The Foundational Clean Energy and Climate Policies in Massachusetts
Back in 2008, national climate legislation seemed inevitable. Al Gore had just won the Nobel Prize for his climate film, An Inconvenient Truth. Van Jones was leading a movement calling for Green Jobs. Both Barack Obama and John McCain were campaigning for president with platforms calling for a national cap and trade system to reduce greenhouse gas emissions. But by 2010, legislative efforts had failed and the window for policy change had closed. While the House did pass climate legislation, the effort died in the Senate. Despite regulatory efforts by the Obama Administration, ten years later we still have no national climate policy. Instead, we have a president who trumpets the revival of “beautiful clean coal.”
This post, however, is not about the tragedy of failing to act on climate at the national level. This is the story of Massachusetts, which succeeded in acting boldly in 2008 during the political window for climate action. In a single year, the Massachusetts Legislature passed the Global Warming Solutions Act, the Green Communities Act, the Green Jobs Act, and several other environmental laws. According to then House Speaker Salvatore F. DiMasi, the 2008 legislative session was “by far the greenest session in the history of the Legislature, highlighted by nation-leading advancements for the environment and our clean energy sector.” Advocates were equally ecstatic about the Massachusetts achievements. “[This session] queues us up as a leader — if not the leader — in legislative policy,” commented Nick d’Arbeloff, executive director of the New England Clean Energy Council.
Ten years later, it is important to understand the impacts that “nation-leading advancements” in legislation had over the past decade. By analyzing the successes and failures of past legislation, advocates working for equitable energy in Massachusetts can build on existing policies. In this post, I review the three most important climate bills passed in Massachusetts in 2008.
The Cornerstone: The Global Warming Solutions Act
The cornerstone of Massachusetts climate policy is the Global Warming Solutions Act of 2008 (GWSA). Written by perennial climate champion Senator Mark Pacheco, the bill passed on July 31, 2008 by a unanimous 154–0 vote in the House of Representatives. The act requires Massachusetts to reduce its total greenhouse gas emissions by 80% by 2050, based on 1990 levels. To achieve this emission reduction goal, section 6 the act states that the “Commonwealth and its agencies shall promulgate regulations that reduce energy use, increase efficiency and encourage renewable sources of energy in the sectors of energy generation, buildings and transportation.”
In addition to the 2050 goal, the GWSA required the Massachusetts Executive Office of Energy and Environmental Affairs (EEA) to set a binding 2020 greenhouse gas emissions goal of 10 to 25% reductions based on 1990 levels. The law further requires the EEA to set a binding reduction targets for 2030 and 2040 a decade in advance. In theory, all of Massachusetts’ energy planning through 2050 should be evaluated based on its ability to meet these targets, with comprehensive statewide plans and progress reports required every five years.
In late 2015, the EEA released its most recent Clean Energy and Climate Plan. The below graphic illustrates the relative magnitudes of emission reduction objectives within the plan. The EEA website provides an interactive graphic showing specific CO2 reductions.
As of the latest emission numbers from 2014, Massachusetts is 21% of the way to its 2020 goal. Due to complicated accounting for interstate electricity usage and Renewable Energy Credits, emission statistics have a long time lag. The Massachusetts Greenhouse Gas Emissions Inventory provides the latest public data available for download in an excel sheet format.
The Workhorse: The Green Communities Act
The second major Massachusetts climate policy passed in 2008 was the Green Communities Act (GCA). This is the workhorse of Massachusetts climate law, as it has arguably contributed more emissions reductions than any other policy enacted by the Commonwealth to-date. Among other things, the Green Communities Act mandated that utilities pursue “all cost effective efficiency,” increased the renewable portfolio standard to reach 15% renewable electricity by 2020, and created a special fund to support municipal governments in taking actions to improve their sustainability. According to the former U.S. Department of Energy Assistant Secretary David Danielson, the Green Communities Act “should serve as a beacon of what is possible for national clean-energy policy.”
