.8 billion in investment.
We know the policy tools and technologies needed to reduce climate pollution and accelerate clean energy adoption. Acadia Center’s EnergyVision 2030 shows that deploying a range of market-ready consumer technologies such as electric vehicles and efficient heat pumps to warm and cool buildings can deliver deep emissions reductions over the next 13 years when paired with policies to clean up the power grid.
A report from NECEC found that strengthening one of these policies – a requirement for utilities to purchase clean energy under the Renewable Portfolio Standard (RPS) – would create thousands of jobs across the region, lower wholesale electricity prices and put us on track to meet our ambitious greenhouse gas emission reduction targets. Boosting the RPS will also provide long-term market stability and position the Commonwealth to build on its strengths in innovation and advanced manufacturing to capture a significant part of the trillion-dollar global clean energy market.
Massachusetts also needs to modernize its energy grid to support the growth of renewables and empower consumers and communities to control energy usage and costs by adopting clean technologies. Customers need to be provided with information on building energy usage to inform decisions. Barriers to electric vehicles, clean heating technologies and solar energy (in the form of net metering caps) must be removed. And policies must make the benefits of these technologies accessible to all consumers, including low-income families. Pricing carbon will unleash the power of the market to reduce emissions, particularly in the transportation sector, which is now Massachusetts’ largest source of climate pollution. For new and promising technologies such as energy storage, meaningful targets must be paired with enforcement mechanisms and tax incentives to speed deployment.
Policymakers are not solely responsible for driving the clean energy economy. The private sector recognizes that renewable energy is not only good for the planet – it’s good for a company’s bottom line. Renewable energy saved Boston-area hospitals $15 million in just a four-year period – enough to pay for 1,357 of the state’s Medicare enrollees. Big energy consumers like Cambridge-based cloud computing service Akamai are choosing renewables, which will power half the company’s global network operations by 2030.
Here in Massachusetts, we’ve already shown the rest of the country and the world what we can do when city and state governments work hand-in-hand with the business community and the support of the public to pursue clean and cost-effective energy solutions. Given the diminishing support from the federal government to advance a clean energy future, we must work even harder to implement smart energy policies at the state and regional level that grow jobs, drive regional competitiveness and build on the Northeast’s reputation as a clean energy and climate leader. With the leadership void left by our federal government, this work is more important than ever.
Peter Rothstein is president of the Northeast Clean Energy Council.
Daniel Sosland is president of Acadia Center.
How Can We Replace Traditional Infrastructure with Clean Energy?
In March, Acadia Center released an analysis demonstrating that outdated financial incentives are driving expenditures on expensive and unnecessary utility infrastructure and inhibiting clean energy in the Northeast. The report, Incentives for Change: Why Utilities Continue to Build and How Regulators Can Motivate Them to Modernize, shows that under current rules, utilities can earn more money on infrastructure expenditures like natural gas pipelines and electric transmission lines than on cleaner, local energy resources like energy efficiency, rooftop solar, and highly efficient electric heat pumps. The key takeaway from the analysis is that without changes to the way they are regulated and rewarded, utilities will continue to advocate for infrastructure over local energy resources because their fiduciary duty to shareholders requires it.
Meanwhile, experience throughout the Northeast shows that clean, local energy resources can replace expensive grid infrastructure proposed by utlilities. These local alternatives include energy efficiency and demand response technologies that reduce demand for electricity at specific times, as well as roof-top solar, battery storage, and efficient combined heat and power.
Energy efficiency investments alone have avoided over $400 million in major transmission upgrades in Vermont and New Hampshire.1 Similarly, the Tiverton/Little Compton pilot project in Rhode Island,2 the Brooklyn/Queens Demand Management Project in New York,3 and the Boothbay Smart Grid Reliability Project in Maine4 are real world examples of local clean energy resources deferring or avoiding upgrades to the distribution grid. Earlier this year, expert witnesses for the New Jersey Division of Rate Counsel argued that a $75 million, 10-mile transmission line is no longer needed due to increasing adoption of distributed generation.5 There are additional examples from California also, where the state’s grid operator (California Independent System Operator, or CAISO) announced in December 2016 that it is putting the Gates-Gregg 230 kV transmission line project on hold, and may cancel the project entirely, due to forecasted increases in the development of solar energy.6
These clean energy projects are possible when consumers are given the ability to shape a cleaner, lower cost energy system through their investment decisions and behaviors. To motivate utilities to give consumers these options, utility regulators need to adopt alternative economic structures that balance the need to bring clean energy resources on-line with the need to keep utilities financially healthy.
