If power on Beacon Hill is measured in terms of share of the state budget, Ian Bowles is a nobody. The state’s secretary of energy and environmental affairs oversees agencies that represent less than 1 percent of the overall state budget, and their funding has been shrinking. The budget for his environmental agencies has been cut nearly 20 percent over the last three years.
But Bowles’s clout is not measured just in terms of tax dollars. He is overseeing a sweeping series of energy and environmental initiatives that will cost billions of dollars over the next three years—paid for mostly through a series of assessments on customer utility bills.
It’s a job that requires good political instincts, a flair for economic development, and strong environmental credentials. The 44-year-old Bowles has strengths in all three areas. His resume includes degrees from Harvard and Oxford, a job with an environmental organization creating a four-million-acre nature reserve in Suriname, posts in the Clinton administration, an unsuccessful run for Congress, and the top job at MassINC—whose duties include serving as the publisher of CommonWealth— prior to joining Gov. Deval Patrick’s cabinet in 2007.
Like Patrick, Bowles sees energy as an opportunity, not as a drag on the state’s economy. He believes Massachusetts can cut its energy usage, reduce carbon emissions (by shifting to wind, solar, and other renewable forms of energy), and build a thriving clean tech industry—all without harming the state’s economic competitiveness. He downplays the cost of these efforts, saying the state will come out ahead as the price of wind and solar fall and the cost of fossil fuels continues to rise.
It’s a message that resonates with the public. It’s also in perfect harmony with the energy policies of President Barack Obama, who reportedly considered Bowles for the top job at the Environmental Protection Agency at the start of his administration. One key difference is that Obama supports the development of a new generation of nuclear power plants as a way of producing large amounts of carbon-free power. Bowles says he supports the president’s position, but he shies away from the politically explosive issue of a new nuclear power plant in New England. He says he supports the relicensing of the Pilgrim nuclear power plant in Plymouth, however.
Over the last three years, Bowles has enjoyed remarkable success implementing the state’s energy policies. The agencies he oversees approved a massive energy efficiency program and created a regulatory framework for the development of renewable energy and carbon taxation. Cape Wind, which he strongly supports, cleared key federal and financial hurdles this spring. The much smaller Hoosac Wind project in western Massachusetts has been delayed by court challenges, so Bowles is pushing for legislation on Beacon Hill that would make it easier for developers to site wind farms. He’s also being sued by TransCanada, an energy company with a wind farm in Maine that says Bowles’s efforts to steer solar and renewable energy subsidies to in-state companies discriminate against out-of-state suppliers.
During our interview inside his office at 100 Cambridge Street, Bowles made a persuasive case for the state’s policies, but like any good politician he tends to play up the positives and downplay any negatives. For example, he defended the state’s solar subsidies by noting that US Energy Secretary Steven Chu says solar power won’t need any subsidies in five years. When I asked his staff for documentation, they pointed me to a federal projection that solar would reach “grid parity” (a price of 10 cents per kilowatt hour) with other forms of electricity by 2015. But that same projection went on to say that grid parity “is not good enough for massive use of solar power.” It said solar’s price needed to drop to 2 cents per kilowatt hour for that to happen, “and that bold goal requires basic research and resultant disruptive technology.”
What follows is an edited transcript of our conversation.
—BRUCE MOHL
commonwealth: In 2008, the state approved the Green Communities Act, the Green Jobs Act, the Global Warming Solutions Act, and the Clean Energy Biofuels Act. What’s been your overall vision as you’ve gone about implementing these initiatives?
Bowles: Three things. We’re trying to make clean energy a core part of our state’s economic strategy and create jobs and economic growth potential for Massachusetts. We have every reason to be the disproportionate beneficiary of the clean energy transformation that’s going on already around the world. We’ve got the highest educational attainment in the nation. We’ve got MIT, UMass, and intellectual property generation unparalleled in our country. We have the second biggest venture capital cluster and over 600 firms in this area. So there’s enormous economic opportunity.