The most transformative aspect of the Green Communities Act was its “energy-efficiency first” policy, which requires utilities to invest in all cost-effective efficiency measures before committing to new generating supplies. These investments are identified through three-year plans designed by the Energy Efficiency Advisory Council, a multi-stakeholder committee that has direct oversight of energy efficiency work. Utilities then carry out efficiency plans through the Mass Save program, a collaborative effort that provide savings on energy efficiency services for residents and businesses throughout the commonwealth.
The GCA’s mandate for promoting energy efficiency was further supported by a complementary “decoupling” order from the Massachusetts Department of Public Utilities, which separated utility profits from the amount of energy provided. Traditionally, distribution utility profits are tied to sales, which incentivizes companies to sell more energy. A decoupling mechanism “decouples” revenues from changes in consumption, thereby removing the disincentive for utilities to promote efficiency programs that reduce demand.
While the payback for efficiency investments is usually less than three years, the upfront investment needs are substantial. The GCA solved this problem by providing three dedicated funding sources for upfront efficiency investments. First, all electric bills from for-profit utilities contain an “Energy Conservation Charge” of $0.0025/kWhr surcharge that directly funds efficiency programs. Natural gas bills have a similar feature called the “Distribution Adjustment Charge.” Second, revenues come from the Forward Capacity Market of ISO-NE, the regional grid operator of New England. Efficiency improvements reduce the need to build new power generating capacity, and thus qualify as “forward capacity” resources needed for the region. Third, Massachusetts earns revenues through auctioning CO2 emission permits through the Regional Greenhouse Gas Initiative (RGGI), a cap and trade program for the electricity sector nine northeastern states. The GCA mandates that 80% of auction revenues received by Massachusetts from the Regional Greenhouse Gas Initiative go towards efficiency investments.
These three combined funding sources contributed nearly $4 billion in energy efficiency investments to the Mass Save between 2010 and 2016. The Mass Save program is the main reason why Massachusetts has won the American Council for an Energy Efficient Economy’s top ranking for the most energy efficient state in the country for seven straight years.
Rapid growth in renewable energy
The next key piece of the Green Communities Act was an effort to boost renewable energy. As of 2008, Massachusetts only obtained 1900 GWhr of electricity from renewables. By 2014, this number had grown dramatically to over 4600 GWhr. Much of the growth in renewable energy consumption in Massachusetts is attributable to the revised Renewable Portfolio Standard included in the GCA, which required retail electricity suppliers to provide 4% of their electricity through class I renewable resources in 2009. The amount of class I renewable electricity required rises by 1% each year, and will reach 15% by 2020.
The Massachusetts renewable portfolio standard does not require that all renewable energy be generated within the boundaries of the Commonwealth. Instead, retail electricity providers can purchase renewable energy credits (RECs) from generators throughout the Northeast, so long as these generators are connected to the New England electricity grid. This policy design creates a subsidy for producers of renewable energy, who can sell the environmental attribute of the power production (the REC) separately from the actual energy, which typically is sold within the ISO-NE wholesale electricity market. The resulting increase in renewable energy supported by the Massachusetts RPS is shown in the graph below.
In addition to a broad renewable portfolio standard, the Green Communities Act authorized the Department of Energy Resources to require a portion of the RPS to be supplied by solar installed within Massachusetts. In 2010, the DOER used this authority to create a “solar carve out” to support 650 MW of solar photo-voltaic installations. The GCA also called for net metering, where residents can sell the power they generate back to the grid at the same price as retail electricity purchases. These two policies catalyzed explosive growth; solar installed capacity grew by more than 100x between 2010 and 2017.
Direct support for local governments
The third key element of the Green Communities Act was direct funding for municipal governments for local green projects. The act created a “Green Community” designation, which is awarded if a municipality takes steps like as-of-right siting and expedited permitting for local renewable energy projects. Once granted green community status, a municipality becomes eligible to apply for grants from a yearly allocation of up to $10 million for local energy efficiency improvements, renewable energy projects, or other sustainability initiatives. Since 2008, the Massachusetts DOER has designated 210 (of the 351) municipalities in the Commonwealth as green communities, and has awarded over $85 million in green communities funding.
