Top Baker aide says full steam ahead with TCI

GOV. CHARLIE BAKER’S top environmental official indicated on Monday that the administration is moving full steam ahead with a regional effort to put a price on the carbon contained in motor vehicle fuels.

The governor himself has sent signals in recent weeks that his administration was re-evaluating its support for the so-called transportation climate initiative, or TCI, given the downturn in driving prompted by the coronavirus pandemic. But Kathleen Theoharides, his secretary of energy and environmental affairs, showed no such hesitation during a virtual panel discussion with Gordon Van Welie, the operator of the regional power grid, and Neil Chatterjee, a commissioner of the Federal Energy Regulatory Commission.

“Through this initiative, we can assure sustained investment in transportation and give people better, more affordable transportation options while cutting the pollution that contributes to global warming,” Theoharides said. “States will be signing on to the final memorandum of understanding by the end of this year and we look forward to implementing the program across the region.”

Her positive remarks follow much more cautious comments by the governor last week, when he said the forecasts on which TCI was based needed to be re-examined given the way transportation patterns have changed during the coronavirus pandemic. “If you pursue a price on carbon associated with transportation, what do you get for that price on carbon in a world that looks a lot different now, and potentially will stay a lot different for the next several years, relative to the one we thought we were living in a couple years ago?” Baker said last Monday.

 Monday’s panel discussion, hosted by the New England Power Generators Association, also yielded some details about a roadmap the administration is developing to reach net zero carbon emissions by 2050. The roadmap, which is expected to be released during the next couple weeks, apparently envisions situations when new nuclear power plants might need to be built.

Theoharides said the road map relies heavily on the development of offshore wind resources. She at one point said 15 gigawatts of offshore wind is needed at a minimum, apparently by 2050, but noted only a small fraction of that amount (1,600 megawatts) had been procured so far and none built. Indeed, a final federal regulatory decision on the state’s first major wind farm, Vineyard Wind, is not due until January.

“If the construction of offshore wind is not achieved at the scale suggested here in this 2050 roadmap, the construction of new nuclear in the northeast region may be required to meet the 2050 target,” she said.

Nuclear power generates no carbon emissions, but it comes with its own issues (high cost/disposal of radioactive waste) and would likely face strong opposition across New England. Still, as of late yesterday, nuclear power accounted for 31 percent of the region’s power needs, second only to natural gas at 43 percent. Renewables accounted for 16 percent.

The secretary also said natural gas power plants are not going away any time soon, largely because the electricity they generate is needed and because the plants are needed as backup to renewable forms of energy whose output varies with the weather and time of day. She said the roadmap assumes no reduction in natural gas turbines in the region through at least 2030.

Theoharides also seemed to suggest the Baker administration would support carbon pricing at the federal level and, if that was politically unattainable, at least consider supporting it on a regional basis. She said political division in Washington, even with the election of Democrat Joe Biden, probably means the nation will not embrace carbon pricing or a national cap and trade system any time soon. She indicated a regional approach to carbon pricing would be the next best approach.

Her office Monday night said the Baker administration does not support an economy-wide price on carbon. Theoharides indicated she is opposed to an idea put forward by Van Welie and Chatterjee that would place a price on the carbon used to produce electricity, in part because that would drive up the price of electricity at a time when the state and the region as a whole want to use electricity to decarbonize the transportation and building sectors.

“We feel very strongly that adding another carbon price on to the electricity system will increase the cost of electricity relative to other fuels, not only burdening residents with larger electric bills but also making our own efforts to electrify even more challenging,” she said.

The question of carbon pricing has come to the fore as many of the key players involved with the region’s electricity markets are trying to find ways to promote the growth of renewables through competitive markets. So far, those markets have had little success in incorporating renewables, and the New England states have procured offshore wind and hydro-electricity on their own through utilities. Baker and the governors of four other New England states have criticized the regional grid operator, ISO New England, for failing to address the problem.

Chatterjee said carbon pricing would allow the existing competitive electricity markets to operate more efficiently. “Carbon pricing is a fuel neutral, transparent, and market-based approach that can be harmonized with the markets we oversee,” said Chatterjee, a Republican who was recently demoted from the chairmanship of the commission by President Trump.

Van Welie also backs what he calls net carbon pricing for electricity production as a way to allow wholesale electricity markets to incorporate renewables more easily. “We don’t think that it would be a massive increase in electricity prices,” he said.

Dan Dolan, the president of the New England Power Generators Association, the sponsor of the event, said in a telephone interview that he was heartened by the comments of Theoharides, Chatterjee, and Van Welie in support of using competitive wholesale markets to move toward a clean energy future. He also said he was surprised at their openness to discussing carbon pricing.

Joe Kelliher a former chairman of the Federal Regulatory Commission, was the moderator for the panel discussion. He ended the session by saying he was surprised at how cordial it had been.