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Jon Coifman

An energy program too efficient for its own good

By Jon Coifman
March 26, 2011

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BILLIONAIRE CONSERVATIVE financier David Koch doesn’t know it, but the advanced energy-saving technologies used in the new $211 million cancer research lab that bears his name at the Massachusetts Institute of Technology were funded in part through a government program to reduce global warming pollution. It is the same program under heavy attack by one of Koch’s biggest political beneficiaries, the group Americans for Prosperity.

The David H. Koch Institute, which was dedicated this month, will use almost a third less energy than comparable facilities. Everything in the building is designed to maximize efficiency, from lighting and climate controls to the laboratory systems — even the floor plan.

Money for all those extras came through MIT’s $14 million campuswide partnership with its utility, NStar. In just 36 months, they plan to cut the university’s energy use 15 percent — enough to power 4,500 Massachusetts homes for a year. The total lifetime payback is expected to exceed $50 million.

But NStar didn’t decide to do this on its own. Under a law signed by Governor Deval Patrick in 2008, Massachusetts utilities are required to pay for efficiency upgrades whenever the energy savings cost less than building the equivalent amount of new generating capacity.

Last year, almost a fifth of that money came by way of the Regional Greenhouse Gas Initiative, an agreement by 10 Northeastern states that limits the amount of carbon dioxide utilities can put in the air and collects a small fee — set by auction — for every ton they emit.

Koch would not be alone in missing the connection to the Regional Greenhouse Gas Initiative. In fact, top supporters of the embattled program didn’t know either. And that is precisely why the program is in serious trouble.

Thousands of businesses, families, and local communities are reaping dividends from the initiative without knowing it, because those benefits flow through a tangled web of rebate and incentive programs administered by utilities, state governments, and nonprofits — robbing an effective program of the natural constituency it deserves and making it easier for groups like Americans for Prosperity to attack.

And attack they have.

Thanks to an aggressive yearlong campaign by Americans for Prosperity, the New Hampshire House of Representatives voted last month to quit the initiative. Senate agreement is expected. The new Republican governor of Maine wants to follow, and there is mounting pressure on Governor Chris Christie of New Jersey to do likewise.

That would be a giant leap in the wrong direction, not just — or even mainly — for the environment, but also those state economies.

The Regional Greenhouse Gas Initiative costs the average household about 75 cents a month. It pays for upgrades from home weatherization to energy-efficient industrial boilers, big commercial lighting projects, and rooftop photovoltaic installations on schools and warehouses (which is how New Jersey became the number two state for solar). Studies consistently show these efforts return $3 to $4 for every one spent.

It saves money for everyone by avoiding expensive new power plants, and by lowering peaks in demand that drive up electricity prices across the board. That’s good for ratepayers, and good for business.

Programs funded by the initiative provide access to scarce capital and help reduce operating costs. They create opportunities for everyone from architects, engineers, and programmers to the people in tool belts who bend metal and wire up buildings. And it’s opportunity that can’t be outsourced to China.

Of the $789 million raised by the Regional Greenhouse Gas Initiative through December, more than half went to efficiency projects. Eleven percent went for renewables, and 14 percent to offset bills for low-income families. Less than 5 percent went for administrative overhead, a figure that should warm Tea Party hearts. (Those numbers would be even better if New York and New Jersey hadn’t used some proceeds for deficit reduction.)

At a time when energy prices are threatening a shaky recovery and many parts of the Northeast are pressed to meet electricity demand, lawmakers and business leaders should take an honest accounting of the program’s benefits before they surrender this important and highly cost-effective economic tool.

Jon Coifman is an environment and clean tech strategist at PRCG Communications, and blogs at PositioningGreen.com.