On March 26, Maine’s Governor Baldacci proposed LD 1201, emergency legislation called “An Act Regarding Energy Independence.” A major feature of this bill (Section 9303(4)(D)) is the establishment of “Efficiency Maine Plus,” an entity that will replace the current Efficiency Maine and will be governed by a Council which will be responsible for developing “quantifiable measures of performance” to which EMP will be held accountable. “Such measures may include, but are not limited to, reduced energy consumption, reduced capacity demand for natural gas and electricity, reduced energy costs, reduced carbon dioxide emissions, program and overhead costs and cost-effectiveness, the number of new jobs created, the number of energy efficiency trainings or certification courses completed and the amount of sales generated.”
Reducing emissions and creating jobs sound like great objectives. But measuring this kind of performance is not a challenge to be taken lightly. Even if you can measure a reduction in emissions or the creation of jobs, how can you be sure those changes were caused by the program you’re funding?
This issue of whether incentives (like those that would be offered through EMP programs) should only be available when the reduction in emissions or increase in jobs would not have occurred but for the incentive is called additionality and is hotly contested in the carbon-reduction arena. Some commentators say additionality is a good objective in theory, but in practice will lead to public money being invested only in bad ideas. In other words, this school of thought argues that additionality tests serve only to encourage the diversion of funding from projects the market supports (because they work) to projects the market does not support (because they don’t).
Others take the position that incentives shouldn’t be squandered on changes that will take place anyway. Under the Kyoto Protocol, for example, only “additional” reductions may be counted as Clean Development Mechanisms, and the governing body has developed a tool (pdf) for measuring the additionality of a project. As you can see from the Kyoto Protocol, screening for additionality is a complex task (though the flow chart on page 3 of the tool provides a nice visual introduction).
Whether additionality should be a factor in public funding of programs like those envisioned by LD 1201 may be an open question. But surely the metrics proposed should at least be calculable. Section 9303 (1)(C), for example, gives EMP the target of reducing peak load by 100 MW by 2020. It does not say relative to what: 2008 peaks? Future forecasts?
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