By Peter Shattuck and Jamie Howland, via CommonWealth

There’s too much risk and not enough need

This is the first in a three-part series. Read the full PART 1 here.

On March 20, 1886, the world’s first alternating current electric grid was powered up in Great Barrington, Massachusetts. The steam generator, power lines, and transformers were revolutionary and, in the 130 years since, the electric grid has transformed society.  Remarkably, over the same time frame, the basic model for the grid has remained largely the same.  Growing demand has been met with more power plants, more fossil fuel combustion, and more infrastructure to transmit energy to customers across a one-way grid.  The accompanying regulations evolved to reward utility monopolies for building and managing this seemingly ever-expanding energy system.

Now the historic model is breaking down.  Rooftop solar allows customers to produce and share power at the local level, offering an alternative to additional utility infrastructure.  Solar, wind, and other forms of renewable energy are increasingly powering the grid without producing carbon pollution responsible for climate change.  And, most significantly, smarter and more efficient electricity use is causing demand to decline, benefitting customers who no longer have to pay for an ever-larger system, but threatening utilities whose profits accrue from building and maintaining infrastructure.

In this context, decision-makers face two main challenges related to energy.  First, new energy supplies must be carbon-free in order to avert the increasingly apparent impacts of climate change.  Second, policies need to account for outdated financial incentives that favor large-scale infrastructure projects over smaller-scale, distributed solutions that can support an efficient, networked grid centered on the consumer.

This three-part series describes these challenges, focusing in Part I on controversial proposals to subsidize large natural gas pipelines through the region. Part II explores how rooftop solar and smart energy management are transforming the energy system and upending the centralized utility model.  Part III describes the near-term legislative opportunity to bring online large-scale clean energy sources that will facilitate achievement of Massachusetts’ climate commitments, stabilize prices, and continue the transition to a clean energy system.

Climate Context

Climate change is no longer a distant threat.  By a wide margin, 2015 was the hottest year on record, displacing 2014, which itself shattered global records.  Fueled by elevated ocean temperatures linked to climate change, Hurricane Sandy devastated New Jersey, New York, and Connecticut.  If Boston were hit by a similar storm, Faneuil Hall, Fenway Park, and much of Boston would be under water.

Against this ominous backdrop, some encouraging steps are being taken. Late last year, world leaders hashed out shared commitments to contain climate pollution under the Paris Agreement. Closer to home, leaders of New England states and Eastern Canadian provinces agreed to a 35-45 percent reduction in greenhouse gas (GHG) pollution by 2030, aligning with Massachusetts’ own legal requirementto reduce the Commonwealth’s emissions 80 percent by mid-century.

These commitments must now inform every major decision related to energy, particularly in relation to natural gas.

Bursting the Methane Bubble

In a remarkable shift from just a decade ago, natural gas now poses the biggest climate threat in the region.  The last of Massachusetts’ coal plants will be shuttered by 2017. Generation from oil-fired power plants declined 87 percent in the 10 years leading up to 2014 (latest year of complete data), and oil generation will continue declining as longer-term solutions to meeting peak winter demand come online (more on that below).  With coal and oil now effectively out of the regional electricity mix, increased generation from natural gas will start displacing non-emitting sources of energy, undermining efforts to reduce climate pollution.

The natural gas industry is trying to hold on to its once-favored status by portraying the fossil fuel as a complimentary “bridge” to clean energy, but numbers do not support their case.  Massachusetts and other New England states have committed to reducing economy-wide emissions – including emissions from natural gas, petroleum, and other sources – to 75 percent below 1990 levels by 2050.  Using natural gas at current rates (accounting for relatively small pipeline expansions coming online next year) will more than eat up the entire budget by 2050.  If we build two large pipelines proposed for the region (Kinder Morgan’s Northeast Energy Direct and Spectra/Eversource/National Grid’s Access Northeast), we will be over budgetby 78 percent in 2050.

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New science is additionally undermining the claimed climate benefits of natural gas. A collaborative study by gas producers and the Environmental Defense Fund found that 1.5 percent of methane (the primary component of natural gas) leaked during production in Texas fracking fields, a figure 90 percednt higher than EPA estimates.  These “upstream” emissions do not account for leaks occurring throughout one of the oldest pipeline systems in the country: in Massachusetts, utilities are losing up to 1.8 percent of the gas in their systems, and in certain places methane has been leaking unabated for over 30 years.  Because methane can cause 86 times as much global warming as carbon dioxide over a 20-year period, the new research suggests that the climate benefits of natural gas have been substantially overstated. The climate risks from methane may be one reason why public support for Kinder Morgan’s Northeast Energy Direct has dropped to 38 percent when respondents understand that the pipeline would carry fracked natural gas.

While the climate risks of natural gas are becoming clearer, the need for subsidized pipelines is disappearing in the face of real alternatives that Acadia Center and others have been requesting for years.  A recent analysis by Massachusetts Attorney General Maura Healey found that market reforms and better planning remove the need for new pipelines to support electric system reliability.  The study additionally describes the consumer and climate benefits of prioritizing investments in energy efficiency, demand reductions, and clean energy imports.  The findings are matched by facts on the ground, including:

Declining electricity prices: Eversource’s and National Grid’s basic service residential winter rates are, respectively, 27 percent and 25 percent lower than last year’s, without any new pipeline capacity.  Lower prices are due to a number of factors, including market reforms that align gas and electric markets, and requirements for power generators to ensure adequate fuel supplies.

Declining Demand: Massachusetts’ and other New England states’ energy efficiency programs are causing energy demand to decline, reducing the need for additional pipeline capacity and other energy infrastructure. Despite using conservative assumptions that overstate the cost and understate the impact of efficiency programs, the regional grid operator ISO-NE predicts that winter peak demand will decline by 0.1 percent annually over its 10-year planning horizon.  The actual impact of energy efficiency is likely far greater. Acadia Center has demonstrated that ISO-NE consistently overestimates energy consumption and peak demand; for instance, actual winter peak demand was 24 percent lower in 2014 than predicted by ISO-NE in 2006. These inaccurate projections overstate the need for expensive energy infrastructure of all kinds, including natural gas pipelines.

Read the full article here.

About the Authors:

Peter Shattuck is Massachusetts director and Jamie Howland is director of the Climate and Energy Analysis Center at Acadia Center, a nonprofit research and advocacy organization committed to advancing the clean energy future. Copyrighted material used with the permission of Acadia Center.  Installments in this analysis series are also available here.