Massachusetts Emissions Plan Sure to Backfire

By Cynthia A. Arcate 15 February, 2017

This week The Boston Globe reported on an emissions reduction plan issued by the Massachusetts Department of Environmental Protection (DEP), which would cap the emissions from in-state power plants in order to comply with a Supreme Judicial Court (SJC) decision finding that the state was not on track to comply with the Global Warming Solutions Act (GWSA).

The Globe accurately reports that by capping emissions from in-state power plants, there is a risk that the plan will actually increase emissions in the region. This could happen because the regional grid operator would be forced to run potentially dirtier plants in other states to make up for the generation curtailed by the Massachusetts rule. Environmentalists acknowledge this risk but argue that, over time, these other resources will be replaced by cleaner new renewables and that this “leakage” is worth the price (environmental as well as economic) in the interim. This is a risky proposition.

Efforts are underway in New Hampshire to pull back from its commitment to the Regional Greenhouse Gas Initiative as well as its renewable energy portfolio standard. New Hampshire has always been the laggard when it comes to environmental energy policy in the region, and Maine has not been far ahead. Historically, these states have been happy to let the southern New England states pick up the tab for their renewable resources—particularly biomass and wind, which provide economic benefits to those states—while they continue to rely on fossil generation. Now Massachusetts will be looking to these two states to provide the transmission for large-scale hydro and wind production. It is not at all clear that the leakage problem will go away anytime soon, if at all. Meanwhile, the region experiences increased emissions and all customers pay for higher cost generation.

The emissions cap is just one of many strategies the DEP has proposed to meet the GWSA. Another is a new Clean Energy Standard (CES), which would operate like the Renewable Portfolio Standard (RPS), which mandates that a certain portion of electricity supply be from a renewable source. But CES would accelerate the amount of new clean energy that retail energy suppliers have to procure. It also includes large-scale hydro, which currently does not qualify for the RPS. One energy colleague describes this as “RPS on steroids.”

This new obligation will increase costs to consumers with no clear logical path to increasing the amount of renewables in the region, particularly if hydro is included. If anything, this plan will close off the opportunity to other new technologies to compete for the renewable energy credit dollars needed to make these technologies economic—the very reason large-scale hydro has been excluded from the RPS. With hydro allowed to participate in the CES, most of the incremental credits will be eaten up by the large-scale procurements, thus depressing REC prices and reducing the revenue stream needed to develop other renewable technologies.

The SJC decision clearly directed the state to come up with plans for emissions reduction for all emission sources. That includes transportation, where there has been little or no emissions reductions in the last decade at a time the electricity sector has dramatically reduced emissions from production.

Yet the DEP continues to squeeze the electricity sector and does little or nothing about transportation. Anyone who has looked at or had to sit in traffic in the Boston area lately knows we have a problem. Policymakers think nothing of imposing hundreds of millions of costs on electricity consumers to reduce emissions but wring their hands every time the MBTA asks for a few million dollars to improve public transportation. It’s time to get creative about solving the number one contributor to emissions in the state.

Not only are the DEP’s plans costly, they are ill-contrived. There is no empirical evidence that they will work. It’s all a lot of math not tied to the reality of how the market or the grid works. Time for the DEP to go back to the drawing board.

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