Task Force: Mandates and Tax Breaks for Agrofuel Industry

The oil industry has been getting some bad press recently, what with global warming and peak oil. If you think these hard-done-by hydrocarbon peddlers deserve more than tea and sympathy, you are not alone. The leadership of the Massachusetts Democratic Party is with you.

The Advanced Biofuels Task Force (the creation of the Governor, Speaker, and Senate President) has published its final report, with several key recommendations. Receiving the most press coverage so far is the proposal to develop a Low Carbon Fuel Standard (LCFS) for Massachusetts. But three short-term recommendations merit closer attention than the LCFS, namely the recommendations that Massachusetts should:
1. Exempt cellulosic biofuels from the state's gasoline tax;
2. Impose mandatory minimum percentages of biofuel in motor and heating fuel; and
3. Give state agencies "latitude to exempt fuel produced from waste materials from full lifecycle greenhouse gas emissions analysis."

The second point, the mandatory minimum blending of agrofuel, is (to put it bluntly) a way of forcing us to purchase agrofuels whether we want to or not. Imposing this requirement is something the task force wants to do before, not after, Massachusetts fashions its LCFS.

Clearly the agrofuels industry will receive a shot in the arm if the Legislature enacts the task force's proposals. This hardly comes as a surprise. After all, during its deliberations the task force heard plenty of testimony from the industry, including testimony from World Energy Alternatives based in Chelsea. According to Biodiesel Magazine, World Energy is "the first alternative energy company backed by a major petroleum company," namely Gulf Oil, which "has been providing financial backing and a platform for growth for the company since its start in 1989."

Should Gulf Oil's partner get the benefit of a gas-tax break from Massachusetts? This is something worth asking legislators when they debate the task force's report.

But putting that question to one side for the moment, let's look at where World Energy's biofuel actually comes from. Curiously, World Energy does not produce fuel of any kind. The company's strategy, explains Biodiesel Magazine, is simple -- "marketing energy, not necessarily creating it." So who does have the task of creating it?

Well, the entity that will be manufacturing biodiesel for World Energy is Dow Haltermann Custom Processing (DHCP) of Houston, Texas. And who owns DHCP? The Heritage Group and the Grube Family, the proud operators of three oil refineries which (according to Indianapolis Business Journal) escaped hurricanes Katrina and Rita and continue to "crank out more than 65,000 barrels a day." According to the relevant SEC filings, the Heritage Group/Gruber Family company (called Calumet Specialty Products Partners, LP) is a leading producer of "high-quality specialty hydrocarbon products" such as gasoline, diesel, asphalt, and jet fuel.

By the way, if you're wondering why Calumet is a partnership the answer is simple: publicly traded partnerships can pass along earnings to investors without paying income taxes.

Requiring Massachusetts residents to buy agrofuel could help boost the fortunes of Gulf Oil, whose officers and directors are not exactly going hungry. Other likely beneficiaries of our largess are companies that are up to their necks in hydrocarbons and are strangely reluctant to pay their fair share of society's tax responsibility.

Let's keep our eyes on the task force's report and how the Legislature deals with it.

Agrofuel Mandates: Warning from the Conservation Law Foundation

Will Massachusetts residents have to subsidize the agrofuel industry?

Last year the Governor and the Legislature created the Advanced Biofuels Task Force to assess the potential for biofuels (also known as agrofuels) in Massachusetts. One of the aims that the Governor, the Speaker, and the Senate President announced was to establish a volumetric mandate for biofuels, i.e. by 2010 all diesel and home heating fuel sold in the Commonwealth should contain 2% biofuels in their blends, with that amount rising to 5 percent in 2013.

The task force has taken testimony from across the Commonwealth and has published its draft summary recommendations. In view of the impact of agrofuels on food prices and carbon emissions, the testimony and the recommendations are important documents.

One of the recommendations is that Massachusetts should "develop standards for lifecycle evaluation that consider the carbon, environmental and economic impacts... including potential impacts on agricultural, forest and other land use in Massachusetts and on a global basis, using definitions like those used in California and included in the new federal energy law. These evaluations must include both direct and indirect impacts, as well as consideration of impacts on environmental justice."

