Go Green, but Be Smart About It

Economists say we are facing a long recession. The Patrick administration offers a response: investing in the ‘Green Economy’ — primarily energy efficiency, renewable energy, and grants to encourage green companies to grow here — as good for the environment and the economy. And they’re right — if we do it correctly. However, in our exuberance to do the right thing, there is the potential to spend money needlessly, and residents may not get all the benefits they should expect.

Let’s start with the basics. The proposed investments are not funded by taxes but rather through surcharges and tariffs collected on customers of utilities — totaling about $175 million in 2009. This money supports utility-operated energy-efficiency programs and grant programs at quasi-government organizations such as the Mass. Technology Collaborative to build renewable power installations and provide seed money to green industries.

In addition, the Green Communities Act would allow utilities to invest ratepayer money to subsidize more renewable-power projects, with the financial risk and higher costs borne entirely by the ratepayer. This is all on top of an existing law that subsidizes renewable power to the tune of $125 million per year, and the approximately $75 million allocated to energy efficiency from recent auctions of carbon allowances as part of the Regional Greenhouse Gas Initiative.

All this adds up to billions of dollars over the next few years alone, a huge wealth transfer from electricity users (many of whom are struggling in the economic downturn) to favored industries and programs. As a result, the administration and the Legislature have a heightened obligation to make sure the programs are cost-effective, transparent, and coordinated, and to monitor the overall program costs.

At present, that is not the case. Since responsibility for these programs spans different agencies and arises from separate legislation, regulation, and administrative actions, it is not clear that anyone except perhaps the attorney general, as ratepayer advocate, is adding up the combined impact of all these programs on ratepayers’ bills or gauging the economic impact of raising electricity rates on one sector of the economy to give incentives to other sectors. While some of the charges that fund these programs are separately identified on ratepayers’ bills, others are not, making them invisible to consumers.

That is not only unfair, but unwise. Without more coordination and cost control, and a hard look at their cost-benefit, these investments will be a patchwork of government and non-government programs operating in their own silos, resulting in redundancy and wasted money.

The fact that something raises costs or does not have an immediate payback, of course, does not mean we shouldn’t do it. Manageable higher prices today are an appropriate trade-off to free ourselves of fossil fuels, for environmental, social, and security reasons, as well as for the potential economic boost of more jobs.

But we must be smart. An economic crisis like this should open the door to innovative thinking and bold actions. The desire for expediency should not absolve the administration from spending the money efficiently and providing information in a transparent and accessible way. At a minimum, this means all the programs should be separately itemized on ratepayers’ bills. Also, the Legislature should maintain vigilant oversight of these programs.

Massachusetts can be the leader it wants to be and turn economic anxiety into economic advantage by committing to build or upgrade our ‘green infrastructure.’ Energy efficiency, distributed generation, wind farms, solar installations, new natural-gas-fired power plants, mass-transit projects, ‘smart’ electric meters, and plug-in stations for electric cars should all be in the mix.

But let’s do something that works, not something that just sounds good. The current crisis will be the catalyst for positive environmental and economic changes only if we resist the urge to spend unwisely.-

Robert Rio is senior vice president of Government Affairs at Associated Industries of Mass. Roger Borghesani is chairman of the Energy Consortium.

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