Mass. environment Commissioner Cash talks economic impacts of EPA climate rule

As the Obama administration announces federal limits on greenhouse gas emissions from existing power plants this morning, do states that have already implemented cap-and-trade mechanisms provide a good example for how the rule might work? During today's OnPoint, David Cash, commissioner of the Massachusetts Department of Environmental Protection, discusses the economic and emissions numbers associated with his state's carbon regulations. He also talks about the behind-the-scenes conversations among states on linking with the Regional Greenhouse Gas Initiative, of which Massachusetts is a member.


Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is David Cash, commissioner of the Massachusetts Department of Environmental Protection. Commissioner, thank you for coming back on the show.

David Cash: It's a pleasure to be here again.

Monica Trauzzi: Commissioner, the president will be announcing new regulations today for carbon emissions from existing power plants. It's a proposal that's already caught the fire of industry in many states with coal-based economies. What are the key elements you're watching for as the president rolls out this announcement?

David Cash: Well, first of all, this is just a huge sea change, and this administration has absolutely led on addressing climate change, and is doing so in a very powerful way right now by addressing carbon pollution coming from existing power plants. We know this is a problem that we need to solve and this will, we think, is going to lead states down the right path, and that path is a path that we see, in Massachusetts and elsewhere throughout the country, as a huge boon to economic development. And the U.S. has always led in innovation and entrepreneurial activity globally, and here's an opportunity to seize huge opportunities on the innovation front, on the job growth front, on developing new technologies that will be carbon-free ultimately, and we think this rule is going to -- we hope this rule will get us there. The things that we're looking for is flexibility. We want states and generators within states to be able to flexibly play within a market so that cost can be reduced for ratepayers, that new innovations can come on the scene, et cetera, and we also want to see a meaningful emissions target, and we're hopeful that both of those things are going to happen.

Monica Trauzzi: So, as you mentioned, a lot of this comes down to economics, and the case in favor of these regulations being made by several states, including yours, is an economic one. What has economic growth looked like, compared to emissions from the power sector in your state since you joined the Regional Greenhouse Gas Initiative? And I know we have a graphic that your office has provided for us.

David Cash: Yeah, we do. And the story is actually a great story. So let me just walk through this graphic. The basics are -- just let's look at some basic data from this state. Since 1990, our population has increased by about 10 percent. Our energy use has stayed relatively flat. We're about, you know, minus 1 percent right now, so our economy has moved forward but energy use has been flat. But if you look at the two bottom lines, kind of a light blue line, which is our total greenhouse gas emissions, we've seen a decline of about 16 percent, and that's just in the last seven to 10 years, but in the power generating sector, the sector that'll be covered by this new EPA rule, we've seen over a 40 percent decline. That's a huge decline. And the people who are concerned about this rule say a decline like that is going to have big impact on the economy. We're going to see job losses, et cetera, but take a look at that top blue line. That's the gross state product in Massachusetts growing by 70 percent since 1990. Our economy is booming, and especially our clean energy sector is blooming, so we've seen job growth as we've put in our aggressive carbon pollution rules.

Monica Trauzzi: But these numbers don't necessarily transfer to states that have very heavily coal-based economies.

David Cash: That's definitely true. There's no question Massachusetts is at the end of the energy pipeline. We've had historically high energy costs, so to some degree, our energy savings are going to be greater than other parts of the country, but one of the things that this rule -- we hope this rule will do, it will spur energy efficiency, and energy efficiency are going to be -- are going to show economic gains regardless of where you are. You go in the northwest part of the country, where electricity costs are the lowest in the country, their energy efficiency programs in Oregon, for example, have big returns on investment. They have old housing stock also. That weatherization programs, lighting programs all see economic benefits, so sure, we see big economic benefits in Massachusetts, but we think that in other states, this is transferrable as well.

Monica Trauzzi: So what should states that have heavily coal-reliant economies be focusing on as these regulations come out?

David Cash: Well, I would say they should be focusing on the same kinds of things we focused on, which is the low-hanging fruit where you can get big cost benefits from, and that's energy efficiency and that's renewable energy that is cost-effective. And look at innovation economy as well. So in Massachusetts, we've seen solar and wind. Solar, which started out five to 10 years ago very expensive, we've seen the cost drop dramatically because of the demand that's been increased because of our incentive programs. We've seen wind grow as well, and we've seen some states that historically have been fossil-dependent moving very quickly to wind. Texas is one very good example of that.

Monica Trauzzi: So do we go back to the green jobs conversation that we had several years ago that didn't go too well?

David Cash: Well, the green -- there's no question, you know, I don't have a graph of it now, but if I had a graph, the graph that we use to show green jobs growth in Massachusetts, we're seeing 6 to 12 percent growth annually in the green jobs sector, and they span the entire value chain, so we've got electricians and plumbers, we have architects and designers, we have Ph.D. chemists that are developing the new kind of solar panels or the new kind of anaerobic digestion or the new kind of clean liquid fuels, and those are all high-paying good jobs that are staying in the region, in Massachusetts, in New England.

Monica Trauzzi: I know there are many conversations happening behind the scenes right now between states. Some are looking to learn from RGGI, some are looking to join. What states are best suited to plug into the Regional Greenhouse Gas Initiative?

David Cash: So just for a quick primer, RGGI is a market-based program in which nine states have banded together to find the most cost-effective approach to reduce emissions, and it's been wildly successful. Forty percent reduction, $1.6 billion benefit on the economic side, so any state, it makes sense for any state to join some kind of market-based program. If they want to join RGGI, RGGI has always been open to those kinds of conversations. If they're interested in creating some of their own regional efforts, that's fine too. But what these kind of programs do is get the most cost-effective reductions while, at the same time, saving economies and ratepayers funding over time, which is what's happened. It's interesting the modeling we did when RGGI was being discussed eight, 10 years ago, suggested that bills would increase by 1 to 2 percent -- electricity bills. In fact, in the region, they've gone down by 8 percent. That's a savings. Environmental protection, savings for ratepayers.

Monica Trauzzi: The willingness of utilities to sort of quickly adapt to this changing marketplace is something that's heavily and often debated here in Washington. What do you think RGGI demonstrates about the utilities sector?

David Cash: The utilities sector has -- well, it depends on where you are in the country because there's the restructured utilities in the New England area. Most of the states are restructured, so the generators are separated from the distribution companies. The distribution companies have adapted perfectly fine to this. Generators, of course, are changing with the economics that change when we start regulating this pollution that causes billions of dollars of harm to the country. We've all experienced Sandy and Irene, tornadoes. Tornadoes in western Massachusetts. We're not talking Tornado Alley; we're talking Massachusetts is getting hit by tornadoes now. And the impacts of that are huge, so what we're saying in this kind of scenario is that generators pay for contributing carbon pollution into the atmosphere.

Monica Trauzzi: How strong are you anticipating the political pushback to today's proposed rule to be?

David Cash: I think it's going to be huge. I think it's going to be huge. If we look at just an article from last week, it's often framed as ecology versus economy. This is when the Chamber of Commerce came out with their report, OK. We've been looking -- Governor Patrick has never bought into this. He's looked at environmental protection as a possible engine for economic development, and that's what we've seen by addressing climate in our state and through many states throughout the country.

Monica Trauzzi: All right. We're going to end it right there. Thank you for coming on the show.

David Cash: Thank you very much.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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