While Massachusetts is known for its progressive cities like Boston and Cambridge, much of the state is more politically moderate or conservative. The Green Communities program has managed to “go beyond the choir” of its liberal supporters and encourage more conservative cities to also address sustainability challenges as well. Comparing the above map of designated green communities with the below map of 2016 presidential election results, there are a number of red municipalities like Middleborough and Granville that are also green. In an age of intense polarization, the Green Communities Act showcases some potential for clean energy to bridge ideological divides.
The Innovator: The Green Jobs Act
I want to highlight one final policy enacted during the wave of Massachusetts green legislation: the Green Jobs Act of 2008. This legislation created the Massachusetts Clean Energy Center, the first economic development institution in the country focused solely on the clean energy economy. As a quasi-public entity, MassCEC has broad discretion to experiment with new approaches to advancing the clean energy economy. Its 12-person board of directors is appointed by the Governor for five year terms. The board then selects a chief executive officer to run the organization.
The Green Jobs Act granted MassCEC control of the Renewable Energy Trust Fund, a special Massachusetts funding source for supporting renewable energy projects. The trust is funded primarily through a $0.0005 per kWhr surcharge imposed on all electric bills in Massachusetts, which generates about $23 million for the MassCEC each year. The MassCEC receives additional revenue from facilities fees and clean energy investments.
Thus far, most of MassCEC spending has gone towards subsidies for deploying new clean energy technologies like air source heat pumps for homes and businesses. The MassCEC has also made investments in job training programs, clean tech incubators, partnerships with Massachusetts universities, and specialized facilities for deploying clean energy technology. Of particular note is the Wind Technology Testing Center (shown below) used for testing wind turbine blades and the New Bedford Marine Commerce Terminal, the first facility in North America specifically designed to support deployment of offshore wind turbines.
Back in 2008, the idea of “green jobs” was popular rhetorically, but was not yet proven as an economic development strategy. There was not even a consistent definition of what qualified as a green job. Early on, the MassCEC worked with BW Research to address this challenge and devised a clear definition of “clean energy jobs” based on Massachusetts Law. BW Research conducts surveys of Massachusetts businesses to estimate the number of clean energy jobs within the Commonwealth. This work has produced a “Massachusetts clean energy industry report” every year since 2011. And, the research shows tremendous growth: clean energy jobs have increased from roughly 60,000 jobs in 2010 to nearly 110,000 jobs in 2017. A graphic from the most recent 2017 clean energy industry report is included below.
Growth in the clean energy economy has happened just because of the MassCEC; many different entities within the state’s clean energy ecosystem have contributed, and other policies like the Global Warming Solutions Act and Green Communities Act have provided more regulatory and financial support than the Green Jobs Act. However, the MassCEC has proven to be a valuable resource for clean energy businesses. Its efforts send a strong signal to investors that Massachusetts is committed to a clean energy economy.
Massachusetts Climate and Energy Policy After 2008
Since 2008, the Commonwealth has enacted additional legislation aimed at advancing clean energy. Of particular note is the Energy Diversity Legislation of 2016. This mandated the procurement of 1600 MW of offshore wind and 1200 MW of another clean energy resource. In January 2018, the Baker Administration announced it had procured 1200 MW of clean energy via imported Canadian hydropower. However, the New Hampshire Site Evaluation Committee rejected the controversial Northern Pass project that would have transmitted the power. The Baker Administration announced the “New England Connect” project through Maine will be the backup option if the Northern Pass does not gain approval by March 25 2018.
Regardless of the result of the state’s hydropower procurement effort, the Massachusetts Legislature has never come close to prioritizing climate action in the same way it did during the 2008 session. Instead, most clean energy policy over the last decade has been through regulation and planning conducted by Massachusetts executive agencies. In a future post I’ll focus on the history implementing the Global Warming Solutions Act, which is illustrative of the limits of relying on regulation.
For now, I want to commend the progress Massachusetts has made over the last decade. The Global Warming Solutions Act, Green Communities Act, and Green Jobs Act helped to launch the clean tech industry in the Commonwealth. Thanks to these policies, Massachusetts has a solid foundation for a push for equitable clean energy in the years ahead.