Acadia Center’s UtilityVision outlines an alternative economic structure to resolve this conflict. UtilityVision recommends that states adopt performance incentives to motivate utilities to advance priorities such as system efficiency, grid enhancements, distributed generation, energy efficiency, and other energy system goals. Regulators can then increase the portion of revenue recovered through those performance incentives while reducing the portion of revenue that is linked to infrastructure projects, helping to shift utility priorities further towards achieving the performance outcomes.
A handful of states are beginning to adopt reforms to focus the utility’s financial incentives on advancing public policy goals for clean energy development. On January 25, 2017, the New York Public Service Commission issued an Order approving a shareholder incentive to reward Con Edison for deploying distributed energy resources (DER) to defer or avoid traditional transmission and distribution projects and deliver net benefits to ratepayers. The PSC approved a shared-savings model that uses a benefit-cost framework to determine the difference between the net present value of DER and the traditional infrastructure solution. The PSC found that this reward structure effectively signals the utility to find the most cost-effective grid solutions for ratepayers and advances additional energy and environmental goals.7
The California Public Utilities Commission is taking similar steps to resolve the conflict between bringing more DER online and ensuring they do not harm utilities’ profits. In December 2016, Commissioner Florio issued an Order creating a model to financially incentivize utilities to adopt DER. The Order will incentivize the deployment of cost-effective DER that displaces or defers utility spending on infrastructure by offering the utility a reward equal to 4% of the payment made to the DER customer or vendor.8
Whether the New York and California model is the best of many ways to revamp the utility business model to incorporate DER is an open question. One limitation of this model is that it is based on a comparison between DER and the traditional infrastructure projects that would otherwise be built in their place. This model makes it relatively straightforward to compensate the utility based on the cost savings and greater net benefits from the DER solution, but it is not easy to apply to more general deployment of DER. For instance, in Rhode Island,9 stakeholders led by the Office of Energy Resources are considering how to reward the utility for proactively and strategically using DER to improve grid conditions and prevent problems before the grid gets to the point of needing infrastructure upgrades. In this case, the NY/CA model can’t be used because there isn’t a traditional infrastructure project to compare to the proposed DER.
States must continue to seek reforms to utility regulations so that clean energy can flourish and both consumers and utilities are treated fairly. Replacing poles, wires, transformers, and substation upgrades with rooftop solar, battery storage, demand response, and energy efficiency can reduce costs and make the grid cleaner—but utilities make a guaranteed rate of return on their million (and billion) dollar grid investments, and any lower cost DER alternatives threaten to undercut those revenues. Until a new system of incentives is created, it will be an uphill battle to achieve states’ goals for a lower cost, cleaner energy grid.
1Schelgel, Hurley, and Zuckerman, 2014, “Accounting for Big Energy Efficiency in RTO Plans and Forecasts: Keeping the Lights on While Avoiding Major Supply Investment.” http://aceee.org/files/proceedings/2014/data/papers/8-1215.pdf
2 Rhode Island Public Utilities Commission Docket No. 4581, “2016 System Reliability Procurement Report”. October 2015. http://www.ripuc.org/eventsactions/docket/4581-NGrid-2016-SRP(10-14-15).pdf
3 New York Public Service Commission Case 14-E-0302, “Petition of Consolidated Edison Company of New York, Inc. for Approval of Brooklyn Queens Demand Management Program.” June 15, 2014.
4 Maine Public Utilities Commission Docket No. 2011-238, “Final Report for the Boothbay Sub-Region Smart Grid Reliability Project.” January 19, 2016.