So far so good. When we're deciding whether to throw public support behind a fuel whose backers present it in green wrapping it makes sense to consider the impact on the environment. But in keeping with the wishes of the Governor and legislative leaders the task force also recommends "carefully targeted mandates, such as requirements for minimum percentages of biodiesel in motor and heating fuel."

Among the witnesses offering testimony to the task force was the Conservation Law Foundation (CLF), whose comments included a warning against setting mandates. Citing the experience of the European Union ("mandates gone awry") and the potentially disastrous results, the CLF "strongly advises against setting mandates." With an eye to the likelihood that the task force would recommend mandates anyway (which its draft does) CLF lays out four criteria that should serve as preconditions. One of those preconditions is tying the putative mandate to "a specified, verified reduction in greenhouse gases." In other words, the biofuel proponents should have to demonstrate that their product would ameliorate, rather than exacerbate, global warming.

Perhaps I'm just not seeing it, but so far as I can tell the task force's draft recommendations contain no such requirements. To find out whether the Governor, Speaker, and Senate President incorporate CLF's common-sense conditions into their proposal, stay tuned.

By the way, I still haven't heard anything from the Deval Patrick administration about what Doug Rubin had in mind when he claimed his boss was showing national leadership on the environment (see "Doug Rubin's Spin" below).

Fuel Subsidies in Boston = Food Riots in Haiti?

The Democratic leaders on Beacon Hill are promoting biofuels as a more sustainable energy source than fossil fuels. According to the press release, the Governor, Speaker and Senate President are pushing legislation that would require “all diesel and home heating fuel sold in the Commonwealth to contain a minimum amount of renewable, biobased alternatives in their blends, with that amount rising from 2 percent in 2010 to 5 percent in 2013.” There would be a tax incentive for ethanol derived from what the press release calls “forest products” (does that mean trees in plain English?) along with switchgrass and agricultural wastes. As a result of the biofuels mandate, they say, Massachusetts will gain 3,000 new jobs.

Is this subsidy really an effective way to combat global warming, or could it make the problem even worse? Right now there is no definitive answer, so green advocates should pause before applauding the Massachusetts Democrats’ gift to the biofuels industry. The response of eco-activists across the Atlantic is instructive.

Prime Minister Gordon Brown is taking Britain down the same route as Massachusetts. Under the British government’s plan all gas and diesel sold in the U.K. will have to contain 2.5% biofuel. Brown’s announcement met with protests from environmentalists. Why? Because the protestors want enforceable guarantees that biofuels will save at least 60% more carbon than they produce. They point to evidence that sources of some biofuels destroy habitats, upset delicate ecological balances, and even exacerbate global warming. If this is true, biofuels are hardly the sustainable alternatives that their lobbyists and legislative allies would have us believe.

Is it possible that biofuels could be making global warming worse, not better? Britain’s Independent newspaper cites a report from the University of Minnesota “which found that growing biofuel crops on converted rainforests, grasslands or peat bogs created up to 420 times more CO2 than it saved.” The current edition of Discover magazine discusses similar research by Joseph Fargione of the Nature Conservancy and Princeton’s Timothy Searchinger. Discover explains that while the two studies differ in some ways they both establish is that “changes in land use related to biofuel production would be a significant source of greenhouse gases in the future.”

The supposed bright side is Brazil, where sugarcane ethanol has reduced vehicle emissions. President Bush likes to tout the Brazilian experience as the basis for subsidizing biofuels here. Yes, George W. Bush. Perhaps you are getting a warning signal from the hairs on the back of your neck at this point.

Writing for the Independent, Daniel Howden reaches a different conclusion from President Bush: “The consequences of the modest reduction in transport emissions in Brazil’s crowded cities can be traced in the gigantic geometrical scars of soy plantations that cut into the Amazon rainforest and the choking black clouds from burning cane fields that engulf the capital for weeks every year.”

The demand for biofuels pushes up the price of their source commodities, commodities like corn. These rising prices have triggered food riots in the Philippines and Haiti. Here in Western Massachusetts, local farmers are feeling the effects in inflated prices for hog, cattle and chicken feed. When a public policy that is supposed to be pro-environment has an adverse impact on small organic farms, we need to ask more questions. So before we smooth the passage of even more public money toward private companies in the belief that we are combating global warming, let’s do some homework. The stakes are too high for mistakes.