Second, we’re making concerted, cost-effective reforms to reduce greenhouse gas emissions. The analysis we put out recently shows that we can get to 18.6 percent below 1990 levels based on existing policies that we’ve already adopted without exercising any greenhouse gas regulatory authorities. It’s the significant environmental challenge of our time. States can lead the way and show how significant reductions in greenhouse gas emissions are possible in a cost-effective basis.
Third is the foreign oil and fossil fuel roller coaster. If you look at the last 10 years of electricity prices for Massachusetts consumers, the message is variable and rising.
[He produces a chart showing average annual consumer electric bills in Massachusetts over the past decade.] What the chart shows you is a lot of volatility. We’re tied to the fossil fuel price roller coaster, which provides unpredictability for our residents and businesses alike. We don’t have long-term, stable-priced generating assets. We’re tied to the natural gas price, and getting off that roller coaster is important for pure economics. Then you’ve got our dependence on foreign oil and what that means for our national foreign policy.
CW: Would you say the policy you’re pursuing is among the most aggressive in the country?
bowles: Yes, but I would also call it the most strategic. California has maybe five different significant power centers that do what this office does. These are five different significant bureaucracies, each coordinating at the level of the governor and each pursuing their own different programs in a way that I don’t think is anywhere near as coordinated as what we’re doing. For example, they’ve tackled greenhouse gas emissions from a largely top-down regulatory approach through the California Air Resources Board. We’ve tackled it from a much more nuts-and-bolts, from-the-ground-up type of approach, each time asking ourselves whether what we are doing is cost-effective.
CW: How do you determine whether what you’re doing is cost-effective?
bowles: We recognize that we’re 2 percent of the nation’s population, so it doesn’t make sense for us to take on very costly greenhouse gas reduction measures unless we can get the rest of the nation moving with us. We don’t want to disadvantage ourselves. California is a larger market, but they’ve taken a more regulatory approach. We’ve done a lot of pretty common sense reforms and kind of block-and-tackle measures that needed to get changed. We’ve got dozens of things we’ve put in place, but I think each one stands up on its own as a sensible policy that’s tied to a specific goal. We’ve been judicious but aggressive.
cw: It sounds like you’re in a competition against California. How do we stand?
bowles: They’re resting on their laurels out there.
CW: Is there a danger for a state like Massachusetts, with some of the highest electricity prices in the nation, being too far out in front of the pack?
BOWLES: When we took office, the message from a small sliver of the business community was, “You can’t do a regional greenhouse gas initiative. The sky will fall.” Three years later, the sky has not fallen. In fact, the contribution of the regional greenhouse gas initiative, in my view, is predominantly architectural. We’ve basically said, “Here’s how you do this.” We’re not making dramatic curbs in greenhouse gas emissions. We are making modest cuts. We’re taking $60 million to $70 million a year on the power part of your bill and then dumping it back into energy efficiency rebates. I would say the cost-benefit of everything we’ve done together yields greater savings than it does costs.
CW: Can you put a price tag on the costs?
BOWLES: Each of the things we’re doing stands on its own. The solar credit program is one that some—some—in the business community have raised questions about [in terms of] the potential costs. But even the projection we made [a $75 million annual solar subsidy] doesn’t really capture the projected decline in solar costs. To be clear, solar costs more than conventional power. There’s no doubt about it. But the benefits really accrue to the states that have created significant markets. So we’ve had a real reduction [in the cost of solar] because we have four times more solar installers than when we got started. They compete with each other and that produces a cheaper product for installing solar. Panels have come down 50 percent. US Energy Secretary Steven Chu will tell you we’re five years away from grid parity for solar. Once you get to grid parity you don’t need subsidies at all.
CW: Do you view yourself as a guy placing bets on energy futures?
BOWLES: The governor and the Legislature were the ultimate architects. The governor had a vision that if we get clean energy right, the whole world will be our customer. That’s been his refrain since he was a candidate and three years on the job. He’s given me the latitude to fill that out and say, “Here’s our strategy to pursue this.” I’d say the Legislature has been an amazing partner. They were absolutely the statutory architects for what we’ve done. We’ve certainly taken specific approaches to wind and solar in terms of aspirational targets based on feasibility, rate of growth, and cost. Certainly some states have much more aggressive solar goals than we do. We have a 10-year, 250-megawatt solar goal. We’re confident we can reach that.
