June 21, 2016

Whitepaper by Brattle Economists Examines Clean Energy Policy Options for Massachusetts to Reduce Greenhouse Gas Emissions

A new whitepaper released today by economists at The Brattle Group examines the clean energy resources available for the Commonwealth of Massachusetts and key policy considerations to help meet the aggressive, long-term greenhouse gas (GHG) reduction requirements established by the Global Warming Solutions Act (GWSA). The GWSA requirements call for reducing the state’s carbon footprint by 80 percent by 2050. The whitepaper provides a set of recommendations for policies that minimize customer cost and risk, while ensuring electricity reliability.

Prepared with funding from the Barr Foundation, the Brattle whitepaper provides Massachusetts policymakers a synopsis of several recent and relevant third-party studies that include a diverse set of information about the cost, complexity, and benefits of alternative means of using clean energy resources to reduce GHG emissions. The main resource options examined in the studies reviewed include large-scale Canadian hydro, offshore wind, and onshore wind, as these are the main subjects of policies being discussed in the state’s Legislature and executive branch agencies. The authors find that all of these resources can be part of the solution but the pathways differ with respect to the portfolio mix, cost, and timing of achieving the GHG reduction requirements of the GWSA – factors that still need to be evaluated in a more systematic fashion.

“To meet both near- and long-term GHG reduction objectives cost-effectively while maintaining reliability and other economic goals, Massachusetts will need to consider a range of policy mechanisms to attract a broad set of clean energy resources,” notes Judy Chang, a Brattle principal and co-author of the study. “If procurements and long-term contracts are used, mechanisms to ensure competition are essential and the procurement requirement should be sufficiently flexible to allow for increases and decreases in the magnitude and timing of the tranches. This would ensure that ratepayers would reap the benefits of future costs reductions.”

To help effectively navigate resource and policy options in the future, the authors recommend that Massachusetts consider developing an ongoing comprehensive energy planning process that would help the state in identifying the proportion and timing of resources to reduce GHG emissions while balancing tradeoffs to achieve other objectives. Such a planning process would improve coordination between electricity, thermal, transportation, and other energy sectors to take advantage of the available synergies. The authors argue that the lack of a comprehensive energy plan creates a gap that forces the Legislature to make choices about energy resources and policy without a comprehensive proposal covering electric and thermal supply and demand, as well as transportation.

The Brattle whitepaper notes that while existing Massachusetts clean energy policies have been successful in attracting new clean energy resources, the 80 percent carbon reduction objective creates significant challenges. For instance, transmission constraints and other challenges limit additional wind resources from northern New England and additional hydro imports from Canada. The current high cost of offshore wind and the litigation surrounding the Cape Wind project have delayed the development of offshore wind. For these reasons and others, no single resource stands out as a clear long-term solution on its own. To meet the state’s energy and climate objectives, the authors highlight that each resource likely will be an important part of the future electricity generation mix. While noting that they have not analyzed the costs and benefits across different portfolios and timing of obtaining the least-cost combination of additional carbon-free resources to meet state goals, the procurements that have been suggested in various reports and proposed pieces of legislation for hydropower and wind seem consistent with the state’s goals if purchased using the efficient, risk-balancing mechanisms recommended. Maintaining the current programs on solar and energy efficiency, and continuing to support research and development in storage technologies, will also be critical.

The whitepaper, “Clean Energy Resource Options for Massachusetts to Meet GHG Reduction Goals under the Global Warming Solutions Act (GWSA): A Synthesis of Relevant Studies,” is authored by Ms. Chang, Brattle Associate Michael Hagerty, and Research Analyst Will Gorman, with contributions from Brattle Academic Advisor Peter Fox-Penner, a Professor of Practice at Boston University’s Questrom School of Business and Director of the University’s Institute for Sustainable Energy; David Cash, Dean of the John W. McCormack Graduate School of Policy and Global Studies at the University of Massachusetts Boston and former Commissioner of the Massachusetts Department of Environmental Protection; and Ann Berwick, former Chair of the Massachusetts Department of Public Utilities. It is available for download below.

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Judy Chang is an energy economist and policy expert with a background in electrical engineering. She has 20 years of experience in advising clients in transmission, resource, and strategic planning. More icon f02782c24cccaf6d90e1da53920c42f20e5a8955f54ac2ca5727ec7dc89987b4
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