Reducing Natural Gas Overreliance Risks in Massachusetts through Renewable Energy
BOSTON, Mass. (April 7, 2016)—A Massachusetts energy plan that diversifies the existing electricity mix—by providing a balanced role for natural gas while increasing the role for offshore and onshore wind, large scale hydropower, and solar—would help insulate the state from natural gas price spikes, cut global warming emissions, and provide economic and health benefits to residents, according to a new report released today by the Union of Concerned Scientists (UCS).
The analysis, Massachusetts’s Electricity Future: Reducing Reliance on Natural Gas through Renewable Energy, examined the costs and benefits of combining provisions from proposals currently before the state’s legislature—including House Bill 2881, Senate Bill 1757, and Senate Bill 1965—compared to business-as-usual that relies greatly on using natural gas, which has inherent risks such as price spikes.
In Massachusetts, natural gas already makes up over 60 percent of in-state electricity generation. While natural gas prices are low now, they are historically volatile with wide price swings tied to increasing demand, extreme weather events, and uncertainties about available gas supplies. Price swings are often felt more acutely by consumers in states that rely more heavily on natural gas.
“Massachusetts is at a fork in the road,” said Ken Kimmell, president of UCS and former commissioner of the Massachusetts Department of Environmental Protection. “Down one path is building more pipelines and locking in an over dependence on one fuel—natural gas—which means we could face the economic and environmental risks that come from putting all our eggs in one basket. The other path is to go big on hydropower, onshore and offshore wind, and solar. The bigger we go, the lower the per-unit costs. We’ll also see greater benefits in terms of reliability, job creation, and decreased carbon pollution.”
The analysis compares existing energy policies to a combination of recommended policies, which include accelerating the ramp-up of the state’s renewable portfolio standard (RPS), requiring utilities to enter cost-effective, long-term contracts for hydropower and RPS-eligible renewables, and creating a competitive bidding process for utilities to get a certain amount of electricity from offshore wind power.
According to the analysis, if Massachusetts moves forward with this suite of renewable energy policies, the state and its residents could experience a slew of benefits, including:
- Lowering consumer risks associated with natural gas overreliance. Under the recommended policies, natural gas use in the region would drop 23 percent compared to business-as-usual by 2030, which also means lowering inherent risks, associated with too much natural gas use.
- Decreasing global warming emissions and air pollution. The modeled combination of policies would bring regional and global health and economic benefits of more than $350 million in 2030 alone, and decrease carbon emissions 6.6 million tons below business-as-usual.
- Creating more renewable-energy jobs. A key result of replacing an out-of-region energy source like natural gas with an in-region, renewable energy source is additional job creation in the clean energy sector, which currently employs almost 100,000 people in Massachusetts.
- Leading the nation in offshore wind. If the state positions itself as a leader in offshore wind nationally, it could capture “first-mover” economic advantages such as expertise in manufacturing, project development, operations and maintenance, so that it will be a go-to resource for other states when they follow suit.
“Massachusetts is a leader in confronting climate change,” said Sen. Ben Downing (D-Pittsfield). “Continuing that leadership by investing in renewables and energy efficiency, as well as tapping new sources like offshore wind, is good for the economy and the climate—plain and simple.”
The UCS analysis also found that this combination of policies would cost the typical household just $3.20 a month on average from 2017 through 2030. This is much smaller than the year-to-year price swings Massachusetts households regularly experience. The cold 2013-2014 winter, for example, led one Massachusetts utility to increase electricity rates the next winter by 37 percent, which translated into a monthly increase of $40 for the average household’s electricity bills for the season.
Additionally, opting for these renewable energy-centric policies over the natural gas-reliant status quo could protect consumers from further long-term economic risks if over time, state pipeline investments—potentially costing more than $1 billion for the electricity portion—turn out to be unnecessary due to increasingly affordable renewable energy options.
“The UCS analysis is notably conservative,” said Ann Berwick, former chair of the Massachusetts Public Utilities Commission. “In fact, the modest cost of their recommended policies is offset by a variety of significant benefits, such as the economic development opportunities associated with increased offshore wind use, health benefits of reduced fossil fuel emissions, and mitigation of the risks to electricity customers if the state is overinvested in natural gas pipelines.”
A 2015 UCS assessment found Massachusetts is one of only eight states in which natural gas makes up over half of its in-state electricity mix. Unless the state takes corrective action, this number is expected to grow as 70 percent of the state’s projected near-term power plant additions are natural gas-fueled.
“In Massachusetts, natural gas already makes up over 60 percent of the in-state energy mix, which is why we’re prescribing a more balanced role for its future use in the state,” said John Rogers, senior energy analyst at UCS and lead author of the report. “And when other states ultimately jump on the offshore wind bandwagon—which is inevitable—offshore wind leaders, like Massachusetts, could get additional chances to prosper economically. This is a golden opportunity we can’t pass up.”
Read a related blog on this analysis by UCS president Ken Kimmell.