Policy Tracker: February 2020

It’s a new year, which means a new opportunity to ramp up policy efforts to decarbonize our economy. We are one month into 2020 and so much has already happened with each state’s legislative session kicking off. The Northeast is responding to a call to action on climate and pushing the bar to ensure that we are carbon-neutral by 2050. Already, a few trends have surfaced, including carbon neutral targets, benchmarking, and energy efficiency planning. Let’s take a look.

Carbon Neutral Targets

We all saw the reports from the IPCC back in October 2018 stating that we need to achieve carbon neutrality by 2050 to limit the impacts global warming to 15 degrees Celsius above pre-industrial levels. This is a major task, and the Northeast is up for the challenge. New York led the charge with the Climate Leadership and Community Protection Act of 2019 that set a carbon neutral target with 85 percent greenhouse gas (GHG) reductions and 15 percent carbon capture. This was a big win for climate.

Now Massachusetts, Maryland, and Rhode Island are following suit. In Massachusetts, S2477, which passed the senate and has been delivered to the house, includes ambitious language around carbon reduction targets. This bill requires carbon emissions limits for every five years leading up to 2050 with accompanying plans for realizing the limits, including quantifying the emissions reduction achieved with the electric and gas energy efficiency programs. The plans would set benchmarks and track adoption of emissions reduction products (e.g. EVs, charging stations, solar PV, solar thermal, energy storage, air-source and ground-source heat pumps). It would also make future policy recommendations. The 2030 limit must be at least 50 percent below 1990 levels. The 2040 limit must be at least 75 percent below 1990 levels. The 2050 limit must be at least net-zero emissions. This language leaves room for the state to go beyond carbon neutral and set a carbon negative target by 2050.

The Massachusetts bill also includes a requirement to establish a market-based compliance mechanism to limit sources of GHG emissions. This essentially means the secretary will promulgate carbon pricing (either revenue neutral or positive) or a cap and trade program. A timeline is included for the different sectors of the economy:

• Transportation by 2022;
• Commercial, industrial and institutional building sectors by 2025;
• Residential building sector by 2030.

The bill authorizes the executive office to work with participating Regional Greenhouse Gas Initiative (RGGI) states, other interested states, and Canadian provinces to expand RGGI to other sources and sectors necessary to limit GHG emissions. Massachusetts is a part of the Transportation and Climate Initiative (TCI), which would likely cover the transportation requirement by 2022.

Legislators in Rhode Island are also aiming for carbon neutrality by 2050. H7399 was introduced, aiming to update the GHG reduction targets to 50 percent by 2035 and carbon neutral by 2050. It also requires the development of public metrics and an online public dashboard that will track both emissions reductions and sources of energy consumed by the state. The metrics and the dashboard will be updated at least annually. Public dashboards are growing in popularity as a way for states to provide transparency towards its goals. By providing a public dashboard, there is a clear mechanism for performance monitoring, reporting, planning, and policymaking.

Heading down to the Mid-Atlantic, proposed legislation in Maryland is pushing the bar even further for achieving zero carbon emissions. The Climate Solutions Act of 2020- Greenhouse Gas Emission Reduction Act (HB1425/SB926) aims to increase the state’s GHG emissions reduction targets to 60 percent by 2030 and net-zero statewide GHG emissions by 2045. If this legislation passes, the Department of the Environment will need to adopt a final plan by the end of 2020 in order to achieve these targets. Making the carbon neutral target year earlier than 2050 sends a clear message that the state is going beyond what the IPCC report calls for.

Additional legislation has been introduced, the Climate Crisis and Education Act (SB912/ H1543), which will assist in achieving the state’s ambitious GHG reduction targets. This bill establishes a Climate Crisis Initiative in the Department of the Environment to administer carbon pricing on fossil fuels brought into the state for combustion and electricity. The schedule of fees on GHG is based on non-transportation ($60/ton CO2e by 2030) and transportation fuels ($37/ton CO2e by 2030). Funds from the fees will be used for education and renewable energy.

Benchmarking and Performance Standards

Another trend that is catching some steam is building energy performance standards (BEPS). Personally, I’m excited at BEPS because I think this type of policy is necessary to achieve our GHG reduction goals. Buildings account for a significant amount of emissions and by setting a standard for reducing energy use and GHG emissions, our existing buildings will become a part of the solution, not the problem.

