Undoing the Wasteful Incentives of the Energy World, Giving Innovators a Shot: A Talk With State Energy Secretary Ian Bowles

11/24/09Follow @wroush

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thought. If you go down the list of companies expanding in Massachusetts, Konarka just bought the old Polaroid facility in New Bedford, and Lilliputian has been expanding here. What’s different under Governor Patrick is that he’s realigning the whole regulatory system to help create markets and give competitive advantage at the end stage to help companies expand in Massachusetts. Those things are different from any previous governor, and they’re paying real dividends.

X: How well do you think Massachusetts agencies and private companies have been doing in getting their share of federal dollars under the American Recovery and Reinvestment Act?

IB: The world is divided between the formula grants and the competitive grants. On the formula grants, we had a huge amount of input into the development of the stimulus package when it was coming along, and we were strong advocates for the $55 million that’s coming to the state through the state energy program. There, we’ll do very well. We’ve been very creative in utilizing the funds that are available on a formula basis. On the competitive side, we have had a few notable successes and a few notable cases where we didn’t get what we wanted. The $25 million that’s coming for the wind turbine blade testing facility was a huge win for the state. That will be a real anchor for the wind industry. And the ARPA-E awards are another great example. Massachusetts organizations did overwhelmingly, disproportionately better than anyone else. The major smart grid proposals, we didn’t get. We have a smart grid pilot project and we thought we were very well positioned but ultimately we didn’t get one of the big utility-based grants. A lot of them went to the Midwest, to the public municipal utilities. And the battery grants—that’s another case where those seem to have gone primarily to Michigan, Indiana, and Illinois, which has some logic to it. So I’d say we’ve done very well in a few areas and have clearly missed some major opportunities, but not for lack of trying.

X: I wanted to ask you about the way the state government interfaces with the entrepreneurial community here in Massachusetts. You’ve got some very active groups around Boston like the New England Clean Energy Council that work on policy initiatives and professional development for energy entrepreneurs. Have they made your work easier?

IB: I’m very impressed with the growth of the Clean Energy Council. I was one of the speakers, along with [Congressman] Ed Markey, at their recent green tie gala at the Kennedy Library. Last year’s event at the Museum of Science was half the size of this crowd, and there was a very strong turnout from the industry. So you have to hand to Nick [d'Arbeloff] and Hemant [Taneja] and others—they have really started to build something here. Very often, emerging technology clusters are late to the process of engaging with the media and government regulators, and the Council has shown a lot of foresight in saying “Let’s get organized, and let’s have an impact.” They worked closely with us on the development of the Clean Energy Center, where Hemant serves on the board. Nick and Peter Rothstein have done a lot of work on the development of the innovation clusters language in the Waxman-Markey energy bill. They are very good partners for us. They are giving a voice to the industry in the media and in government circles and we welcome that.

X: Turning back to the Regional Greenhouse Gas Initiative auctions that you mentioned earlier—those got started last year, with a company that I’ve covered, World Energy in Worcester, handling the technology part of the auction. How do you feel the carbon allowance auctions are working, and do you think RGGI is providing a good model for a national cap-and-trade system regulating carbon emissions?

IB: The 100 percent auction model has worked fantastically well. It has shown the world that an auction-based approach is sound in terms of revealing price and predictability. It’s elegant in terms of how it works, and it creates funds that are repurposed back for more energy efficiency. It should be a model for a national system. The congressional deliberations have had more of a deal-making flavor. Most of the national legislation shows a glide path, starting out with a lot of grandfathering, which is probably a political necessity. But in many ways it just prolongs the period of transition. If you believe in markets, the [Regional Greenhouse Gas Initiative] system has been a real success.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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