The next U.S. president should follow Massachusetts's lead.
Thursday, August 07, 2008
By David Danielson
In a whirlwind legislative session ending last Thursday, July 31, 2008, Massachusetts
legislative leaders have launched the most comprehensive and forward-thinking
set of clean-energy policies in the nation. They will allow the state to move
rapidly toward a low-cost, secure, environmentally friendly state energy
industry.
Massachusetts's suite of policies creates the nation's first electric
utility program to put efficiency first, accelerates the state's Renewable
Portfolio Standard, and puts in place strong incentives and mandates for homegrown,
non-food-based biofuels for transportation and home heating. It also opens the
door for clean-energy development in Massachusetts's
wind and ocean-power-rich shoreline, mandates steadily decreasing state greenhouse-gas
emissions, and establishes the necessary innovation and training infrastructure
for the state to use these policies as a catalyst to develop a world-leading clean-energy
industry. (See further details below.)
The state that created the model for the United States' public parks,
libraries, high schools, and university system has now created the model for a
comprehensive clean-energy policy for the nation. This is more critical than
ever now, when both 2008 presidential candidates have made strong
commitments to revamp the country's failing energy policies when they take
office in January 2009.
Politics is often called "the art of the possible." From top to
bottom, Massachusetts's
new comprehensive clean-energy policy shows what is possible when policies are
developed through strong, productive public-private partnerships.
Massachusetts's new policy should serve as a beacon of what is possible for national
clean-energy policy, and it should serve as a model for whichever presidential
candidate enters the Oval Office come January 2009.
In line with Massachusetts's
visionary new clean-energy policy, any comprehensive national clean-energy
policy must
- emphasize energy efficiency
over new fossil-fuel power;
- provide strong, stable, and
steadily growing policy support for renewable power and fuels through
national Renewable Portfolio and Fuels Standards;
- provide a transparent and
fair regulatory process for the permitting, siting, and development of new
forms of renewable energy;
- create a national
greenhouse-gas-emissions cap and trade regime;
- provide the necessary financial and
institutional support to our nation's universities, entrepreneurs, and
workforce in order to allow our best people to focus on clean energy;
and
- be the result of a strong
public-private partnership.
Massachusetts
has done it. Now it's the nation's turn.
Here's a rundown of the state's comprehensive suite of new clean-energy
policies.
Energy-Efficiency First
The Green
Communities Act of 2008 enacts a first-in-the nation "energy-efficiency
first" policy for the state's electric and gas utilities, requiring them
to invest in all cost-effective energy-efficiency measures before turning to
building new energy supply infrastructure. This policy is designed to finally
enable the state to harvest its as-of-yet untapped gold mine of energy
efficiency (often referred to as "the lowest hanging fruit" of clean
energy) in order to eliminate the need to build new fossil-fuel power plants in
Massachusetts, providing up to 25 percent of the projected 2020 state electricity
load through efficiency. Massachusetts
utilities will be required to identify and employ all cost-effective energy-efficiency
measures, including, among others, efficient lighting, cooling, and industrial
processes, and they will be overseen by a 12-member public-private Energy
Efficiency Council.
Furthermore, the Massachusetts Department of Public Utilities has enacted an
electric
utility "decoupling" policy that goes into effect in 2012. It will
decouple utility profits from the amount of energy that utilities deliver,
zapping the long-present perverse incentive for utilities to overlook energy-efficiency
investments in order to be able to sell more power.
Together, these policies will make the Commonwealth an energy-efficiency
powerhouse and will foster the development of a world-leading cluster of new
companies in the state focused on providing technology for energy efficiency.
Strong, Stable Policy Support for Renewable Energy
The Green Communities Act also offers strong, stable, steadily growing
support for renewable power in the Commonwealth, doubling the growth rate
of the state's Renewable Portfolio Standard from 0.5 percent to 1.0 percent per
year. This will steadily and predictably increase the required percentage of
electricity supplied in the state by renewables, such as wind, solar, and
biomass power, from the required 2008 level of 4 percent up to 15 percent by
2020. The act will also foster the continued rapid growth of the state's
emerging clean-energy technology industry and bring jobs and dollars into the
state while increasing Massachusetts's
energy security and lowering the environmental impact of its energy use.
