Michigan's Gas Giveaway

The Michigan Legislature is currently considering a massive giveaway to gas utilities, tucked away in the state budget. This proposal would allocate $250 million of taxpayer money towards paying for gas utility infrastructure expansions, with no specification on how many homes this would serve or benefit. While the proposal claims to be motivated by improving energy reliability in the Upper Peninsula, it does nothing to implement the numerous suggestions that stakeholders in the region have explicitly asked for through Governor Whitmer’s Upper Peninsula Energy Task Force. Instead, this blank check giveaway would lock in yet another unsustainable fossil fuel energy source, imposing substantial health and climate risks (and potential cost risks) in the process.

Michigan Gas Utility Service Area Map

Michigan Public Service Commission

Under this proposal, Michigan taxpayers—who already spent billions this year in utility costs—will foot the bill for expanded gas infrastructure (which the state’s utilities will in turn be able to earn further profit on). To put the size of the giveaway into context, the budget proposal gives $250 million to promoting fossil fuels with unnecessary infrastructure. This is more than the $207 million Governor Whitmer has proposed to allocate towards ensuring safe drinking water across the state. It is more than the $241 million allocated towards the child development and care program last year, which helps families afford childcare for their kids. And it’s more than the $175 million allocated towards the low-income energy assistance program last year, which helped Michiganders keep their lights on during a pandemic.

Prioritizing the Upper Peninsula’s Own Recommendations

But not only would this proposal be costly for taxpayers, it isn’t sound policy. It does not address the very real energy reliability and affordability concerns of the Upper Peninsula. The residents of the Upper Peninsula of Michigan face dual challenges on energy: some of the highest electricity rates in the nation, combined with an uncertain future in meeting home heating and other energy needs as Line 5’s stint in the Great Lakes (and the UP’s propane heating source) draws to a close. To help address these concerns, in 2019, Governor Whitmer directed the Upper Peninsula Energy Task Force to make recommendations ensuring that the region’s energy needs are met with sources that are reliably, affordable, and clean. The task force examined both ways to improve propane reliability and affordability in the case of disruptions to supply, as well as longer term strategies for ensuring reliable, affordable, and environmentally sound energy supply. The task force put forth a set of 30 recommendations in total, uplifting solutions like energy storage, energy bill assistance and consumer protection measures, energy efficiency and building upgrades, modifications to rate design, renewable energy, coordination between energy providers, centering energy and environmental justice, and engaging local communities to inform policy and promote economic development. Nowhere in the process did the task force recommend that public funds be used on polluting gas infrastructure.

The money being considered to hand off to the gas industry could instead be used to meet these other crucial needs. By way of example, the funding could be used to both help provide high efficiency cold weather electric heat pumps for customers and weatherize homes to reduce energy use overall and ensure the new heat pump technology provides optimal performance and comfort. Assuming the program pays for the full cost of a heat pump (estimated at $10,000 per home) for low-income households (as defined by the ALICE criteria), covers half of the cost for all other households, and the cost of weatherizing homes (assumed to be $5,000 per home), the state would have the opportunity to retrofit and electrify the heating for 22,989 households (of the 27,500 households heated with propane in the Upper Peninsula) for less than the proposed cost of the expanded gas infrastructure (approximately $217.5 million). There are many other factors to consider before moving ahead with using public funds to retrofit homes in this way, but it is a useful exercise to consider alternatives for these funds and how they could be redirected to untether the future of the UP’s heating needs from health-harming and polluting fossil fuels.

The Downsides of Gas

Instead of meeting the stated needs of the Upper Peninsula, expanding gas infrastructure in the Upper Peninsula imposes an unhealthy, unsustainable energy source, one that customers will be saddled with for decades to come. Continued reliance on gas as an energy source comes with plenty of downsides. Burning fuels, including gas, releases harmful pollutants such as nitrogen oxides, sulfur dioxide, and particulate matter (PM2.5). PM2.5 pollution in particular can lead to a variety of negative health impacts, including cardiovascular and respiratory disease, stroke, asthma, and premature mortality. Accordingly, a meta-analysis found that children living in homes with gas stoves have a 42% higher chance of experiencing of asthma symptoms. Recent research from the Harvard T.H. Chan School of Public Health finds that in Michigan, air pollution from burning fuels in buildings has led to an estimated 841 early deaths, and $9,419 billion in health costs in 2017 alone.

In addition to damaging the health of our communities, the continued use of fossil fuels like gas promises to intensify the climate crisis. In order to avert catastrophic climate change and the subsequent devastating human impacts, we need to begin phasing out fossil fuels in buildings in favor of efficient electric appliances powered by clean energy. While it is important to acknowledge that the transition away from gas in a cold climate like Michigan—which relies heavily on fossil fuels for home heating—will take time, we must get started today. And we cannot meet our climate goals if we continue to build out and invest limited resources into gas infrastructure.

Part of a Larger Pattern

The gas expansion fund proposal exists as a part of a larger trend of the gas industry fighting to keep customers as more communities begin to move away from this unhealthy fuel. Across the country, and especially in the Midwest, the American Gas Association is backing a multi-state campaign to prevent cities from passing their own energy codes to meet residents’ health, energy, and economic needs. These “gas ban preemption bills” restrict local jurisdictions from enacting energy codes that discourage the use of gas in buildings. They’ve been introduced in twenty states so far this year, including Michigan in the form of HB4575. The legislation sets a bad precedent by removing tools in the toolbox that cities and towns could use to clean up pollution from buildings and address air quality both inside, and outside, of homes. Several proposals have already been enacted in the Midwest—Iowa, Indiana, Missouri, and Kansas—as the AGA uses this region as a proving ground for its agenda. Both the preemption bill and the gas expansion fund are examples of how the gas industry uses legislative efforts to protect its bottom line at all costs, leaving communities to bear the burden of unhealthy gas appliances and potentially expensive gas infrastructure.

Moving Beyond Gas Giveaways

Ultimately, using taxpayer dollars to expand gas infrastructure ignores a range of alternatives for the Upper Peninsula, in favor of giving away money to a “solution” with substantial health and environmental downsides that will last for decades to come. Other regions of the country that rely on delivered fuels like propane and wood (i.e. the San Joaquin Valley in California and, as an even more relevant example, the Northeastern United States with its similarly frigid climate) are choosing to leapfrog over gas, moving directly from expensive delivered fuels like propane and wood to cleaner healthier electric alternatives. If Michigan enacts this budget proposal, it loses its opportunity to do the same.

Instead of engaging with the residents of the Upper Peninsula and striving to meet their immediate needs, as well as considering the recommendations proposed by the Governor’s Task Force, this proposal locks in a dirty, unhealthy energy source for decades to come, moving taxpayer dollars into the pockets of the fossil industry in the process. We urge Michigan’s policymakers to reject this proposal, and instead look to better, healthier alternatives to fossil fuels (like energy efficiency and electrification) that can serve energy needs in the Upper Peninsula that are sustainable for decades to come.

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