Maine’s new climate action plan: Where’s the money?
Earlier this month, the Maine Climate Council released its four-year plan titled, “Maine Won’t Wait,” a proposal covering a multitude of policy areas ranging from transportation to energy infrastructure to workforce development. The plan’s overarching goals focus on how to shift the Maine economy toward significantly decreasing greenhouse gas emissions and ultimately delaying the predicted effects of climate change. It is especially significant because it articulates Governor Janet Mills’ broader energy and economic priorities.
Unfortunately, the pandemic and government lockdown-induced economic shocks from Spring 2020 continue to ripple throughout Maine. Those fateful months showed us how immensely interconnected Mainers are to each other, the region, and the continent, especially concerning supply chains for food and household goods. The plan raises important questions about how the state can achieve greater independence in food and energy production, emphasizing the $4.4 billion Mainers spend annually on imported fossil fuels for transportation and heat.
The governor’s Climate Council unfortunately left much to be desired on how its ambitious goals will be achieved, much less funded. The section on “funding and financing options” merely suggests that state leaders “identify revenue sources” for long-term goals, instead of identifying those resources itself. Even the short-term goals do not suggest difficult trade-offs—as is necessary with any broad-reaching economic proposal—but simply fills a wishlist of new state programs, funds, and borrowing.
The Climate Council offers dozens of different strategies to update and upgrade infrastructure such as sewer and water systems, ferries, automobile travel, freight trucking, building codes, and the entire electrical grid, but with very little actionable ways how to get there.
While the report does not specifically lend its support to specific tax or fee increases, it’s emphasis on state “investments” signals to legislators that raising revenue on the backs of Mainers, even during a slumping economy, will be necessary to achieve its goals. As state leaders grapple with a budget shortfall of nearly $400 million over the next two years, the substantial state spending recommended by the Climate Council might need to be placed on the back burner.
The report focuses on the largest drivers of greenhouse gas emissions from within the state: transportation and home heating. Emissions from the transportation sector make up 54% of total statewide emissions, whereas home heating oil and gas account only for 19%. Based on 1990 levels, it sets out a goal to reduce greenhouse gases 80% by 2050. Much of that will involve shifting energy demand to the electrical grid, which in turn requires capital to upgrade and maintain. Dovetailing with its emissions goals, in 10 years, the Council wants to see 80% of the electricity used in-state from renewable sources.
In tackling those hefty transportation-related emissions, the Climate Action Plan aims to promote the vast adoption of electric vehicles across the state, in homes and in use for public transit. Maine fuel dealers are anxiously awaiting the governor’s final position on the Transportation and Climate Initiative (TCI), a proposed regional cap-and-trade system for gasoline and diesel sold in the northeastern US. While not a traditional fuel tax, TCI would contribute to higher prices at the pump between $0.13 and $0.24 per gallon—without allocating more funds to maintain Maine’s roads and bridges. Instead, 80% of TCI fees on fuel dealers would finance electric vehicle infrastructure. Governor Mills has yet to definitively state her intentions for Maine in regard to TCI, but did not sign onto the most recent memorandum of understanding (MOU) released on December 21, 2020. That day, the governor expressed concern on the likelihood that TCI will raise fuel prices for one of the most rural states in the country, hurting low-income Mainers the most.
The Maine Climate Council’s report puts forward a goal to have 41,000 electric vehicles on the road in Maine by 2025 and 219,000 just five years later. A 2018 Natural Resources Council of Maine survey estimated there were 1,300 electric vehicles (EVs) in Maine, noting that number had doubled since the previous survey four years earlier. U.S. Department of Energy EV registration data shows 750 of those are all-electric cars while the remainder are plug-in hybrid vehicles, which Maine also allows for subsidy under its EV program. It remains elusive how Maine would achieve these monumental goals for EV adoption without the funds forecasted by the implementation of TCI.
Directing more state and federal dollars to developing public transit will dovetail with EV ownership goals to reduce miles traveled by light-duty vehicles by 20% and heavy-duty vehicle mileage by 4% in the next 10 years. The plan aims for over 900,000 electric vehicles on the road in Maine by 2050. There are over one million light-duty vehicles currently registered among a population of about 1.4 million. Based on current state economic projections, Maine’s labor force is likely to remain flat through 2025 as the state weathers the pandemic shutdown-induced slowdown. Lawmakers must substantially reduce barriers to work and opportunity if there is a hope of growing the state to a point where the populace can afford and sustain an economy with nearly one million electric vehicles.
Promoting public transportation and reducing vehicle mileage aligns with the Council’s goals to support working from home through expanded broadband connectivity. The plan sets a goal to provide high speed broadband internet access to 99% of Maine by 2030, a proposal estimated to cost at least $1 billion by Peggy Schaeffer, Executive Director of the ConnectMaine Authority, the state agency that makes grants for public-private broadband development. ConnectMaine considers a community “served” by broadband if it has access to download speeds of 25 megabits per second (Mbps) and 3 Mbps for uploads.
On the residential side, the report emphasizes goals to double the number of home weatherization and energy efficiency projects over the next 10 years. This strategy seeks to leverage state funds for federal dollars to make homes more energy efficient through the use of tools like heat pumps. Heat pumps are electrical heating systems that may help homeowners reduce their use of home heating oil or a wood-burning stove as part of a comprehensive home heating system.