Furthermore, the act increases the maximum net metering cap on distributed renewable-energy
projects by almost a factor of 4, from 60 kilowatts to 2 megawatts, enhancing
the reliability of the state's grid through the increased development of a
distributed power infrastructure. The act also provides long-term support for clean-energy
power projects in the state by allowing Massachusetts utilities to, for the
first time, engage in long-term power purchasing contracts from these projects,
giving renewable project developers the long-term revenue certainty that is
required for sustained growth of the state's renewable-power sector.
In further support of renewable-energy development in the state, the
legislature has also passed the Massachusetts
Oceans Act, which provides a clear regulatory framework for the exploration
and development of Massachusetts's
massive offshore wind, wave, and tidal resources. It will also foster state
leadership in these highly promising new emerging clean-energy industries.
The Commonwealth's strong, stable, long-term policy support for renewable
energy will serve as a model for the U.S. federal government, which has until
now significantly hampered the development of the renewable-power industry by
refusing to put in place the long-term, stable renewable-energy policy support
that will be required for the creation of a strong and growing domestic
renewables industry. Such support will also allow the United States to catch up to and surpass Japan and Europe
in this critical rapidly growing strategic industry. (The current
debacle over the extension of the Federal Renewable Production Tax Credit is
seriously hampering stable investment in wind and solar in the United States.
Check out the erratic ups
and downs of annual installed U.S. wind capacity for a case in point.)
Strong Support for Renewable Fuels to Displace Petroleum Imports
The Clean
Energy Biofuels Act of 2008 provides strong and stable incentives to enable
increasing displacement of expensive and insecure petroleum imports and to
catalyze the creation of a market for the cellulosic biofuels currently under
development by nearly a dozen leading Massachusetts-based companies. This
policy will lay the foundation for the development of a state and national cellulosic-ethanol
industry by exempting cellulosic biofuels from the state's 21-cents-per-gallon
gasoline tax and by creating a state renewable-fuels standard that mandates a
steadily increasing biofuel content in diesel fuel and home heating oil of 2
percent by 2010, up to 5 percent by 2013.
Capping Greenhouse-Gas Emissions
The Global
Warming Solutions Act of 2008 puts Massachusetts
right at the head of the pack in terms of policy leadership to address the specter
of greenhouse-gas-driven climate change. As an active leader in the nation's
first greenhouse-gas cap and trade regime, the Regional Greenhouse Gas
Initiative, Massachusetts
has mandated a 10 to 25 percent reduction in state greenhouse-gas emissions
below 1990 levels by 2020, and a long-term 80 percent reduction by 2050,
representing the most stringent greenhouse-gas cap in the nation. This policy
not only serves as an example to the nation that the United States must take a
leadership position in addressing climate change and institute a national greenhouse-gas-emissions
price; it will also serve to spur the early development of a low-carbon energy
technology industry sector in Massachusetts, setting it on a path to become a
global leader in this rapidly growing multibillion-dollar industry.
Fostering a Clean-Energy Innovation Ecosystem
The Green Jobs Act of 2008 lays the foundation for Massachusetts to rapidly repurpose its world-class
universities, technologically skilled workforce, and entrepreneurial startup
culture to the task of making Massachusetts
a global hub of clean-energy innovation. (The act was developed in a close
collaboration between the New England Clean Energy Council and the state
government.) The Green Jobs Act devotes $68 million to create the Massachusetts Clean Energy
Technology Center
to achieve this clean-energy innovation ecosystem transformation and accelerate
the region's clean-energy economy.
The Massachusetts
Clean Energy
Technology Center
will administer, first, a Clean Energy Seed Grant Program; second, a Clean
Energy Fellowship Program; and third, a Green Jobs Initiative. The Clean Energy Seed Grant Program
will provide seed funding to stimulate clean-energy R&D. It will also
create new ventures that will deploy technologies developed by leading Massachusetts
universities, research institutions, and small businesses. In so doing, it will
fill a critical gap in early-stage funding and will accelerate the development
of technologies created by the state's world-class technical and
entrepreneurial talent. The Clean
Energy Fellowship Program, the pilot of which has been successfully
developed and deployed this summer, addresses the critical shortage of experienced
entrepreneurs in the state's clean-energy startup industry by transforming
successful entrepreneurs in other sectors into clean-energy entrepreneurs
through a three-month clean-energy entrepreneurship boot camp. (Note: This is a very
exciting program. I am a cofounder and have co-led the development of the
program's curriculum and expect a number of exciting new Massachusetts-based clean-energy
ventures to come out of the program in short order.)The Green Jobs Initiative will focus on
designing clean-energy industry job training programs at area schools and
training organizations to ensure the creation of a Massachusetts-wide workforce
ready to take advantage of career opportunities in the state's rapidly growing clean-energy
industry.