Benchmarking is the first step towards BEPS and has largely been done at the city level thus far. States are catching on, though, and introducing legislation to bring statewide benchmarking to fruition, which will then lead to BEPS. Maryland and Massachusetts are the first to do so. NYSERDA has also indicated its interest in adopting a similar policy to what New York City has done.

Maryland legislators have introduced the Clean Buildings Act of 2020 (HB1490). If this bill makes it through legislature, buildings of 50,000 square feet or more will be required to monitor GHG emissions starting in 2021 and then buildings 25,000 square feet for more starting in 2022. This bill has big plans. In 2024, it will establish baselines for the average median GHG levels for different categories of buildings, along with creating five-year GHG reduction targets. Building energy performance standards for different size and building types will also be established to help building owners and managers achieve GHG reduction targets.

By setting GHG reduction targets with clear compliance pathways, BEPS hold building owners and managers accountable for helping achieve climate and carbon reduction goals. This legislation also sets broader GHG reduction targets for all covered buildings: 40 percent by 2030 and 80 percent by 2050. Decarbonizing our building stock requires a comprehensive set of actions. The BEPS established in accordance with this bill will require that 75 percent of the GHG reduction are achieved through energy efficiency measures, on-site fuel switching, and building technologies, rather than the purchase of renewable energy.

The Clean Buildings Act of 2020 clearly demonstrates the link between building energy use and GHG emissions, and the need to address existing buildings to achieve broader climate goals. In a major Massachusetts climate legislation of 2020 (S2477), statewide benchmarking is introduced as a stepping stone towards BEPS. Although it doesn’t specifically call out establishing BEPS, it presents the opportunity to do so if energy trends in benchmarking data do not change from year to year. It also recommends building performance standards, energy actions, assessments, and audits to improve the energy performance of buildings.

This bill requires statewide benchmarking of each residential building (comprised of 35 or more individual units), non-residential building of 35,000 square feet or more and each state-owned building of 35,000 square feet or more on an annual basis starting in 2022. The state will use this information to determine if a building uses more or less energy, and emits more or less GHG of comparable buildings in size, use, and occupancies.

While Massachusetts legislation requires tenant authorization for building owners to access energy usage, there are alternative pathways states and cities may consider to streamline data access, while maintaining tenant privacy. One way is whole building data aggregation. This establishes a threshold that will incorporate the greatest number of units without putting the privacy of tenants at risk. Take a look at NEEP’s benchmarking toolkit for more information.

Utility Energy Efficiency Plans

Another trend to keep an eye out for are three-year energy efficiency plans. This year, Maryland, New Hampshire, Rhode Island, and Vermont are all going through the planning process for 2021-2023 energy efficiency plans. This provides an opportunity to weigh in and encourage higher energy savings, equitable access to efficiency programs, and the inclusion of programs for fuel-switching and strategic electrification. Maryland legislators are determined to see higher savings from low-income programs and have introduced legislation (SB740) requiring at least one percent annual incremental gross energy savings per year starting in 2021 to come from energy efficiency programs for low-income customers.

NEEP hopes to see all states in the region require demand-side resources – including energy efficiency, demand response, and electrification – as a first strategy to defer more costly electric and gas transmission or distribution additions. Energy efficiency plans provide a great opportunity to push for these strategies before program design begins. Pennsylvania is going through Act 129 Phase IV planning and New Jersey is working through implementing the Clean Energy Act requirement that electric and gas utilities reduce consumption by at least two percent and 0.75 percent. The New York Public Service Commission (PSC) released an order authorizing energy efficiency and building electrification portfolios though 2025. The order includes $2 billion in electric and gas efficiency and heat pump programs that will result in two percent savings of electric demand (three percent when Long Island Power Authority and New York Power Authority efforts are included) and 1.3 percent of gas demand by 2025, saving a total of more than 35 trillion Btu of energy through 2025. This order aligns with Governor Cuomo’s New Efficiency New York targets and the Climate Leadership and Community Protection Act.

Needless to say, there is a ton happening in 2020, and we are only two months in! Be sure to check back for NEEP’s bi-monthly policy tracker blogs to keep up with building decarbonization policy trends and current events.