Based on remarks made at a Massachusetts State House briefing on 6/6/2023:
Investment in new gas infrastructure is costly for Massachusetts utility customers. Better, and less costly, alternatives exist.
Fossil gas must be phased out by 2050 to comply with Massachusetts’ net zero greenhouse gas emissions requirement.
By 2050 at the latest, therefore, oil and gas pipelines, storage facilities, and power plants will need to be retired. Most facilities will need to be retired sooner; Massachusetts law sets intermediate emission reduction targets of 50 percent below 1990 levels by 2030 and 75 percent by 2040. Facilities that retire before the end of their economic lifetime face accelerated depreciation creating stranded assets that must still be paid for in utility customers’ rates and bills, even when the facilities are no longer in operation. These are costs paid for by consumers with no benefit to consumers.
Over the next three decades, the number of customers on the gas system will plummet. In the residential sector, Massachusetts’ Clean Energy and Climate Plan calls for more than half of all households to be heating with electricity by 2035 and 85 percent by 2050. Richer households with access to upfront funds, credit sources, and the financial facility to assume risks or take on investments with five-, ten- or twenty-year payback periods will leave the gas system first.
As a result, the fixed cost of the gas system will be shared with a shrinking customer base, driving up energy bills for the households that do not have the financial means to decarbonize their heating systems. The households who are left behind on the gas system, paying higher fixed costs every year, are disproportionately households with lower incomes, renter households, and those living in environmental justice communities.
Second, the restoration and refueling of Massachusetts’ aging and leaky gas infrastructure is costly for Massachusetts utility customers and presents a danger to all homes, schools and businesses located nearby.
As fossil gas is phased out to comply with Massachusetts climate standards, some advocates for spending utility customers’ money to rebuild aging gas pipelines call for a transition to using the same infrastructure to deliver different highly combustible fuels: a mix of upgraded biogas and hydrogen.
Our research at the Applied Economics Clinic has, repeatedly, found:
a lack of evidence that a sufficient supply of these alternative fuels will be available to meet customer needs;
that, if supplied in high volumes, these fuels are far more costly than the fossil gas that utilities supply today;
that upgraded biogas and hydrogen are only zero carbon under very special circumstances; and
that these alternative fuels pose significant dangers to human health and safety from leaks and accidental combustion or explosion.
Continued investment in repairing leaks and rebuilding the Commonwealth’s gas infrastructure has already cost ratepayers billions of dollars.
Gas pipeline replacement is estimated to cost an additional $16-$17 billion—an amount that would take more than 90 years to pay off using the $5 per month “GSEP charge” currently paid on each gas bill. Factoring in the expected drop in the number of gas customers over time as more and more customers switch to electric heating, it would require a GSEP charge of about $30 per month, to pay off the total costs of pipeline replacements by 2050.
Investments in both new and existing fossil fuel infrastructure are not economic. Immediate repairs of dangerous leaks are essential to public safety, but a comprehensive $17 billion pipe replacement program cannot be paid for without increasing charges on gas bills. Richer families have been fleeing, and will continue to flee, the gas system, raising bills for the remaining lower-income families who will be left holding the bag. Massachusetts needs a strategic plan for economically, and equitably, walking away from gas. An end to fossil gas will still happen without such a plan, but it will cost us more, and cost Massachusetts’ overburdened communities the most.