Lawmakers recently attempted to spur residential transition to non-fossil fuel sources with a new law that directs Efficiency Maine to promote heat pump technology through its home weatherization fund. Efficiency Maine is now empowered to install 100,000 new heat pumps throughout the state by June 2025. It also allows heat pumps to be a primary electric heating source for new or renovated publicly-funded multi-family housing.
Another part of the home energy equation for the Climate Council is broader use of solar panels. Lawmakers recently passed a law to promote large-scale solar energy projects by raising the kilowatt-hour threshold for projects that may benefit from Net Energy Billing (NEB). Also known as “net metering,” NEB means that utility consumers with solar panels connected to the grid receive a credit based on the energy their panels produce. While residential solar owners benefit greatly from this arrangement, a recent report showed that traditional power customers could lose out.
The Maine Public Utilities Commission (PUC) in November noted that, under expanded NEB, Maine’s utility companies and ultimately ratepayers will likely face a sizable financial hit. The PUC estimates that additional transmission and distribution (T&D) costs to Central Maine Power and Versant Power would exceed $160 million if solar construction continues as expected. Opponents—including former Gov. Paul LePage and analysts at Maine Policy Institute—have argued that discounting transmission and distribution (T&D) costs within net metering ultimately hurt consumers. It seems as though the PUC now validates their predictions.
In terms of natural resource industry support, the Climate Council proposes that the state “develop and enhance marketing programs” for Maine’s forest products and fisheries industries. Recognizing that the forest product sector provides at least $8 billion in direct economic impact, the Council sees much potential in this industry as a partner in developing a cleaner economy. Maintaining Maine’s working forests is a large part of the plan’s goals to drive greater carbon sequestration, or capture, through trees which intake carbon dioxide. Part of that goal will involve broadening various tax credits and incentives the state currently offers for land conservation.
A study performed in 2011 showed that forests have a significant effect on capturing carbon from the atmosphere, known as carbon sequestration. Authors estimated that forestation can remove one-quarter to one-third of the carbon dioxide emitted by the burning of fossil fuels. Today, Maine’s forest cover is nearly 90%. In 2016, a Maine Forest Products Council report noted that, of the 20 states under the USDA Forest Service Northern Research Station, Maine ranks #1 in forest as a percentage of the state, even though it ranks only #11 in total acreage.
There are only four states in the U.S. that are more than 75 percent forested, with New Hampshire, West Virginia, and Vermont following the Pine Tree State. While incentivizing carbon sinks might seem like a worthwhile state investment, a thriving forest products industry could be the driving force behind sustainable reforestation without needing additional state spending.
Much of the Climate Council’s suggestions direct the creation of commissions and working groups to study and report on aspects of the action plan not yet outlined for action. Those proposals that refer to execution largely focus on how the state can throw money at these problems through various subsidy programs for preferred industries, hoping some of them will stick.
Undergirding a substantial portion of the Climate Action Plan is a reliance on a labor force some say is not ready to take on the large-scale technologically-advanced projects needed to fulfill the plan’s goals. A 2015 report published by the University of Maine, co-authored by Glenn Mills at Maine Department of Labor estimated that by 2022, Maine’s labor force will decline by 1% from 2012 levels while skewing much older than the national average.
To combat the issue of an older, undertrained Maine workforce, the climate plan proposes attracting new investment for innovative technologies for the forest products sector, fisheries, farms, and clean energy producers. It also promotes the creation of an Americorps-style service organization to engage recent college graduates to work on forthcoming clean energy projects. This will support the goal of at least doubling the number of energy-efficient jobs in Maine from 14,000 currently to more than 30,000 over the next 10 years.
Of course, preparing for these new types of work, like installing heat pumps, building high-tech solar arrays by the acre or efficiently producing ground-breaking new building materials, will require thousands of trades-skilled workers living in Maine. Unfortunately, the plan leaves much to the imagination on how to develop that workforce.
In its proposals to attract skilled workers and sustainable investment, the plan does not consider that the state imposes the 10th-highest tax burden of all 50 states, despite being only 33rd-highest in median household income. It remains to be seen how taxpayers could afford the significant growth in government spending required to fulfill the Climate Council’s wishlist.
One of the few financing mechanisms specifically described in “Maine Won’t Wait” is a “Green Bank,” a mission-driven public, quasi-public, or non-profit institution that lends capital to environmentally-friendly development projects. The Portland Press Herald reports that a Maine Green Bank could raise up to $4 in private investment for every public dollar invested. Depending on scope and mission, it could fund projects as diverse as road and bridge infrastructure, home weatherization, industrial clean energy development, and electric vehicle subsidization. If, in the next federal administration, Congress passes enabling legislation like the “clean energy accelerator,” states could begin to set up their own Green Banks.
All in all, the Climate Council recommends many drastic policy changes without a roadmap to fund its priorities amidst a pandemic and lockdown-induced economic slump. Perhaps, a more realistic and cost-effective approach would be to cut and reform business and occupational regulations, as well as taxes on earnings and investment. These moves could make Maine a magnet for out-of-state capital and the next wave of innovative natural resource and clean energy technology, without the multitude of strings attached to public-private partnerships.