The 2019 State Budget passed last June
included money for a study on the costs and benefits of various
options to reduce Vermont's carbon emissions in response to climate
change. Vermont has several targets for greenhouse gas (GHG)
reduction that have been set during the Douglas, Shumlin and Scott
administrations. In 2005 Vermont passed a law setting a target of 37%
reduction from 1990 levels by 2012. In 2015 Vermont joined the
conference of New England Governors and Eastern Canadian Premiers in
setting a target of reducing regional GHGs by 45% from 2005 levels by
2030. In 2017 Governor Scott joined the U.S. Climate Alliance which
set a taget of GHG reduction of 26% below 2005 levels by 2025. A
report from the Vermont Department of Environmental Conservation
released last July showed that Vermont's GHG emissions are currently
16% above 1990 levels,
mainly due to transportation and heating. Our electric generation
emissions, however, have decreased extensively to the point that they
are now about 60% carbon-free and will improve even more in years to
come. Transforming our energy use from fossil fuels to electricity
will reduce total GHG emissions.
Vermont's Joint Fiscal Office
commissioned the firm Resources for the Future (RFF), a non-profit
research institution in Washington, DC, to conduct the study. RFF
looked at four options: the Western Climate Initiative (WCI)
cap-and-trade system, the ESSEX Plan introduced in Vermont last year
($.05/gallon to $.40/g after 8 years), a medium carbon pricing plan
($.30/g to $.50/g by 2030), and a high carbon pricing plan ($.60/g to
$1.00/g by 2030). All of the options were assumed to be revenue
neutral in their model, that is, all revenues would be returned to
taxpayers either through a dividend or through tax relief. Their
models took into account the cost/benefit to consumers, the cost to
business, estimates of carbon reduction, and the net benefits of
revenue allocation and associated health benefits. The impact on
consumers was also differentiated by income and geography.
A major conclusion of the study is that
transportation and heating fuel uses are relatively insensitive to
moderate changes in pricing. People changed their driving habits and
paid more attention to their thermostats when fuel was close to
$4.00/gallon a couple of years ago. Last year's increase of
$.50/gallon for gasoline back in May did little to change driving
habits; most people just absorbed the increase. The conclusion was
that carbon pricing alone at the levels being considered would not be
enough to reduce emissions. However, if carbon pricing were combined
with non-pricing policies such as financial assistance for
weatherizing homes and incentives for purchasing electric vehicles
(used and new), then the targets were achievable.
None of the options would negatively
affect Vermont's economy more than a few tenths of a percent overall.
However, fuel-intensive businesses would suffer reductions while
service related businesses would grow. The economic welfare of
families varied by income under all the plans with the lowest 40%
benefiting (60% for the ESSEX Plan) and the upper 40% of income
earners losing from $15 to $250 per year. Urban dwellers would also
be better off than rural folks.
The study looked at carbon pricing in
Vermont alone, not at a regional level. Governor Scott has agreed to
join other New England and Mid-Atlantic states in studying a regional
cap-and-trade plan called the Transportation Climate Initiative. The
plan will be designed by the end of the year, after which Vermont can
decide whether to join TCI. Scott also has included some money for
weatherization and electric vehicle rebates in his 2020 budget. It is
imperative that we take concrete steps sooner than later to drive
down GHG emissions in Vermont because it will only get more expensive
the longer we wait.
I welcome your emails
(myantachka.dfa@gmail.com),
phone calls (802-233-5238), or in person contacts.
