Putting a price on carbon gains momentum in Mass.

Putting a price on carbon gains momentum in Mass.

Senate approves legislation, National Grid lends its support

CLARIFICATION: The original version of this story twice likened putting a price on carbon to putting a tax on carbon, but a sponsor of the legislation said it is not a tax. To read his point of view click here.

MASSACHUSETTS MOVED CLOSER to embracing an economy-wide price on carbon, as the Senate approved an energy bill with a “market-based compliance mechanism” and one of New England’s largest utilities said the pricing carbon is needed if the region is going to have a chance of meeting its greenhouse gas emission targets.

The Senate on Thursday passed legislation authorizing what is essentially carbon pricing but called it a “market-based compliance mechanism” instead. Massachusetts, as part of the Regional Greenhouse Gas Initiative, already puts a price on carbon in electricity generation, but the Senate bill would extend that approach to the rest of the economy, including transportation.

Sen. Michael Barrett of Lexington said putting a price on carbon “is the single most effective thing a state government can do to fight” climate change. He said the vote on carbon pricing makes the Senate the first legislative body in the country to approve revenue-neutral fees  as a carbon pricing option. The measure now goes to the House, where its prospects are uncertain.

Putting a price on carbon got a big boost when National Grid, one of New England’s largest utilities, called for  putting an economy-wide price on carbon and rapid electrification of the transportation sector. The utility said both initiatives, as well as a host of others, are needed if the region is going to have a chance of meeting its carbon emission goals for 2030 and 2050.

In a white paper released Friday, the utility said the Northeast is currently not on track to achieve either of the consensus emissions targets – a 40 percent reduction from 1990 levels by 2030 and an 80 percent reduction by 2050. In fact, Grid said, the Northeast will not reach the 40 percent reduction target by 2050 if trends continue at the current pace.

The utility said most of the emissions reductions to date have come in the electric generation sector. While progress there needs to continue, Grid said, the bulk of future reductions will need to come in the transportation and heating sectors, where progress has been minimal. According to the report, transportation emissions are still at 1990 levels and emissions from space and water heating are down 12 percent from 1990 levels. Power generation emissions, by contrast, are down 50 percent.

One of the most surprising policy proposals contained in the 14-page white paper is Grid’s call for carbon pricing.  The utility said putting a price on carbon is crucial if the region (New England plus New York) is going to reach its emissions targets.

“Improving the cost advantage of low-carbon fuels will appropriately incentivize customer choices towards cleaner transport and heating systems,” the paper said. “Secondly, gathering carbon revenue from all sectors (not just electricity, as currently happens with the Regional Greenhouse Gas Initiative) will provide a more robust and balanced revenue source for supporting the necessary changes.”

Grid said a portion of the revenue from carbon pricing should be used to mitigate financial impacts on vulnerable populations, with the remaining funds returned to consumers.

The white paper’s release comes at a time when Beacon Hill is grappling with energy and greenhouse gas emissions on a variety of fronts. The Baker administration, which is completing large, complicated procurements of Quebec hydro-electricity and offshore wind power, is saying the state is on track to meet its emissions targets. Lawmakers, however, have been more skeptical and the bill the Senate approved on Thursday would dramatically increase renewable energy production, set electricity storage targets, and require the administration to come up with a detailed plan for achieving the state’s emissions targets.

The Grid white paper attacked the region’s emissions challenge head-on, saying the only way the targets can be met is by incentivizing drivers and homeowners to change their energy consumption habits.

Rudolph Wynter, Grid’s president and chief operating officer for transmission, generation, and energy procurement, said 40 percent of the region’s emissions come from vehicle tailpipes, and those emissions can be cut in half on a per-vehicle basis by electrifying the vehicle.

Grid’s white paper said half of the region’s light-duty vehicles (passenger cars and light trucks) need to go electric by 2030. That’s about 10 million vehicles, and there are only 75,000 on the road today. Grid said every vehicle sold starting in 2028 would have to be 100 percent electric to reach the goal.

On heating, Grid called for a rapid transition from the use of fuel oil, propane, and kerosene to electricity through a combination of air and ground-source heat pumps. The white paper called for 3.85 million homes to utilize heat pumps by 2030, which would require 300,000 homes and businesses to be converted annually by 2030. The adoption rate is currently 25,000 a year.

“This is a big challenge,” Wynter said. “It is a challenge just to reach the midpoint target.”

The Grid white paper didn’t address directly the debate over whether the region needs additional natural gas pipeline infrastructure, but it did call for oil-to-gas heating conversions. “Oil-to-gas conversions, which achieve greenhouse gas reductions of over 27 percent per home, will also need to accelerate over the period, bolstered by investment in growing the regional supply of renewable natural gas,” the paper said.

In terms of the region’s power grid, National Grid said zero-carbon electricity currently comprises 50 percent of power generation, with 25 percent from renewables (hydro, wind, solar) and 25 percent from nuclear. The white paper said the percentage of zero-carbon electricity needs to rise to 67 percent by 2030, with the renewable share rising to 50 percent, which would require higher targets for renewables in the Regional Greenhouse Gas Initiative and at the state level.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Currently, regional electricity demand has been trending down slightly, thanks largely to energy efficiency efforts. Peak demand has been fairly steady. Grid said those trends will change as electrification takes hold and the demand for electricity outpaces energy efficiency efforts. The company forecasts total electricity demand and peak demand will both grow 15 percent over the next 12 years, but greenhouse gas emissions from the electric sector need to fall 29 percent over that period.

“Electricity demand growth will become the ‘new normal,’” the white paper said. “Efficiency investment will still be foundational since it lowers the total energy budget, but it must pivot to a holistic focus on emissions reduction rather than narrowly aiming to reduce electricity and natural gas use.”