Preface from Larry Chretien, Executive Director:

Readers of this blog should be aware that we are enthusiastic supporters of electric vehicles and air-source heat pumps. Costs of these products have come down in recent years while quality has gone up. We see them as economically sensible ways to reduce greenhouse gas emissions, to the point that we see them as essential parts of any climate action plan. That would mean for a plan for Massachusetts, Rhode Island, any other state, your city or town, and your family. In our work, we are lucky to come in contact with experts who have figured all this out and who are kind enough to explain their findings to the rest of us. So please enjoy this blog from our guest, Patrick Knight of Synapse Energy Economics.

Since 2009, nine northeastern states have led the country in addressing greenhouse gas emissions from the electric sector. Working together under the Regional Greenhouse Gas Initiative (RGGI), Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont have already cut electric-sector carbon dioxide (CO₂) emissions by 45 percent compared to their 1990 levels and have created a framework to drive deeper electric sector reductions in the future. RGGI’s electric sector carbon cap is complemented by individual state renewable portfolio standards (RPS) and energy efficiency resource standards (EERS) that are further helping to transform power generation in the region.

At the same time, all nine of these states have legislated targets or goals that require them to achieve longer-term economy-wide emission reductions, clustering around a 40 percent reduction from 1990 levels by 2030 and an 80 percent reduction by 2050. (Note that these are goals for emission reductions from all uses of energy—and not just from the electric sector.) While RGGI, state RPS programs, and state EERS programs will cause these nine states to make major strides in emission reductions, they’ll need to do more to reach the goals they’ve set for themselves.

In a March 2016 study, Synapse Energy Economics (on behalf of several environmental advocacy groups) evaluated the most cost-effective approaches for RGGI states to meet their 2030 climate goals. In addition to using electric-sector energy efficiency and renewables, this least-cost strategy achieves deep emission reductions by implementing new policies in the transportation, residential, commercial, and industrial sectors. Under current policies, by 2030, the nine RGGI states will likely achieve only 58 percent of their required reductions—a further 86 million short tons will need to be eliminated for these states to comply with state law.

To achieve further emission reductions, Synapse analyzed the impact of a number of electric-sector strategies, including higher levels of electric-sector energy efficiency, more renewables, as well as strategies that can reduce emissions outside the electric sector. The three non-electric strategies analyzed in our study included:

• Expanding electric vehicles: By 2030, 35 percent of existing light-duty vehicle trips under 100 miles are assumed to be replaced with trips taken in plug-in battery electric vehicles, which are assumed to be powered by new, clean renewables.
• Using heat pumps to replace outdated oil furnaces and boilers: By 2030, 44 percent of residential consumption of petroleum is assumed to be replaced with ductless minisplit heat pump systems
• Expanding natural gas energy efficiency programs: Natural gas energy efficiency reaches levels of 1.9 annual savings as a percent of sales each year, based on the potential analyzed in a 2013 report from the Lawrence Berkeley National Laboratory

Together, these strategies from outside the electricity sector are responsible for meeting more than half of the incremental reductions needed to get to lower economy-wide emissions by 40 percent (see Figure 1).

Figure 1. Emission reductions required to meet 40 percent target in RGGI states

In the Northeast, implementing these non-electric measures is essential to achieving high levels of emission reductions. In addition, we found that:

• Gasoline cars are big polluters. Cars are responsible for a great deal of carbon pollution. Reducing the consumption of gasoline by light-duty vehicles by 30 percent in 2030 leads to a 28 million short ton reduction in CO₂ Still more emission reductions are possible—although not modeled in this study—through the electrification of longer light-duty vehicle trips, trucks, and other vehicles.
• Gasoline cars use energy inefficiently. Internal combustion engines are also incredibly inefficient. Cutting the consumption of gasoline by light-duty vehicles by 30 percent only increases demand for electricity by 4 percent in 2030. This is equivalent to adding about 2,700 megawatts of new natural gas generation, in a region with thirty times that capacity in place today. However, that new electricity doesn’t need to come from new natural gas facilities—this increase in demand can be more than offset through electric-sector energy efficiency measures (which in our study were assumed to reduce the demand for electricity by 22 percent in 2030).
• The switch to an electric car pays for itself. Furthermore, the cost savings of switching from gasoline to electricity to power a car more than make up for electric vehicles’ generally higher purchase price. Our assessment of which emission reduction measures have lower and higher costs includes a value for the climate impacts avoided by lowering CO₂ But even ignoring the benefits of avoiding damage from climate change, electric vehicles save households money by avoiding costly gasoline expenditures and using cheaper, cleaner electricity instead. We found that even in the Northeast, a region with high electricity prices, drivers could pay half the cost to travel the same distance if they use electricity instead of gasoline.
• Heating with oil pollutes. The Northeast states are unique in their reliance on high-CO₂-emitting oil for home heating. Replacing inefficient, high-emitting heating systems with highly-efficient heat pumps that rely on much lower-carbon electricity is an effective way to achieve significant CO₂ reductions, especially if these new resources are powered with clean, renewable energy.
• Electric heat pumps both heat and cool. Heat pumps are appliances that use electricity to absorb heat energy in cold areas (i.e., outside) and transfer it to indoor areas. Heat pumps have the advantage of being able to work in reverse—not only can they provide heating in winter months, but they take the place of a central air conditioning systems in the summer months. Heat pump technology has existed for decades, and these units are commonplace in Europe and Asia, but high-performing systems that function well in cold-weather climates as in many of the Northeast states have just recently begun to make inroads in the United States.
• A shift to heat pumps saves emissions. By shifting heating consumption from inefficient, high-emitting oil boilers and furnaces to highly efficient heat pumps, 9 million short tons of CO₂ can be avoided throughout the nine-state RGGI region.
• A shift to heat pumps also saves money. We found that replacing half of all oil burners and furnaces with heat pumps can lead to over $3.5 billion in savings to consumers in 2030 alone. Savings come from avoiding the cost of replacing both heating and cooling systems, along reduced expenses from purchasing electricity instead of more costly oil.
• Heat pumps are highly efficient. Just like with electric vehicles, heat pumps can lead to significant savings without a big change in electricity demand. Shifting nearly half of all residential oil use to heat pumps in 2030 leads to an increase in electricity demand of just 2 percent. Figure 2, below, shows how expanded energy efficiency can help to offset the increase in electricity sales from new heat pumps and electric vehicles.
• Newer natural gas heaters use energy more efficiently. More efficient use of natural gas in homes and businesses has the potential to significantly reduce the RGGI region’s greenhouse gas emissions. In 2030, natural gas energy efficiency measures save 159 trillion Btu in the 40 percent emission reduction scenario and avoid 5 percent of total gas consumption between 2015 and 2030.

Figure 2. RGGI states’ sales in the baseline and 40 percent emission reduction policy scenarios