Beware Sun Screen

The news* that the Deval Patrick administration is using rebates to encourage people to install solar panels is welcome. Via a program called Commonwealth Solar the state will provide up to $68 million over the next four years to generate 27 megawatts of solar electricity. The program is not open to Massachusetts residents whose communities have municipal power, however. Only private-sector consumers need apply. That said, for the companies and individuals who qualify, this transfer of public money will be a real boon.

But in a state that depends overwhelmingly on coal and other fossil fuels, subsidies of this scale are not enough. Sixty-eight million dollars over four years is not going to produce the kind of energy turnaround that we need in Massachusetts. And shutting out people who get their electricity from municipalities sends the wrong kind of message.

Right now, we are hardly the leaders in the field that the administration would have us believe we are. Let's look at the reality:

Only seven percent of the energy generated in Massachusetts in 2006 came from renewables, says National Geographic. The other 93% came from fossil fuels, which emit the greenhouse gases that contribute to global warming. Of the 260 power plants in Massachusetts, 66 qualify for "red alert" status according to the watchdog organization CARMA (Carbon Monitoring for Action).
http://carma.org/

Nobody expects Massachusetts to kick its fossil-fuel habit overnight, and the administration deserves some credit for helping move the Commonwealth away from its dependency. Deval Patrick was right to sign up to the Northeastern Greenhouse Gas Initiative and the solar subsidies are a plus. Together they are steps in the right direction. But these steps do not keep pace with global warming. As Environmental Secretary Ian Bowles told Associated Press: "The public is ready for bold measures." So let's see some.

*The Associated Press is treating Commonwealth Solar as today's news. In fact, the administration announced the $68 million program in January 2007. Here's the announcement:
http://www.mass.gov/envir/press/pressreleases/012808_commsolar.pdf

The Clock is Ticking

How much longer are progressive Democrats going to wait for the Massachusetts Democratic Party to live up to its commitments?

The platform of the Massachusetts Democratic Party contains many laudable, progressive proposals. Single-payer healthcare, for example, has been in the platform since the early 1990s. With single-payer, as with Medicare, patients still choose their physicians but there is just one insurer -- the Commonwealth. Regardless of the platform commitment, the healthcare law that the Legislature delivered in 2006 (Chapter 58) bears absolutely no resemblance to single-payer. Instead, it mandates the purchase of health insurance from the private sector.

In addition to single-payer, the platform states that the party "continues to strive for the public funding of elections, thereby eliminating economic barriers for qualified candidates." Of course, such striving as there may have been since the Democratic-controlled Legislature repealed the Clean Elections Law in 2003 has been utterly invisible and inaudible. The party now controls all six constitutional statewide offices, from Governor to State Auditor, and almost 90% of the seats in the General Court: Against whom is it supposed to be striving?

Curiously, the platform also proclaims that "Massachusetts Democrats condemn the tax cuts that leave cities and towns to fend for themselves with only the regressive property tax as the primary source of revenue." But it was Massachusetts Democrats in the Legislature that enacted those tax cuts. What our cities and towns need is less condemnation and more action.

No progressive would deny that the platform of the Massachusetts Democratic Party contains many worthy aspirations. But the longer those aspirations remain locked in the platform, the stronger the case grows for a breakaway from the party. But where could disaffected progressives find a political home? The results of the 2006 general election may point the way.

Two things have become clear following the 2006 general election. First, the Massachusetts Republicans have abdicated the role of principal party of opposition. Secondly, the Greens are on the rise. Without the benefit of bid donors or a friendly press, the Greens’ level of support has grown -- in 2006 it was double their 2002 showing. In the race for Secretary of the Commonwealth, the Greens’ Jill Stein won 18% of the votes, which is twice the percentage that Jamie O’Keefe garnered in his well-run 2002 bid for State Treasurer.

Today Massachusetts is badly in need of both an effective opposition and some meaningful electoral competition. In this supposedly blue state we need to remember that only about 37% of Massachusetts voters are registered Democrats, with close to 50% voters unenrolled (independent). Nevertheless, even with half the electorate eschewing both the major parties by opting for unenrolled status, the Democratic Party controls 88% of the seats in the Legislature. In addition, both of our U.S. Senators, all 10 members of the congressional delegation, and all six of the constitutional statewide officers, from Governor through State Auditor, are Democrats. By any reasonable standard, that is an extraordinary imbalance.