CW: Still, the bet on solar is pretty big. Why solar?
BOWLES: Do I really think [the solar subsidy] will cost that much? No, I don’t. All the data suggest the opposite, that costs will continue to come down, as they have already, and the states that move first will have the most significant cost advantages because they’ve helped stimulate the market. Is $75 million a reasonable bet to put on solar technology, given that prices are coming down dramatically each year, given all of the significant employment benefits in the state, and given that it’s a technology that has the potential to be ubiquitous? I think it’s a reasonable bet. As fossil fuel prices continue to rise, we’ll look back and say we made a smart bet.
CW: All of the state’s initiatives are premised on the cost of fossil fuels continuing to rise over the next 20 years. What if that doesn’t happen? Many say new techniques for retrieving natural gas may keep prices low for a long time.
BOWLES: Even in the depth of the worst recession in any of our lifetimes, oil is trading at $80 a barrel today. It’s pretty hard not to read that as the marketplace is baking in sustained high prices for fossil fuels. So I guess I feel comfortable with the basic idea that we need to diversify. As long as we’re doing it in an intelligent way that’s creating jobs in our state and plays to our state’s competitive economic advantage and is judicious in terms of risk and reward, then, yeah, I think we’re on the right track.
CW: Many of your renewable initiatives funnel subsidy money from electricity customers in Massachusetts to projects outside the state. Officials in Connecticut are so concerned about this wealth transfer that they’re thinking about scaling back their support for renewable energy. You’re being sued for trying to steer a portion of the Massachusetts subsidy money to Massachusetts companies. What’s your priority, clean energy or the jobs that come from it?
BOWLES: The idea that we would not want to buy any renewable power from any of our neighboring states is not one that I subscribe to. From a cost basis, as we make this major transition to a lot cleaner power-generating sources, we need competition from a northern Maine wind project, a small hydro project in upper New York state, sustainable biomass in New Hampshire, and solar in East Boston. I think that’s fine and it’s good. Our market is open. That promotes competition. In a few cases, the Legislature said to give some added incentives for in-state power generation. So the long-term contracts provision on a pilot basis tells utilities to provide some more financing certainty for in-state projects. Same with solar. We’re doing that. With energy efficiency we’re doing that as well. I have not felt the pressure that my counterparts in Connecticut have felt. I think that’s shortsighted in terms of what’s happening in Connecticut. But Connecticut has a legislature that changes its energy laws every session. I don’t think that provides stability for the investment community.
CW: You’ve struggled to win support for Cape Wind and battled an environmental group opposed to the Hoosac Wind project in the Berkshires. That’s why you’re pushing legislation that would make it easier to site wind farms. I get the feeling you feel some environmental damage is acceptable in the state’s effort to deal with climate change.
BOWLES: I grew up in Woods Hole, with parents in the science community there, thinking about ecosystems. So I think I was exposed to some of the early research on climate change, maybe earlier than some. I spent a lot of my career in biodiversity conservation. I spent five years working on a four-million-acre park that’s pristine in Suriname, the former Dutch Guiana. I don’t yield my land conservation stripes to anybody. But the idea that we’re going to misuse our environmental laws to render judgments about aesthetics, I’m not for that. I think it’s wrong.
Today, the power plants in the Commonwealth are built predominantly in the cities—Fall River, Salem, Everett, Holyoke. These are the places where our fossil-fuel-burning power plants are. Those were decisions made a generation ago, and if you live near one of those power plants you probably have higher rates of pediatric asthma and lower property values. So [I have trouble with] the idea that a town in western Massachusetts [votes for] a modest wind farm, we give it all the permits, it doesn’t conflict with any park or any endangered species or any environmental issue—and then we’re going to have a group of opponents who don’t even live in the town tie it up for five years with appeals of the same wetland permits. That’s not environmentalism. That’s NIMBY. That’s just saying I don’t want to look at this stuff and I’m going to use the Commonwealth’s well-intentioned environmental laws to tie a project up in knots. I’m not on board with that. Fundamentally, environmentalism shouldn’t be about saying no. It should be about protecting the environment in all its forms.
