Filling up at the gas station for a weekend on Cape Cod has taken on new significance this summer as prices hover around $3 a gallon. High energy prices have long contributed to the cost of living and doing business in Massachusetts. But now, as the crunch seems to be getting worse, energy could represent not only a challenge for the Commonwealth but also an opportunity.
The nascent gold rush for next-generation energy technology could become an economic engine for Massachusetts, one that deserves a place alongside the much-trumpeted biotech sector. But only if the state’s civic and business leadership gives the field the attention it deserves.
Advocates have been banging the drums about climate change for years and about energy conservation for decades. However, a number of factors are now coming together to make energy technology take off.
Crude oil prices have seemingly gotten stuck at nearly triple their average price of three years ago. Home heating oil and natural gas prices have also tracked upward. Robust economic growth in China and India—along with instability in many oil-producing nations—makes it likely that high prices are here to stay.
At the same time, the regulation of greenhouse gases is arriving. Northeast and mid-Atlantic states have formed a regional initiative focused on carbon dioxide emissions from power plants. Though we have our own regulations, Massachusetts has declined to participate in the new pact. Nonetheless, our neighbors are moving forward, as are other states around the nation. On the international level, the Kyoto Protocol entered into force as a treaty last year. Though the US did not sign on, this agreement binds Europe and many other industrial countries to curbing these emissions. This host of new regulations sends an increasingly clear signal to the market to develop new energy technologies.
The results of the Commonwealth’s 1997 utility restructuring are also being felt. One lesser-known part of utility restructuring is the Massachusetts Renewable Portfolio Standard—the requirement that an ever increasing share of our state’s power mix come from renewable sources. That provision offers significant financial incentives for projects like Cape Wind and a host of others.
All this suggests that, where energy technology is concerned, change is coming. Globally, trillions of dollars will be spent as energy infrastructure gets replaced with more efficient technologies, new fuel types, and cleaner power production. Jobs and wealth will be created in this process—and Massachusetts should be part of the action. With our preponderance of venture capital and private equity, our skilled workforce, a history of leadership on environmental concerns, and some of the world’s leading centers of innovation and invention in our universities, we are well positioned to cash in on the coming energy revolution.
We already have some important leadership coming from the Massachusetts Technology Collaborative (MTC). Through grant funds and loans, MTC is helping to get new Massachusetts energy tech companies down the road to commercial projects. However, MTC’s portfolio is limited by statute to renewable energy. The next generation of energy technology will be broader than that, involving such things as new transportation fuels (such as ethanol and biodiesel) and energy-efficient consumer products. We should broaden—and elevate—state government’s engagement with this emerging energy technology cluster.
We also need to raise the profile of the opportunity in an energy future, and get the civic and business community engaged. The life sciences don’t represent the only important economic opportunity our state has before it. Massachusetts already has 10,000 jobs in energy efficiency and renewable energy. How many people know that?
In California, ideas good and bad are floating about, including a proposed $4 billion ballot initiative to tax oil and fund alternative energy. Regardless of the merits of that particular proposal, no discussion of similarly big ideas is under way in Massachusetts. Here, you are either for Cape Wind or against it, and that is about as far as it goes. If that’s the way it stays, Massachusetts will miss the energy technology boat.