Written on: April 1, 2021 by ICM
Article courtesy: Boston Globe
The state’s heating oil industry is fired up about a proposal to take away energy-efficiency rebates from their customers as part of a state-led effort to wean homeowners off fossil fuels.
At issue is a set of priorities endorsed on March 24 by the state’s Energy Efficiency Advisory Council that includes phasing out Mass Save rebates for new oil-fired systems for heat and hot water, as well as no-interest loans for homeowners to install them, as soon as next January. Rebates for natural gas-fired and propane installations would be ratcheted back significantly.
“It’s simply not fair,” said Michael Ferrante, president of the Massachusetts Energy Marketers Association. “I wouldn’t say it’s going to cripple the industry. But it’s going to hurt us. And it’s going to hurt heating oil customers.”
The proposal from the council, which is chaired by the state energy resources commissioner, follows a set of recommendations issued by the Baker administration in December for Massachusetts to reach a “net-zero” standard for carbon emissions by 2050. The changes also line up with aggressive goals to reduce greenhouse gas emissions that were included in a sweeping new climate law passed by the Legislature and signed by Governor Charlie Baker last week. One provision in that law would allow communities to adopt net-zero building codes for new construction, which, for example, which could block fossil-fuel hookups in those projects.
Significant shifts would need to be made in how buildings are heated if Massachusetts is to reach that ambitious 2050 goal. State officials and environmentalists hope to encourage adoption of electric heat pumps in homes, and discourage fossil fuels. The ramifications could be huge for the 700,000-plus homeowners in the state who use heating oil — as well as for companies that serve them. Massachusetts electricity rates, meanwhile, are among the highest in the US, nearly double the national average.
It’s against this backdrop that the Massachusetts Energy Marketers Association, which represents the state’s some 400 heating oil dealers, now finds itself about to lose Mass Save rebates that range from $400 to $800 per installation, as well as access to the popular no-interest HEAT loans, to subsidize oil system installations. (The council recommends studying impacts on low-income households before changing their incentives.)
Heating oil companies argue that their customers pay into the Mass Save program via surcharges on their electric bills and should be able to get rebates to upgrade their heating systems. Ferrante said he worries the utilities that work with state officials to design the program have no incentive to support his industry. He said his association intends to challenge the changes in court if they are finalized.
“We’re under the microscope to be wiped off the map,” Ferrante said.
Ferrante noted that many heating oil suppliers have taken steps to address environmental impacts, by shifting to biofuel blends that have much lower carbon emissions. For example, nearly 80 dealers participate in a state-run program to encourage the use of biofuel, primarily discarded cooking oil, that can be blended with standard heating oil; they receive incentives funded by penalties electric utilities pay for falling short of renewable energy goals.
Among the participants: Cubby Oil & Energy. President Charlie Uglietto said nearly all of the Wilmington company’s roughly 6,000 customers burn a 50/50 blend of petroleum and used cooking oil. Uglietto said it costs homeowners about $50 more a year than unblended heating oil. A few customers use fuel made solely from discarded cooking oil.
From Uglietto’s perspective, biodiesel is a more cost effective way of addressing emissions than heat-pump installations, which state officials want prioritized in the new Mass Save plan.
“Neither the state nor Mass Save nor a lot of people recognize the value of liquid renewable fuels,” Uglietto said. “Why are we making people buy $25,000 heat pump installations when we can just change the fuel that goes into people’s oil burners and achieve greenhouse reductions today for pennies on the dollar? I just don’t get it.”
Caitlin Peale Sloan, who heads Massachusetts policy efforts for the Conservation Law Foundation, said there isn’t enough discarded cooking oil from restaurants to go around for the heating oil industry to solely rely on it as a solution.
The elimination of oil rebates is one of many proposed changes to the Mass Save program, which is regulated by the state and funded by surcharges on electric and natural gas bills. They will now be used by the state’s major electric and natural gas utilities as they formulate a new plan for the next three years, with an eye toward incorporating climate benefits.
“We are really scrutinizing all our fossil fuel incentives and will be careful about which fossil fuel incentives that will be retained in the next plan. This is not just about heating oil,” said Patrick Woodcock, the state energy resources commissioner. “We think that heat pumps should be integrated across the state. … It’s a technological breakthrough that Massachusetts will seize. It’s just a matter of time. We do think that time is now.”
Amy Boyd, a member of the efficiency council, said the panel and utilities will hash out a final version by the end of October. She notes that heating oil customers could still use Mass Save funds for other efficiency measures, such as insulating their homes.
“Using ratepayer money to buy things that will keep fossil fuels around longer is wasting ratepayer money,” said Boyd, who is policy director with the Acadia Center, a climate-policy think tank. “I’m really glad that the EEAC is taking a stance on the need for electrification.”
But Emerson Clauss, co-owner of Allegiance Construction & Development in Northbridge, said the shift to electric heat still relies heavily on natural gas, the most prevalent fuel source for New England’s power plants. Clauss said he’s also troubled by the new climate law’s net-zero language for new construction, because it could box out heating oil, propane and natural gas as a heat source.
“More than half of our electricity comes from natural gas,” said Clauss, president-elect of the Home Builders and Remodelers Association of Massachusetts. “It sounds like we’re doing a great thing, moving in the right direction. But aren’t we just moving where the smoke is burned off?”