CW: You’ve stressed the need to address climate change, but unlike President Obama you seem reluctant to push for nuclear power, which offers the promise of a lot of power with no greenhouse gases.
BOWLES: Nuclear power is going to be part of the solution to address greenhouse gases. There is a next generation of reactors that hold promise to not have the long-term waste issues that the current generation do. I would say, given the siting controversies with them, the likelihood is that the first set of those reactors is not going to be in New England. But as the next generation proves itself out, New England will be an excellent candidate for them because we’ve got relatively high electricity prices. The thing I would have reservations about is: How big a public bet do you want to put on nuclear power from the perspective of the federal government? What other industry has comprehensive liability relief? I can’t think of any. It has some enormous insurance and other benefits and still, for 30 years, none have been built. There are some economic questions about how much of a bet to put in that area, but directionally speaking I think the president is correct. It will be part of the mix.
CW: The governor sent the Nuclear Regulatory Commission a letter in February after radioactive tritium was discovered in ground water surrounding the Vermont Yankee nuclear plant, which is owned by the same company that owns Pilgrim. The governor asked that the relicensing process be put on hold at Plymouth until questions about testing for leaks of radioactive tritium can be answered. Anything new on that?
BOWLES: I went down [to Pilgrim] after the Vermont incident because I wanted to understand their tritium testing protocols. So I went and spent a half a day at the Pilgrim plant and walked away feeling comforted by the level of environmental monitoring. We’ve had some discussions with them about doing additional environmental monitoring. Pilgrim has had some greater capital upgrades in the last 10 years than the Vermont facility. So on the basis of the assurances that I got when I was there, I’m comfortable with them being relicensed.
CW: Do you feel like there is broader acceptance of environmental policies today, by individuals and corporations alike?
BOWLES: That’s an interesting observation. I hadn’t really thought of it in those terms. I think you’re correct there’s a lot more consensus around the need to address some of the significant environmental challenges. Kids grow up today with a lot more of this in their curriculum than they did when I grew up, in terms of recycling and learning about the rain forest or forestry or climate change or whales or whatever it is. Kids coming out of college are very up-to-speed on a lot of these issues. That’s been a big change in a generation. At the corporate level, there’s a lot more commitment to worrying about that element of the supply chain. You see Wal-Mart, which has gone from being an environmental black-eye bad actor to trying to drive the market through their supply chain. At the national level, though, you still have this very balkanized parochial debate about which industry gets advantaged and which industry gets disadvantaged. One of the things that’s remarkable about our Global Warming Solutions Act is it makes no special deals for any industries. That is the simplest, most transparent, least-cost way of doing any of this—to focus on the environmental quality outcome and find the cheapest way to do it. That was a piece that was missing in the state dialogue before Gov. Patrick took over.
CW: What kind of car do you drive?
BOWLES: I have a state car that’s a plug-in hybrid Prius. It’s retrofitted with an A123 battery. [A123’s headquarters is in Watertown.] You take a regular hybrid and you put in a much bigger battery in the wheel well in the back. It essentially means you can drive your first 40 miles on purely battery power. I can get over 100 miles a gallon. I plug it in downstairs. I leave it here since I live in Charlestown.
CW: I interviewed Gordon van Welie, who heads ISO-New England, the organization that manages the region’s power grid, and he likened the state’s support for renewable energy to what a car owner does when trying to choose between a Corolla and an all-electric car like the Chevy Volt. He says the car owner has to decide whether gasoline prices will go up enough over time to make paying the higher upfront cost of the Volt worth it. Do you agree with that analogy?