In the 2006 elections, there were contests in only one-quarters of the legislative districts. That’s right -- most of the seats in the Legislature went uncontested in the general election. There were contested Democratic primaries in just 15% of the districts, and most of those were for open seats. (i.e. the incumbent was not seeking reelection). The truly staggering fact is that in Massachusetts this is the norm, not the exception.

Is there a realistic possibility that Massachusetts could achieve contested elections and acquire a real opposition? Yes -- such things are possible. In Vermont, for example, the Progressive Party holds six seats. As their website explains: “The two brand-name parties frequently act in concert, because they serve the same corporate interests. They agree to take issues ‘off the table’, preventing discussion of issues important to most Vermonters: health care for all, property tax reform, energy independence.” http://www.progressiveparty.org

Could Massachusetts follow that example, with the Greens in the role that the Progressive Party plays in Vermont? Statewide races are important and the Greens have used these races to raise their profile and expand their popular support. But real power, i.e. the power of the purse, resides in the House. Unless and until there are Green state representatives, the party will not be in a position to file legislation or propose budget amendments. In the meantime, the effects of the 2006 success story will dissipate. So now is the time to start restoring balance to the Legislature.

As the experience of the Progressive Party in Vermont shows, there could be significant benefits to making a breakthrough and electing a small number of state representatives. With the Republicans demoralized and adrift, the Greens could use their presence in the Legislature not only to hold the Democratic Party accountable but also to acquire a greater degree of credibility as the alternative party of government.

There is no secret formula for winning legislative elections. It is a question of concentrating on a handful of winnable seats, seizing sudden opportunities (such as special elections), training and supporting candidates, focusing on several simple and coherent policy proposals, identifying Green voters, and getting out the vote on election day. Easy? No. But straightforward? Yes.

Massachusetts has a multi-party electorate, a two-party voting system, and a one-party government. The Republican Party has forfeited its role as the major opposition party. Like nature, genuine democracy abhors a vacuum. There will always be work for some progressives to do within the Democratic Party, but the time may be coming for other progressives to complement that work from the outside.

So in the next few years, there is clearly room for the Greens to assume the role of effective opposition in Massachusetts. One big question is whether the party is willing to seize the opportunity. The other big question is whether there are enough disaffected progressives willing to help.

Capital and Labor

According to the Boston Herald, Sean M. O'Brien, the president of Teamsters Local 25, is planning to inject a little democracy into the Massachusetts Democratic Party. He is threatening to do the unthinkable -- encourage people to run for office against sitting legislators.

It is hardly a secret that the Democrats take organized labor for granted. And contested legislative elections are such a rarity in our one-party state that we often rank 49th in the nation, just ahead of Arkansas. In 2006 only 15% of Democratic primaries had more than one candidate, and most of those races were for open seats (i.e. the incumbents were not seeking re-election). So, in one sense, it is a welcome development when a union leader decides to do something about the dearth of electoral competition in Massachusetts.

It is clear that only a matter of fundamental import can have triggered this sudden urge for accountability on the part of the Teamsters, an issue central to the interests of ordinary working families. The lack of single-payer healthcare, perhaps? Here is a measure that would transform the lives of every working class and middle class family in the Commonwealth. Imagine how much easier life would be if people in Massachusetts, like the citizens in most industrial democracies, had free healthcare -- if they did not have to dedicate such a large proportion of their annual income to private health insurance companies. This is the freedom that single-payer offers.

But single-payer has been in the platform of the Massachusetts Democratic Party for so long that it has become a fragile antique. Like grandma's best china, nobody dares touch it except for occasional dusting. They would never dream of taking it down off the shelf and using it.

So the leading Teamster's threat to make incumbent Democratic legislators actually run for re-election, not merely stand, is all about single-payer healthcare, right? Guess again.

Well, if not single-payer healthcare, it must be public higher education that has prompted Mr. O'Brien to commit political blasphemy. A college degree is essential nowadays, and working class families in particular depend on the University of Massachusetts and the state colleges. But right now public higher education funding is $245.6 million (18.9%) below the FY 2001 level of funding, says the Massachusetts Budget and Policy Center's Budget Monitor.

So is that what Mr. O'Brien is angry about? Under-funding of public higher education?

It is not.