Together, the Massachusetts
Clean Energy
Technology Center's
three core programs will ready the state's world-class innovation ecosystem for
the massive opportunity presented by the state's rapidly emerging clean-energy
sector.
Huge kudos are in order for the visionary state leaders who have worked in
strong public-private partnership to make Massachusetts's new clean-energy policy a
reality. Governor Deval Patrick and State Energy and Environment secretary Ian
Bowles, House Speaker Salvatore Dimasi, and Senate President Therese Murray
worked tirelessly in collaboration with stakeholders in the state's rapidly
emerging clean-energy private sector, in large part through the facilitation of
the nonprofit New England Clean Energy Council,
which is led by my colleague at General
Catalyst Partners, Hemant
Taneja (cofounder and chairman of the board), and Nick d'Arbeloff (executive
director). The council's board
is composed of leaders from all the state's key clean-energy private-sector
stakeholders, including leaders from academia, startups, venture capital,
industry, utilities, financial institutions, unions, and environmental groups.
The fact that Massachusetts's new
clean-energy policy has been largely developed over the course of the little
more than year and a half that Governor Patrick's administration has been in
office is a testament to the strength of Massachusetts
leaders' unique ability to work together in strong and efficient public-private
partnership.
In concert with the ongoing mobilization of Massachusetts's substantial
innovation assets toward clean energy, embodied in MIT's new $100M+ Energy Initiative and the exploding number of clean-energy technology
firms in the state, Massachusetts's new energy policy will drive the state
to a national and global clean-energy leadership position.
Massachusetts Institute of Technology
Comments
javs on 08/08/2008 at 4:32 AM
74
rttedrow on 08/11/2008 at 7:54 AM
32
javs on 08/14/2008 at 9:44 PM
74
javs on 08/29/2008 at 4:46 PM
74
ms on 08/10/2008 at 1:14 PM
73
JimHopf on 08/10/2008 at 5:55 PM
1
The way to achieve the largest emissions reductions, at the lowest cost, is for govt. to tax CO2 emissions, or require emissions reductions, and then get out of the way and let the market decide how to proceed. The govt. should not be picking winners, developing "plans" for how emissions are to be reduced, or making specific mandates for the use of certain practices or energy sources.
The main reason is because, as shown in the above article, govt. can be counted on to choose technologies/paths based on political popularity/correctness, whereas the market (under a cap-and-trade system) will choose based on technical and economic merit. After reading just the first few lines in this article about the Mass. energy plan, I already new that the single most potent tool against global warming, nuclear power, would not even be mentioned...
Renewable portfolio standards are awful public policy. Not only are they, in effect, and infinite subsidy of one specific set of energy sources, but they only act to encourage that one specific means of reducing emissions. They do nothing to encourage any of the following: conservation, fuel switching (gas vs. coal), coal sequestration, nuclear, or replacing old fossil plants with newer, cleaner, more efficient plants. Finally, RPS policies lead to silly arguments over what is a "renewable" source, and they make no distinction between different renewable sources, some of which are much more desireable than others (e.g, trash burners are "renewable").
Decide what you want (e.g., emissions reductions), and then require or incentivize it, period.
robert.hargraves on 08/11/2008 at 9:30 AM
11
Bob Hargraves
Coalition for Energy Solutions
mkogrady on 12/09/2008 at 11:20 AM
127
robin26 on 08/19/2008 at 2:09 PM
10
Good luck to the Massachusetts power utilities who will be required to prove to government bureaucrats that they have invested "in all cost-effective energy-efficiency measures before turning to building new energy supply infrastructure".
The U.S. appears to be heading toward a dangerous energy shortage. We need to aggressively develop new generating capacity and better exploit our existing resources and technologies: nuclear, coal, and oil. Wind, solar, tidal, and the rest, offer hopes for the future, but are not yet ready to satisfy a significant fraction of our immediate need for new capacity.
Government has an important role in enforcing strong but reasonable standards protecting the environment, but imposing restrictions on the energy industry to the point that they are economically nonviable invites economic disaster for the U.S. A failed economy will benefit neither the U.S., the global environment, nor mankind's standard of living.
