Theoharides explains $6b cost figure

THE BIGGEST DIFFERENCE between Gov. Charlie Baker and the Legislature on climate change legislation comes down to an issue where the two sides don’t seem very far apart at all.

Baker, in his roadmap for getting to net zero emissions by 2050, set a target for 2030 of a 45 percent reduction in emissions below a benchmark level. The Legislature, in the measure it passed at the end of last year’s legislation session, approved a 50 percent reduction. It was a mere 5-point difference, which lawmakers and environmental advocates dismissed as little more than a rounding error, but the Baker administration insisted it was a very big deal.

In his January 14 letter vetoing the legislation, Baker for the first time said those five percentage points would unnecessarily cost state residents $6 billion. Sen. Michael Barrett of Lexington, the Senate’s point person on climate change, said he had never heard the number before, and hinted it might have been made up. Environmental advocates were also dismissive. House Speaker Ron Mariano and Senate President Karen Spilka say they are determined to send the bill back to the governor as is.

Now, Kathleen Theoharides, the governor’s secretary of energy and environmental affairs, is explaining where the number came from and why the difference between 45 percent and 50 percent is so substantial.

Theoharides said reducing emissions is dependent on convincing millions of vehicle and home owners to replace their cars and heating systems with cleaner options. Timing is everything, Theoharides said, noting that the cheapest, most efficient way is to replace the cars or systems when they need replacing, which doesn’t occur all that often. She said two years of research by her agency found that a 45 percent goal matches up best with the pace of replacements going on in the economy.

According to the Baker administration’s 2030 plan, “pursuing emissions reductions beyond 45 percent in 2030 would likely require technological transformations faster than stocks are expected to turn over and before key markets can fully transform. As a result, mandating the achievement of deeper emissions reductions in 2030 – far beyond those of any other state in the region – poses the significant risk of placing the Commonwealth at a competitive disadvantage and imposing unacceptably high cost-impact on businesses and families with little to no added benefit to the Commonwealth’s transition to net zero in 2050.”

To achieve a 45 percent reduction, Theoharides said, the state would have to reduce emissions by 19 million metric tons. To go to 50 percent, she said an additional 4.7 million metric tons would have to be cut.

The administration’s plan calls for putting 750,000 electric vehicles on the road to achieve the 45 percent goal. To reach 50 percent, Theoharides said, the state would need to put an additional 400,000 electric vehicles on the road over the next decade. She said the current subsidy per car of $1,500 would have to be boosted to $9,000 at some point. She pegged the total extra cost of adding all those additional electric vehicles at $300 million a year over eight years, or $2.4 billion.

The administration estimates the 50 percent goal would require nearly every home that is heated with oil be converted to an electric heat pump or adapted to use biofuels or biogas. Total cost is estimated at $3 billion over the decade.

The administration’s analysis also indicates the adoption of low-carbon fuels would need to be dramatically accelerated between 2025 and 2030, particularly in commercial vehicles that currently run on diesel fuel. Most gasoline sold at the pump now is one-tenth ethanol, but use of bio-diesel fuel is rare. Theoharides said a higher 2030 target would necessitate a ramp up of that effort, at an estimated cost of $400 million over the five-year period.

Lawmakers and the Baker administration have engaged in little discussion so far about their differences, which go beyond the 2030 goal. Barrett has suggested the $6 billion figure was pulled out of thin air and that Baker wants a lower target for 2030 to leave future governors with the heavier lifting of what really needs to be done now.

Lawmakers and environmental advocates have also questioned whether the differences between the Legislature’s and administration’s 2030 goals are really all that different. Indeed, the Baker administration’s own energy and climate plan for 2030 indicates the governor’s approach would yield a reduction in greenhouse gas emissions between 45 and 48 percent. (see here for climate plan, page 13)

Barrett points out that the administration’s energy and climate plan doesn’t set a target of putting 750,000 electric vehicles on the road over the next decade, but instead calls for a range between 750,000 and 1 million. (climate plan, page 21)

The senator also said the Baker administration and the Legislature make different assumptions about the federal government’s future role. Barrett said the Legislature assumes a robust federal-state partnership, with the federal government providing direct financial assistance to motor vehicle purchasers, homeowners, and business owners. The senator said the Baker administration assumes the federal government will enact supportive policies, but not direct financial assistance.

In a recent column on the furor over the $6 billion number, Larry Chretien of the Green Energy Consumers Alliance said the difference between the targets set by the Legislature and the governor works out to about $600 million a year for 10 years , which is not that significant in the context of statewide energy spending of roughly $20 billion a year.

“The administration’s reasoning is that we can reach our ultimate goal [net zero by 2050] gradually and that we should not over-invest in this decade,” Chretien said. “We have two economic arguments in this regard. The first is that none us really know what it will cost to reduce emissions between 2030 and 2050. … We think it’s more prudent to reduce emissions at least 50 percent by 2030 so that we have more options in the following decades. The second is that our federal government is back in the game on climate policy. “

Theoharides takes a different view. She said the new administration in Washington and time will be friends as Massachusetts tries to match car and home heating system replacements with the need to reduce greenhouse gas emissions. She said the state has to keep that in mind as it moves from cleaning up the energy sector, which is populated by a relatively small number of power plants, to greening up the transportation and building sectors, a job that revolves around convincing millions of individuals to make personal spending decisions.

“We don’t believe this is easier to do now,” she said of accelerating the emission reduction schedule. “The last emissions we will be wringing out of the wash are going to be some of the toughest, including airplanes, heavy industry, and freight. But the world will be much further along when that time comes.”