Strained budgets have struck statehouses from Trenton to Sacramento, and most recently, here in Hartford. As policymakers look for short-term ways to plug budget gaps, they're raiding funds intended for long-term investments in clean energy.
In lean times, investing in clean energy may seem like an expensive luxury. Not only is that belief far from the truth, throttling back on a commitment to clean energy in the short term can have a harmful impact in the long term by shaking investor confidence and stymieing investment just when we need it most.
To be sure, there's lots of good news about clean energy these days. Solar panel prices have fallen by 80 percent over the past five years, and new U.S. wind power capacity nearly topped new natural gas-fired power plants built in 2012. Meanwhile, states have been forging ahead with bold clean energy targets, standards and projects that are helping speed adoption of the energy technologies — and jobs — of the future.
One of the most effective programs, the Regional Greenhouse Gas Initiative, known as RGGI, joins Connecticut and eight other New England and Mid-Atlantic states in a market-based program to reduce carbon dioxide emissions from power plants, the leading source of climate changing emissions in the U.S.
During the pact's first three years, greenhouse gas emissions have dropped by 23 percent. These savings are equivalent to taking 2 million vehicles off the road for one year. In addition to these environmental benefits, a 2012 analysis showed that participating states have enjoyed significant economic benefits. Over the last three years, RGGI raised more than $900 million from the sale of pollution allowances, while generating more than $1.3 billion in lifetime energy bill savings for utility customers and helping train an estimated 2,400 workers in clean energy fields.
RGGI revenues are specifically authorized to catalyze the development of clean energy projects, in order to create a virtuous cycle of investment. Yet as budget-stressed state leaders have watched their coffers shrink, they've started yielding to temptation to use the new RGGI revenues shortsightedly.
Since its start, New Hampshire and New York have diverted a share of their states' RGGI funds to unrelated projects. In New Jersey, Gov. Chris Christie pulled the state out of RGGI, and has diverted roughly $800 million to the state fund.
Here in Connecticut, state lawmakers have made three separate raids on clean-energy dollars. They last struck a few weeks ago, when it initially looked as if legislators were going to deplete both RGGI funds and the state's green bank, the Clean Energy Finance and Investment Authority. Amid an uproar from constituents, they backed off and dropped those provisions on the final day of the legislative session.
While state leaders want to balance their budgets, our energy plans — and increasing interstate competition — oblige us to keep a steady course and send clear signals to our growing clean-tech industry. Business people — investors, contractors and entrepreneurs alike — need to plan in advance, and to trust that promises are kept and rules won't change from year to year.
Instead, state policies should drive investment in industries that benefit both citizens and the economy. For example, the Connecticut green bank is a leading effort to stimulate investments in energy efficiency, which creates both savings for homeowners and businesses while driving business development and job creation in the state.
A recent report from the Investor Network on climate risk, entitled "Power Factor," outlines a range of steps that policymakers can take to unlock the multi-hundred-billion dollar investment opportunity in energy efficiency in the U.S., including strategies that drive demand for efficiency services, boost financing options for consumers and align incentives for electric power utilities. An important take-away from this report is that innovative financing mechanisms, pursued by states like Connecticut, will only work if the state is pursuing efficiency on multiple fronts. Redirecting RGGI funds undercuts the leadership effort Connecticut is pursuing on energy efficiency finance and causes investors like myself to pause.
Leaders in Hartford would do well to heed this advice, because if Connecticut raids clean energy funds today, the state may indeed pay tomorrow.
Mark Cirilli is a co-founder and managing director of MissionPoint Capital Partners, a private investment firm based in Norwalk, which provides capital to companies focused on clean energy, energy efficiency and environmental finance.Copyright © 2015, CT Now