I don't share the author's enthusiasm for the Massachusetts plan.
javs on 08/31/2008 at 7:36 PM
74
However, such regulated decoupling has an insidious secondary effect: extending the obsolete utilities and regulators price controls business model. As can be seen in the electricity without price controls (EWPC) blog’s article Let’s Avoid Many Expensive Fiascos, state regulators will keep using their price controls powers to make exceedingly large risky bets that are bound to result in premature obsolescence.
I agree that with incremental extensions of today’s energy policy system, “renewable energy can’t make a go of it without a major overhaul of the nation’s electricity transmission grid.” However, by unloading the transmission (and also distribution) grid the financing requirements will be reduced. This can be accomplished by reorganizing the industry and simplifying systems rules with the EWPC market architecture and design paradigm. An EWPC Energy Policy Act will decouple physical distribution from retail sales and enable an integrated transportation (transmission and distribution) regulated (under tolls price control) market compact, under a responsibility to transport electricity of commercial quality.
Now is the opportunity to introduce federal legislation on electricity without price controls to solve once and for all the global electricity systemic crisis.
José Antonio Vanderhorst Silverio, Ph.D.
Systemic Consultant: Electricity
First posted on the Grupo Millennium Hispaniola Blog.
Reference: Obama’s Green Dream: Would His Renewable-Energy Plan Make a Difference?, The Wall Street Journal's Environmental Capital Blog
This comment was alredy posted in energyblogs.com
Brian H on 08/20/2008 at 11:32 PM
25
If progress continues on current gradients towards its generating plants, then small-scale (5MW) Dense Plasma 'Focus Fusion' plants will be turning out power at ¼¢/kwh, for installed costs of about 5¢/W, with zero emissions and waste, from about that point on.
Investment in any other power-generation technology thereafter will be so patently economically wasteful that it will come to a screeching halt.
energymv on 08/28/2008 at 5:44 PM
19
Quoting the main article:
"Furthermore, the Massachusetts Department of Public Utilities has enacted an electric utility "decoupling" policy that goes into effect in 2012. It will decouple utility profits from the amount of energy that utilities deliver, zapping the long-present perverse incentive for utilities to overlook energy-efficiency investments in order to be able to sell more power.
I will try to follow this initiative on my blog at energy analysis
javs on 09/04/2008 at 8:56 AM
74
Having won Bill Clinton plenty of accolades, the artificial decoupling of electricity sales and utility profits works. However, such regulated decopling has an insidious secondary effect: extending the obsolete utilities and regulators price controls business model. As can be seen in the electricity without price controls (EWPC) blog’s article Let’s Avoid Many Expensive Fiascos, state regulators will keep using their price controls powers to make exceedingly large risky bets that are bound to result in premature obsolescence.
Power utilities price control business models are in a dead end and regulators are making excessive risks that will go into customers' pockets as soon as the new investments go into infant mortality. The articles’ summary reads: There is no need to cite any [analytical] evidence “to enable a highly competitive, pro-consumer, complete and fully functional market architecture and design paradigm shift.” What is needed is to have “the global power industry … get out of the wrong jungle to produce a EWPC based EPAct [Energy Policy Act] as soon as possible.”
Three key references are the EWPC article are Warren Causey’s article Utilities Full Speed Ahead on IUE/SG: The Question is What to do First, the EWPC article Utilities and Regulators’ Value Destruction, and the EWPC article Leadership Answers What to do First.
Instead of being part of an integrated systemic solucion, such artificial regulated decoupling is just another incremental extension on the already complex energy policy system. The problem with increasing complexity is explained in the EWPC article To Congressional Requesters of Utility Oversight.
The EWPC market architecture and design paradigm will enable business models innovations that will have the natural market incentives for energy efficiency decoupling as one of its key disruptive technologies. See the EWPC article The Sixth Disruptive Technology to “... do a better job of managing our dwindling energy resources…”
Now is the opportunity to introduce federal legislation on electricity without price controls to solve once and for all the global electricity systemic crisis.
José Antonio Vanderhorst Silverio, Ph.D.
Systemic Consultant: Electricity
Reference: Less Juice: Clinton Wants Power Companies to Sell Efficiency, Wall Street Journal.
charles j neal on 10/28/2008 at 11:50 PM
1
MickeyFouse on 11/25/2008 at 2:46 AM
19