The Road to Net Zero is Paved With Numerous Policy Initiatives

While the presidential transition has focused attention on the energy and environmental policy initiatives that likely will be undertaken by the Biden-Harris Administration, the Commonwealth of Massachusetts continues to cement its status as one of the national leaders on addressing climate change. Over the last several months, Massachusetts issued or proposed a number of new initiatives, including the release of the Massachusetts 2050 Decarbonization Roadmap (the Roadmap) and the Massachusetts Clean Energy and Climate Plan (CECP) for 2030; the filing, veto and refiling of a landmark climate bill, An Act Creating a 2050 Roadmap to a Clean and Thriving Commonwealth (S. 2995); and efforts by the City of Boston to amend and strengthen its Building Energy Reporting and Disclosure Ordinance (BERDO).

The Holland & Knight Energy and Natural Resources Blog will be publishing a series of articles exploring these topics in greater depth, including the implications for various industries, over the coming weeks and months. This post provides an introductory overview of these recent Massachusetts developments.

A Background on Massachusetts Climate Policy

Massachusetts has a well-established history of taking early action to address climate change. In 2008, the Global Warming Solutions Act (GWSA) was signed into law, which required the Commonwealth to reduce greenhouse gas (GHG) emissions to at least 25 percent below 1990 levels by 2020, and at least 80 percent below 1990 levels by 2050. In 2010, the Clean Energy and Climate Plan for 2020 was published, outlining the action steps that would be taken to achieve the required 2020 emissions limit. This plan was updated in 2015. In 2018, the GWSA 10-Year Progress Report was published, demonstrating the Commonwealth was on track to meet the 2020 limits. In his January 2020 State of the Commonwealth address, Gov. Charlie Baker committed Massachusetts to achieving "Net Zero" by 2050, which the administration later defined as "[A] level of statewide greenhouse gas emissions that is equal in quantity to the amount of carbon dioxide or its equivalent that is removed from the atmosphere and stored annually by, or attributable to, the Commonwealth; provided, however, that in no event shall the level of emissions be greater than a level that is 85 percent below the 1990 level."

Massachusetts 2050 Decarbonization Roadmap

The Roadmap was issued by the Commonwealth's Executive Office of Energy and Environmental Affairs (EEA) and identifies "cost-effective and equitable strategies to ensure Massachusetts achieves net-zero greenhouse gas emissions by 2050" under the GWSA. As noted above, "Net Zero" requires at least an 85 percent reduction in GHG emissions below the 1990 level. The Roadmap targets a 45 percent reduction in GHG emissions by 2030 and evaluates reduction opportunities in six separate sectors: buildings, economic and health, energy pathways, land, non-energy and transportation. Six technical reports, one for each sector, accompanied the Roadmap's release and provided additional detail and analysis of the identified strategies. In performing this analysis, the Roadmap placed a heavy emphasis on addressing environmental justice and equity considerations.

To meet the required emission reduction requirements, the Roadmap identifies and evaluate four Pillars of Decarbonization:

1. end use energy – transitioning buildings, vehicles and other end uses away from fossil fuels
2. energy efficiency and flexibility – aggressively pursuing energy efficiency and flexibility
3. decarbonizing energy supply – producing zero- and low-carbon energy supplies
4. carbon sequestration – balancing remaining emissions by removal

As a result, it includes potential strategies for reducing vehicle emissions (including encouraging dense- or transit-oriented development, encouraging the transition to Zero Emissions Vehicles (ZEV) and electrifying bus fleets), reducing building emissions (including the enactment of a "net zero" building stretch code), reducing energy system emissions (including electrification and a strong reliance on increased wind and solar power, as well as Canadian hydropower) and reducing non-energy and industry emissions (including incorporating best practices for industrial and agricultural processes). These topics will be discussed in further detail in future blog posts.

Massachusetts Clean Energy and Climate Plan for 2030

The CECP, which was released for public comment on Dec. 30, 2020, provides details on the specific actions that will be taken to ensure the 2050 Roadmap's emission limit for 2030, a 45 percent reduction, is achieved. These actions primarily are focused on 1) the electrification of buildings, vehicles and other end uses, 2) aggressively pursuing energy efficiency, 3) producing zero- and low-carbon energy and 4) facilitating removal of carbon dioxide from the atmosphere. In determining the specific actions that will be taken, the Secretary is required to consider feasibility, cost-effectiveness and co-benefits of such limits, as well as ensure the limits maximize the Commonwealth's ability to meet the 2050 limit.

To achieve Net Zero, the CECP concludes that fossil fuels must be nearly eliminated from on-road vehicles by 2050. The plan describes a number of broad investments in clean transportation infrastructure and setting ZEV standards and incentives, and addresses the Commonwealth's role in the Transportation and Climate Initiative Program, a multistate effort to create a regional cap-and-invest program in the transportation sector with an annually declining cap, which will begin to be implemented in 2023. The Massachusetts Department of Environmental Protection (MassDEP) will also adopt and implement the California Advanced Clean Cars II standard, which requires all new vehicle sales to be 100 percent ZEV by 2035, by the end of the year in which the standard is finalized in California. Additionally, the Massachusetts Department of Energy Resources (DOER) will explore strategies to reduce the cost of ZEVs, implement a utility-based residential charging incentive program and develop new ways to raise consumer awareness.