Then I guess it just has to be taxes. After all, during the 1990s the Democrats in the Legislature cut the income tax time and again, knowing that the result would be a steady increase in the regressive property tax. Far from fighting for a progressive income tax, these Democrats in effect voted for property-tax hikes that have (predictably) hit working families and seniors hardest. Union leaders must be outraged that the party they bankroll has done this to their rank-and-file.

But no, it's not unfair taxation that has inflamed the leader of Teamsters Local 25. It is casinos, the ill-fated measure that the Massachusetts AFL-CIO made its top priority earlier this year. At the Governor's behest, organized labor spent a large chunk of political capital lobbying for a proposal that would have made the lives of working families considerably harder and the wallets of right-wing billionaires who control the casino industry considerably fatter.

Casinos should never have been labor's top priority and the issue is a flimsy casus belli. The Massachusetts Democratic Party has a longstanding platform commitment to single payer healthcare, to equitable taxation, and to public higher education, but even with total control of the executive and legislative branches it has failed to deliver. Now that is something worth fighting elections over.

Doug Rubin's Spin

In a recent post on Blue Mass Group, Governor Patrick’s chief of staff, Doug Rubin, declared that “Governor Patrick has succeeded in bringing fundamental change to our state government.” One phrase made clear that Mr. Rubin was engaged in extreme spin. Rubin cites the decision of the Appellate Tax Board (ATB) to let communities charge telecommunication companies property taxes for the land that their telephone poles occupy: “The Appellate Tax Board closed the loophole on telephone poles, which when the process is completed will raise millions in new revenue for cities and towns.”

Well, the administration certainly played a role in the pole-tax case. As Boston Globe columnist Steve Bailey has pointed, the administration did intervene -- but not on the side of the communities trying to close the loophole. In fact, Deval Patrick’s Department of Revenue jumped in on the side of the defendant, Verizon. Now the Governor is claiming credit for an ATB decision that his administration actively argued against just a few months ago.

Rubin’s list of Deval Patrick’s heroic achievement states: “Highlights in 2007 include the historic vote on same-sex marriage… and national leadership in clean energy and environmental issues.”

Claiming some credit for the Legislature’s decision not to put the anti-marriage equality measure on the ballot is fair enough. Nobody would deny that the Governor, along with House Speaker Sal DiMasi, helped persuade legislators to kill the proposal. Persuading people to come around to your point of view is part of the art of politics. Of course, when Sal DiMasi exercised that same art to kill casinos, Deval Patrick cried foul. Referring to my handy Polspeak-to-English phrasebook, I see that when the Governor talks to legislators he is a doughty advocate and when the Speaker talks to legislators he is a sleazy midnight-deal-making hack. So far, so good. Like Humpty Dumpty, many politicians seem to believe that words mean whatever they chose them to mean, and unabashed hypocrisy is what makes politics such fun.

But the Patrick administration claiming “national leadership on clean energy and environmental issues” is a bit of a stretch. What could Rubin mean?

On the plus side, the Governor issued an executive order last year setting targets for renewable energy. Called “Leading by Example,” the executive order says that 15% of agency electricity should come from renewable resources by 2012 and 30% by 2020.

According to National Geographic, Massachusetts is below the national average in terms of renewable energy. The current edition states that renewables account for just two percent of the Commonwealth’s energy resources. If we had all the time in the world to come to terms with global warming and peak oil, the figure of 30% within a dozen years might be reasonable. But in reality we have years, not decades, to make radical and far-reaching changes in our energy use. In the context of large chunks of the Antarctic collapsing into the ocean, thirty percent is a risible target.

In addition to the “Leading by Example” greenwashing, our Governor has a penchant for high-emission/low-efficiency forms of transport (e.g. helicopters). And the avowed intent of his casino proposal was to encourage people to drive long distances to large new constructions on previously undeveloped land. How all this might constitute national leadership on clean energy and environmental issues intrigued me. So I decided to try and find out what Doug Rubin meant.

Yesterday (Wednesday, April 2) after e-mailing an inquiry I followed up with a telephone call to the Governor’s office, asking what specific measures Mr. Rubin was referring to. They put me through to the communications office where a woman took my number and said that somebody would get back to me. Then, a little nervously, she asked “you’re not from the press or anything, are you?” My request for concrete facts seems to have triggered a degree of alarm in the Deval Patrick communications office. I shall let you know as and when they get back to me.