5 “Rate Counsel Sees No Need For High Voltage Transmission Line,” NJ Spotlight (Jan 19, 2017) available at: http://www.njspotlight.com/stories/17/01/08/rate-counsel-sees-no-need-for-high-voltage-transmission-line/
6 ”Solar Growth Puts Fresno High-Voltage Line on Hold,” Fresno Bee (Dec 20, 2016). Available at: http://www.fresnobee.com/news/local/article122063189.html
7 New York Public Service Commission, Case 15-E-0229, Petition of Consolidated Edison Company of New York, Inc. for Implementation of Projects and Programs that Support Reforming the Energy Vision, Order Approving Shareholder Incentives. January 25, 2017. http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?MatterSeq=47911
8 California Public Utilities Commission, Decision 16-12-036, Rulemaking 14-10-003, Order Instituting Rulemaking to Create a Consistent Regulatory Framework for the Guidance, Planning, and Evaluation of Integrated Distributed Energy Resources. December 22, 2016. http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M171/K555/171555623.PDF
9 More about Rhode Island’s Power Sector Transformation initiative can be found at: http://www.ripuc.org/utilityinfo/electric/PST_home.html
New State Home Heating Oil Fees Proposed
Claire Coleman, an attorney with the Connecticut Fund for the Environment, said the draft strategy plan involves “some significant missed opportunities, and … doesn’t get Connecticut where we need to be in terms of greenhouse gas reductions.” The Acadia Center’s Kerry Schlichting also said her organization “have some doubts” about the plan’s ability “to make real progress on carbon reductions.”
Read the full article from the Hartford Courant here.
California Shows How States Can Lead on Climate Change
Attention now turns to the Northeast, where nine states, including New York, Connecticut and Massachusetts, are part of what is known as the Regional Greenhouse Gas Initiative, which, like California’s effort, is a market-based cap-and-trade program that goes beyond state boundaries. So far, R.G.G.I., as it is known for short, has helped reduce emissions from power plants in the region by 40 percent between 2008 and 2016, according to the Acadia Center, a research and public interest group. States are now negotiating the future of the program beyond 2020.
Read the full editorial from The New York Times here.
Northeast States Talk Big On Climate. This Is Their First Serious Test.
“What we gain in return for that marginal additional cost is that we avoid 99 million [short] tons of CO2 emissions” from 2017 to 2031, Jordan Stutt, a policy analyst at the Boston-based Acadia Center, told HuffPost. “That’s more than a full year’s worth of emissions for this region. If the states are serious about acting on climate, they can’t ignore those kinds of emissions reductions at that low a cost.”
Read the full article from the Huffington Post here.
Healey calls for Eversource rate cut
A group of local officials and environmental groups have also raised concerns about Eversource’s proposal, which they say would reduce the compensation paid to cities and towns for solar projects by about 40 percent.
“The Eversource proposal that impacts these municipal solar projects is part of broader rate proposals to reduce customer control over bills and lower incentives for local clean energy,” Acadia Center staff attorney Mark LeBel said in a statement. “Eversource’s proposals would set back efforts to promote energy efficiency, electric vehicles, storage, and efficient electric heating too. The DPU should be looking for economically sensible ways to advance innovative clean energy efforts and should not roll back the progress the Commonwealth has made to date.”
Read the full article from State House News Service, published in the Berkshire Eagle here.
Greens fear momentum loss in 9-state climate pact
Peter Shattuck, director of the Acadia Center’s Clean Energy Initiative, said the decision has become increasingly important in the wake of President Trump’s announcement of the United States leaving the Paris Agreement.
An Acadia Center study found that emissions in the RGGI region fell by 37 percent after 2008, the year the program was instituted, while electricity prices fell by more than 3 percent.
“I think they need to follow through on the commitments they’ve made on climate change,” Shattuck said. “This is now an issue of global importance.”
Read the full article from E&E News here (article may not be available without subscription).
As Feds Move Away From Climate Change, Maine and New England Consider Stronger CO2 Caps
“All the evidence points to the fact that RGGI’s working well, it’s been a great success since its inception,” says Peter Shattuck, director of the Clean Energy Initiative at the Acadia Center, an an environmental policy group with offices in Maine and around the northeast.
“[Since RGGI’s 2009 startup] carbon pollution is down 40 percent, electricity prices are down 3 percent, and at the same time [the participating] states’ economies have grown by 25 percent,” he says.
“This is an opportunity and a necessity to fill that void. And this is not uncharted territory for RGGI itself,” Shattuck says. “It was conceived during the 2000’s when the Bush administration was not acting on climate and a bipartisan group of governors came together and formed the program.”
Listen to the whole interview from Maine Things Considered on Maine Public Radio here.