BOWLES: Remember, the ISO-New England’s job is to keep the lights on. So they’ve never met a power plant or transmission line they don’t like. That’s a threshold thing to know about them. Gordon is a smart leader of that organization, but organizationally, dispositionally, they discount energy efficiency. Their job is to be super conservative. Their job is to avoid the once-every-three-decades one-day blackout because that’s the thing they have to make sure doesn’t happen. I think they, as an organization, have not yet begun to build into their scenarios the level of energy efficiency that states are making happen. I don’t think they’ve done enough to look at the end-use energy efficiency in their medium-term trends because they’re still predicting load growth in New England. I think that load will go down in New England based on end-use energy efficiency.
CW: How long do you think it will be before homeowners start to have to pay attention to their utility bills the same way they do to their cable and cell phone bills?
BOWLES: In a 10-year time horizon I think there’s a good possibility of that. It really depends on price signals. The level of disinterest of the average consumer in their water, gas, heating oil, and electric bills…is kind of stunning. I think that’s a lack of innovation and market signals in that utility space, and that’s because they are regulated monopolies and they’re not fast moving. No one has come to me as a consumer to say, “I will save you 35 percent on your heating and electric bill if you do the following 10 things—insulate your home, update your oldest appliances, address your heating and cooling, buy a real-time meter, run your dishwasher at 9 p.m.” It will not be hard, in my mind, for consumers to see that level of savings once market participants come and offer that type of pricing plan. We’re not far. A company like EnerNOC has come from nowhere to be a $1 billion capitalization company selling negawatts. It’s a great business model, and those guys have done very well. I think that will happen for the consumer and the marketplace.
CW: How come we’re not seeing the installation of smart grid meters that will tell consumers to adjust usage based on price?
BOWLES: The prices for smart grid meters are still too high from where I sit for us to make a statewide bet on them. The federal stimulus is putting out $10 billion for the purchase of smart meters all around the country. That will drive the unit cost down and when that unit cost goes down then I think it would make sense for state regulators to require it across the rate base. But right now, absent the strong retail supplier presence, absent the plug-in cars, absent a more snappy delivery of energy efficiency services to the home, I don’t think the comprehensive smart meter thing makes sense. But in five to 10 years it will.
CW: Do you have any concerns about the state’s investor-owned electric utilities, which are your partner in this effort?
BOWLES: The cards you get dealt are the cards you play. Changing fundamentally the delivery channel of the utilities for things like energy efficiency is an example of a battle that I didn’t think was worth it. The utilities, some of them particularly, have the motivation and the consumer contact channel to be the best partner in this line of work. Vermont has created Efficiency Vermont, an energy efficiency utility. That’s their delivery channel. That takes a huge amount of heavy lifting to create that channel. My view of it was the utilities are a necessary partner in this enterprise.
CW: The electric utilities, no matter what the policy, seem to be held harmless financially. Even in negotiating a long-term contract for renewable power, they get 4 percent of the value of the contract as a negotiating fee.
BOWLES: This Department of Public Utilities has held the utilities accountable in a way that hasn’t been seen in 20 years. NStar asked for $30 million for the CSI [customer savings initiative] case, and the DPU gave them zero. That was based on a review on the merits. In the National Grid case, they got nowhere near what they asked for. For 16 years, the utilities didn’t have much oversight in the Commonwealth, since Gov. Dukakis was there. Gov. Patrick put in a more consumer-friendly DPU, and we’ve heard some squawks from the utilities about that. Some of the utilities look at what’s happening right now and see demand erosion, energy efficiency, and things like solar ownership, and they’re saying, “I’m going to be a different type of entity in five years. I’m going to be more of a full-service energy supplier than a passive energy pusher,” which is what their role was for about a century, pushing energy to people because they make more the more energy you use. Now with decoupling, least-cost procurement, solar ownership, long-term contracts, their world has changed a lot. I would say we’ve got some of the nation’s best utilities in terms of being well run—the big ones, at least, anyway —and having the capacity to see that shareholder opportunity to go out and do a good job in this area. Now are they going to move at the velocity that the governor and I want in all circumstances? No. If we went in thinking they would, then we would be unrealistic. We knew going in that they were going to be a key partner for us and we needed to sort out how to provide them with incentives and encouragement for fulfilling this vision.
