THE CLIMATE CRISIS has arrived, and Massachusetts must take new and bold steps to address it, including critical funding support. July floods in Western Massachusetts damaged over 1,000 acres of farmland and caused more than $15 million in damage to growing crops.  Leominster suffered catastrophic flooding in September from unprecedented rainfall. A “punishing rainstorm” in August caused major damage in the Merrimack Valley. The Commonwealth’s climate chief expects that Massachusetts will face “climate-driven in-migration from other regions of the United States as well as migration from other areas of the world to the Northeast.”       And given the Commonwealth’s commitments to advancing equity as we address climate change, it is notable that a 2021 EPA assessment concluded “that racial and ethnic minority communities are particularly vulnerable to the greatest impacts of climate change”. 

Massachusetts has been a leader in addressing climate change, through legislation such as the 2008 Green Communities Act (GCA) and 2008 Global Warming Solutions Act (GWSA), and through our consistently award-winning MassSAVE energy efficiency programs, which operate under those key laws.  However, the state now needs to pivot from the impressive energy efficiency successes of the past 15 years towards a focus on electrification: switching millions of heating systems and appliances from fossil fuels (gas, heating oil, propane) to electricity as the energy source.  This is a major challenge, both due to the costs involved and the need to change the current legal structures and policies under which our MassSAVE energy programs operate.

The funding challenge is immense: Massachusetts has a policy goal of converting 1 million heating systems to air source heat pumps by 2030.  That will cost at least $15 billion, through some mix of state incentives, homeowner funds, and various federal tax breaks and rebates. And the hundreds of thousands of households that heat with natural gas face this hurdle: investing in an air source heat pump, which relies on electricity rather than a fossil fuel, will result in increasing their heating bills, at least in the near term.

Not surprisingly, it’s hard to convince many households – especially moderate-income households — to switch to a heat pump that may require them to spend thousands of dollars out of pocket, even after MassSAVE rebates.  Even for the low-income households that will get the heat pumps for free, they may be reluctant to switch if their resulting heating bills will increase for some number of years.

There is also a structural barrier in the MassSAVE program that delivers energy efficiency services to utility customers across the state.  The Green Communities Act (GCA) mandates that our electric and gas needs shall first be met “through all available energy efficiency and demand reduction resources that are cost effective or less expensive than supply.” 

For several years after the GCA was passed, that language drove utilities to achieve significant energy savings and helped the Commonwealth earn No. 1 status in the annual ACEEE Energy Efficiency Scorecard that rates all 50 states on their energy efficiency programs. 

But the newer Global Warming Solutions Act set in motion goals that somewhat conflict with the GCA, by mandating greenhouse gas reductions that may not be cost effective to achieve, at least as “cost effective” is currently determined.  Under the “Massachusetts Clean Energy and Climate Plan for 2025 and 2030,” issued as required by the GWSA and Next-Generation Roadmap legislation, the state’s secretary of environmental affairs sets emission reduction goals that simply must be met.  As the climate plan notes, heating of buildings by gas and oil represents 30 percent of our greenhouse gas emissions, and the plan requires reductions in heating-related emissions of 28 percent by 2025 and 47 percent by 2030. 

Meeting the ambitious greenhouse gas reduction goals of the GWSA will be daunting. The state, through the Energy Efficiency Advisory Council (EEAC), has just started the lengthy process to review three-year utility energy efficiency plans for the 2025-27 period, which ultimately will be submitted by the state’s utilities to the Department of Public Utilities. 

The EEAC consultants, who historically have aggressively pushed the utilities to set ambitious goals in their three-year plans, have already noted that some of the measures we need to meet the state’s climate goals simply are not cost effective under the GCA.  The MassSAVE program, one of the premier tools we have to reduce greenhouse gas emissions, faces the restriction that it can only secure energy efficiency and electrification measures that are “cost effective,” as defined under tests and policy frameworks established nearly 15 years ago, well before electrification became a high-priority policy goal.

There are statutory, policy, and funding changes we must adopt if we are to meet our climate goals.  First, the state needs to place the appropriate value on avoiding carbon emissions.  This is largely done through the “Avoided Energy Supply Cost” (AESC) study currently underway.  If we properly value energy investments that avoid carbon emissions, many more measures and investments are cost effective.  But that only works at the aggregate level of evaluating a suite of energy measures; it does not address the household economics of a gas-heat customer thinking of switching to an air source heat pump and facing the likelihood of higher energy bills in the near term. So, second, the state must consider adopting a special rate for those with heat pumps, something the state of Maine has already done.  

Third, the state must find other sources of funding to help us implement our urgent climate policies.  As the very recent “Recommendations of the Climate Chief” makes clear, the state must “develop specific funding strategies” if we are to have any hope of meeting the 2050 climate goals.  Collecting ever more money from utility ratepayers to support even deeper subsidies through the MassSAVE program is no longer a viable option.  It places too great a burden on ratepayers, while also making switching less attractive by raising electricity rates. 

The passage of the GCA, GWSA, and the Next-Generation Roadmap underscores the state’s strong and unwavering commitment to be a leader among the 50 states in addressing climate change. Yet the state has relied almost exclusively on ratepayers to bear the extraordinary cost of implementing this high-priority public policy. There is no dedicated funding for delivering the state’s critical MassSAVE programs, apart from the billions collected from ratepayers and some of the proceeds from the Regional Greenhouse Gas Initiative (RGGI) auctions. 

I am part of the Commonwealth Coalition for Decarbonization, which includes consumer and environmental groups.  We have been seeking $500 million of state funding to supplement the funding already available via the surcharge on ratepayer bills so that we can increase the number of customers who invest in energy efficiency and electrification and to fill existing gaps.  That funding would be targeted to substantially increase the number of low-income households served, especially via installation of heat pumps; serve customers in towns with municipal light plants who currently are not eligible for the MassSAVE program; cover the costs that MassSAVE currently doesn’t cover for making commercial and industrial buildings structurally able to install large-scale electrification equipment; and support innovative programs that would combine energy efficiency, solar, and battery storage.

Charlie Harak is a senior attorney at the National Consumer Law Center and a member of the Massachusetts Energy Efficiency Advisory Council.  The views expressed above are his own.