With a focus on improving efficiency standards for new buildings, the DOER is required to develop and present a new high-performance stretch energy code to the Board of Building Regulation and Standards in 2021. Designated "Green Communities" can opt in to the new code starting in 2022, and the code will become mandatory and effective statewide no later than Jan. 1, 2028. Acknowledging there are challenges with transitioning existing buildings, the CECP nonetheless maintains that the number of buildings using natural gas, fuel oil and propane for space and water heating must decline while the deployment of heat pumps and building envelope improvement retrofits must become widespread. The CECP also describes plans to phase out incentives for fossil fuel heating systems, increase electrification, expand access to energy efficiency and clean heating for low- and moderate-income renters, and establish workforce development programs related to decarbonization of buildings. Additionally, a new Commission and Task Force on Clean Heat is required to develop and implement a long-term declining emissions cap on heating fuels by 2023 and propose statutory, regulatory and financing mechanisms to ensure the development of reliable and affordable clean heat solutions. These mechanisms will include performance and reporting standards for large commercial and industrial buildings.

The CECP also discusses energy supply, noting that by decarbonizing electricity generation and energy supply systems, the Commonwealth has already reduced power sector emissions by nearly 50 percent since 1990. With electricity demand expected to more than double by 2050 due to the widespread electrification of transportation and buildings, emissions intensity must continue to decline. The CECP contemplates a primary role for offshore wind, including off the coast of New England, with solar resources providing a complimentary generation source.

Finally, the CECP explores the need to mitigate other sources of emission, including from Massachusetts's industrial and agricultural sectors, and describes the role of carbon sequestration in mitigating excess emissions.

An Act Creating a 2050 Roadmap to a Clean and Thriving Commonwealth (S. 2995)

On Jan. 4, 2021, the Massachusetts General Court reported out Senate Bill 2995, An Act Creating a 2050 Roadmap to a Clean and Thriving Commonwealth. After detailed consideration, Gov. Baker vetoed the proposed legislation on Jan. 14 and sent the bill back to the legislature for further consideration.

Intended to build on the 2008 GWSA, S. 2995 would have created new GHG emissions reduction targets for 2030 (at least 50 percent) and 2040 (at least 75 percent), while requiring interim five-year roadmap plans to establish statewide emissions limits along with specific sub-limits for six sectors. The bill also ramped up the Renewable Energy Portfolio Standard (RPS) for sellers of electricity in the Commonwealth by 3 percent each year from 2025 until 2029, in order for at least 40 percent of the Commonwealth's electric power to come from renewable resources by 2030. Additional highlights include nearly doubling the mandated offshore wind procurement, codifying environmental justice principles, loosening restrictions on renewable generation "net metering" caps, establishing new natural gas pipeline safety standards and requiring DOER to develop and adopt a "municipal opt-in" net zero stretch energy code.

In vetoing the bill, Gov. Baker indicated that while he was supportive of the bill's goals and "largely in agreement with many of its proposals," he was concerned about the impacts that certain provisions would have on the economy. Gov. Baker focused on the bill's requirement to reduce emissions by at least 50 percent in 2030, as compared to the 45 percent target in the Roadmap, emphasizing his administration's position that the additional reductions would impose "undue expense and unnecessary impact on Massachusetts households and businesses." He also pushed back on the bill's net zero stretch energy code proposal, claiming that it would overburden the construction industry and hinder the development of affordable housing. Gov. Baker also noted that the legislation did not go far enough in some respects, citing the omission of policies to address the ongoing impacts of climate change.

As of Jan. 19, an identical bill has been refiled by the House and Senate, with legislators prepared to override the governor's veto. Holland & Knight will monitor these developments as they continue.

Possible Amendment to Boston's Building Energy Reporting and Disclosure Ordinance

At the municipal level, the City of Boston is currently working to amend its Building Energy and Reporting Disclosure Ordinance (BERDO). BERDO was enacted in 2013 in response to the Boston Climate Action Plan, which called for reducing GHG emissions in Boston by 25 percent by 2020 and 80 percent by 2050. The Boston Air Pollution Control Commission is tasked with regulation and enforcement of BERDO. BERDO requires covered buildings to report energy and water use annually and undertake either an energy assessment or energy reduction action every five years. At this time, BERDO is a reporting and disclosure ordinance, but the City of Boston is working to amend BERDO in 2021 to include building emissions performance standards, as New York City and Washington, D.C., have recently done. The city expects to release a draft policy during the first quarter of 2021 for public comment.

Conclusion

The Commonwealth has long been recognized as a leader in taking action to address climate change. While the CECP is undergoing public comment, S. 2995 has yet to be passed and the BERDO amendment process is ongoing, one certainty is that Massachusetts remains a state to watch on energy and environmental policy. Massachusetts-based members of Holland & Knight's Energy & Environment Team, a multidisciplinary team of lawyers and professionals who are well informed on emerging environmental issues, will be following these climate policy initiatives closely as the legislative and regulatory landscape continues to evolve.

For questions about this article or for legal counsel about a specific situation involving your organization, please contact the authors.