The carbon tax is back again, but with a new name.
Local environmentalists unveiled the “Essex Plan” at the Energy Action Network annual meeting at Champlain College last week in Burlington.
The tax proposal, endorsed by Seventh Generation, focuses on adding costs to carbon-based fuels and transferring the tax revenue to electric utilities. It was promoted Saturday at the Climate Action Through Carbon Pricing event hosted by the Vermont Public Interest Research Group.
As envisioned by the plan’s 13 authors, the Essex Plan will “create jobs, attract new businesses, spur strategic electrification and provide the cleanest electricity at the lowest rates in New England.” The authors say the plan will lower utility bills “for every Vermonter and Vermont business” and offer refundable rebates for low-income and rural Vermonters.
According to the plan, carbon costs would increase over time, starting at $5 per ton of CO2 in 2018 and increasing by $5 per ton annually. The goal is reach $40 per ton, or “the social cost of carbon” — an estimate of damages caused by greenhouse gas emissions as determined by the U.S. Environmental Protection Agency.
As envisioned by its authors, the plan proposes adding 32 cents per gallon of gasoline, 40 cents on diesel and home heating fuel and 24 cents per gallon of propane and natural gas, phased in over an eight-year period.
Mark Curran, founder and co-owner of Black River Produce based in North Springfield, is one of the authors of the report. His business provides local produce to schools, restaurants and hospitals.
“The one downside is we’re real energy hogs,” he said. “We have a fleet of 50 diesel trucks that are out there every day, and we have these big 60,000 square-foot coolers that require refrigeration, so our carbon footprint is considerable.”
To mitigate their carbon output the company installed 3,000 solar panels on their roofs to cover 80 percent of their electric. They also installed electric vehicle chargers for their employees.
Curran said his company made the investment in alternative energy back when oil and gas prices were expensive.
“But then all of the sudden oil came way back down and I thought, well, it’s cheaper for us to burn oil than it is to burn wood pellets that are made in Windsor, Vermont, 15 miles away,” he said.
He added that local industry needs a little nudge in the form of a carbon tax to help boost the economy while simultaneously curbing carbon output.
Matt Cota, executive director of the Vermont Fuel Dealers Association, has been tracking carbon tax proposals for years, but with a more critical eye.
“This is yet another version of the same thing we’ve been hearing for the past five years in Vermont, which is, ‘How can we make it harder for people to drive to work in fossil-fuel cars and make it more difficult for people to heat their homes with oil and gas?’” he said.
Cota said shifting the funds to Vermont’s electric utilities is a new approach.
“The idea is, if you are going to replace 200 million gallons of heating fuel in Vermont and 300 million gallons of motor fuel in Vermont, the way they want to do it is by everyone driving electric cars and everyone using electric heat,” he said.
“You’ll be incentivized to use that [electric power], and people who don’t adopt electric cars and heating will be penalized with a financial penalty of up to 40 cents a gallon — that’s what $40 a metric ton equals.”
Some electric cars have been selling in Vermont at nearly one-third their regular retail price, courtesy of a $7,500 federal tax credit and additional rebates from the manufacturer.
Cota said shifting to electricity has cost issues.
“Electric resistance heat [conventional electric heaters] is the most expensive way to heat your home, there’s no question about it,” he said.
While newer cold-climate heat pumps are more efficient, Cota said, they still don’t compete with low-cost heating fuels.
Rob Roper, president of the Ethan Allen Institute, a free-market think tank, criticized the Essex Plan.
“It’s a transfer of wealth from one industry to another,” he said. “And I think that if you look at it, what you are doing is you are subsidizing higher income people, because clearly what they are saying that they want to do in that report is they want people to buy more electric cars and they want people to buy more heat pumps.”
Roper added that he thinks many Vermonters can’t afford to switch from conventional vehicles to high-priced electric cars as envisioned in the plan.