Massachusetts has ambitious climate goals, and not a lot of time to achieve them, which has some clean energy and climate experts questioning why a state program continues to promote fossil fuels with cash incentives for oil and gas home heating systems.
The state’s climate plan demands that 1 million households be converted from fossil fuels to electric heat by the end of the decade, part of a sweeping transition meant to help stave off the worst of climate change’s consequences. And yet the state’s only incentive program, and its best tool for helping convince businesses and homeowners to make that switch, is sticking with rebates for new carbon-emitting systems likely to remain in service long past that deadline.
The program, Mass Save, is run by utility companies with oversight by the state, and hands out between $640 million and $700 million a year in rebates that are funded by a surcharge on utility customers’ bills. It is credited with successfully reducing carbon emissions from home heating across Massachusetts since its inception in 2008. But in the past, those cuts have come largely by encouraging conversions from oil to gas, a less-dirty fossil fuel that the state plans to phase out.
However, in a set of proposed new incentives that would take effect next year, Mass Save is again planning substantial incentives to install gas systems and, in some instances, oil. And at a time when record-breaking heatwaves are scorching the country and the amount of greenhouse gas in the atmosphere is at an all-time high, experts said incentives must now move sharply in the other direction.
“This draft plan for energy efficiency still exists in the old mind-set, the old world, where we don’t actually have to do anything on climate very urgently, or where there isn’t a role in energy efficiency in helping us get to our goals,” said Caitlin Peale Sloan, a senior attorney and vice president of the Conservation Law Foundation in Massachusetts. “And that isn’t the case.”
Ultimately, the state wants the vast majority of homes and businesses to be outfitted with electric heat pumps that plug into a power grid fueled by wind and other renewable sources. While Mass Save’s proposed new incentives include robust rebates for heat pumps, the program is planning to direct those rebates primarily toward homes currently using oil or propane, not the 52 percent of residences statewide that now use natural gas.
Heat pumps are highly efficient, and provide cooling in addition to heating, but they come with hefty up-front costs. And with the low cost of natural gas and high costs of electricity in Massachusetts, a switch from gas to electric heat pumps could cause those customers to see their energy bills increase. For that reason, some experts say, Massachusetts needs to rethink its incentive program.
“Now is the time to be aggressive in our shifting, and we need to make it as easy as possible for the average person to step up their game and get to the maximum level of efficiency,” said the Rev. Mariama White-Hammond, chief of environment, energy and open spaces for the city of Boston.
Compounding the problem, critics say, is the fact that homeowners who decide to replace their boilers probably won’t want to do it again for a decade or longer. That means conversions to natural gas or the replacement of existing natural gas equipment in the next several years will ensure sustained usage of fossil fuel at least up to the state’s 2030 deadline for halving carbon emissions and likely longer.
“Under this draft Plan, Mass Save will continue pouring ratepayer money into new fossil fuel systems long past when they are needed, at the brink of too late,” wrote Kathleen Scanlon and Anne Wright, co-coordinators of the Clean Heat, Clean Air Campaign of the advocacy group Mothers Out Front, in a public comment on the draft.
Buildings account for nearly a third of all greenhouse gas emissions in Massachusetts. Without meaningful reductions in this sector, experts said, the state’s climate goals — reducing greenhouse emissions to 50 percent of 1990 levels in the next nine years and getting to net zero by 2050 — may be out of reach.
The idea behind Mass Save when it launched in 2008 was to achieve big energy savings by promoting more efficient home systems, and it has worked. Roughly 80,000 households take advantage of Mass Save’s free home energy efficiency assessments each year. From its inception through the first quarter of 2020, Mass Save’s energy efficiency rebates have resulted in a reduction of 5.6 million metric tons of carbon dioxide equivalent, according to the program. That’s roughly the emissions from 1.2 million passenger cars driven for a year, according to the EPA.
But because the program relied so heavily on natural gas to achieve those reductions, it led itself into a trap, said Peale Sloan of the Conservation Law Foundation.
“By relying on switching from coal and oil to gas, we’ve basically stranded ourselves at a level that maybe meets the 2020 goal, but drastically misses what we need to get to for 2030, 2040, and 2050,” she said.
If the state is going to achieve its goal of net-zero emissions by 2050, she and others say the transition off fossil fuels — including natural gas —needs to happen right away.
Mass Save’s critics point to two big hurdles standing in the way of fast action: First, the program prioritizes financial savings over energy savings, and second, the incentives it uses to encourage customers are decided by utility companies, including gas providers. The utilities revise the program’s incentives every three years, and while the state provides input, it has limited tools to ensure its input is adopted.
“These are electric and gas companies. There is an inherent conflict in the business models at play,” said Cammy Peterson, director of clean energy at the Metropolitan Area Planning Council and a member of the state’s Energy Efficiency Advisory Council, which oversees the Mass Save program.
Bob Kievra, a spokesman for National Grid, denied that utilities have a conflict, in part because of the complicated profit model for utilities. “Folks may see us as delivering natural gas and thinking that every additional therm is profit for us,” he said. “It just doesn’t work that way.”
Chris Porter, the director of customer energy management for National Grid in New England, said his company and others are working on carbon-free business models that would make them players in a new energy landscape. “We do think there is a role for our existing, and for all gas utilities’, natural gas infrastructure,” he said. “No one has all the answers yet on exactly the right path, but that is actively being worked on,” he said.
Mass Save’s latest proposed incentives are being reviewed by the program’s advisory council, a governing body that includes representatives from clean energy groups, the attorney general’s office, housing organizations, and more, and engages in months of negotiations with the utilities over their proposed plans. The advisory council will vote on the plan. In years past it has approved incentive plans put forward by the utility companies with little or no dissent. But this year, it is hoping for major changes, said Amy Boyd, a council member..
She said the council will ask the utilities to move further away from fossil fuels and do more to incentivizing the transition to heat pumps.
She said it will also push to make the new Mass Save offering more appealing to low- and middle-income consumers. In the past, Mass Save has been primarily used by those in wealthier communities, where usage can be seven times higher than in less affluent towns.
The state Department of Public Utilities will have final say on the plan in January 2022.
A spokeswoman for Mass Save defended the natural gas rebates as a way to ensure customers opt for the most energy-efficient equipment. “In the long run, customers save more money and use less energy than they otherwise would have as a result of program offerings,” said Shaina Kaye. “Absent our programs, customers are more likely to buy less-efficient equipment, which would then drive up costs for themselves and other customers in the long run.”
But as negotiations around the plan continue, some members of the advisory council and others are hoping to see the incentives for heat pumps increase dramatically right now, to help make the math work for current natural gas users who might want to switch.
And there’s some hope that could happen, thanks to the new requirements of the state’s climate plans.
The state’s climate blueprint for achieving its 2030 climate goals calls for the elimination of incentives for fossil fuel equipment in new construction beginning in 2022, and phasing out all incentives for fossil fuel heating by the 2025-2027 Mass Save plan. The climate legislation signed by Governor Charlie Baker earlier this year mandates reducing emissions to 50 percent below 1990 levels by 2030 and net-zero carbon emissions by 2050, and also stipulates for the first time that the state can require Mass Save to meet specific greenhouse gas reduction goals.
“Now, I’m hoping that with the consideration of climate inequity by the DPU and an explicit climate goal, the plans could actually give a really large incentive for heat pumps,” said Boyd. “Let’s go ahead and put the thumb truly on the scale toward electrification, and minimize what we are paying for replacing fossil fuel systems.”