By John McClaughry
A year ago the Global Warming Solutions Act created a 23-member Vermont Climate Council to develop a Climate Action Plan strict enough to reduce carbon dioxide emissions 80% over the next 28 years.
Such a dramatic reduction could conceivably be achieved by Plan A: an increasingly burdensome carbon tax on gasoline, diesel, heating oil, natural gas and propane. A heavy enough tax burden would make those fuels too expensive for many Vermont motorists, homeowners and businesses, and with enough subsidies they would switch to electrified transportation, home and business heat pumps, wood heat, and methane from landfills.
The increased electricity demand would be met by conservation and renewables like hydro, wind, solar, and wood burning plants, backed up by purchases from the New England power grid. The carbon tax would bring in up to $500 million a year that the Legislature could use to subsidize home weatherization, electric vehicles, and lots and lots of wind and solar projects.
The carbon tax backers acknowledged that the Legislature could use the carbon tax proceeds for Medicaid, highway maintenance or retirement fund shortfalls instead of climate subsidies, and that a large chunk of the tax revenues would have to be used to pay off the lower income and working families stuck with tax-inflated motor fuel and home heating bills.
But the carbon tax forces, spearheaded by the Vermont Public Interest Group (VPIRG), couldn’t get a two-to-one liberal House and Senate to even vote on a carbon tax bill. Not only that, but Gov. Phil Scott repeatedly opposed a carbon tax as a regressive burden on Vermonters and a crippling blow to Vermont’s economy struggling to emerge from the COVID pandemic.
Enter Plan B: the Transportation and Climate Initiative (TCI). This 12-state plan would levy increasing motor fuel taxes on motorists and businesses, and rebate an unspecified fraction of the take back to the participating states to pay for the usual climate subsidies.
When this plan appeared in late 2019, three New England governors indicated support for it. New Hampshire’s Chris Sununu rejected it out of hand as “a financial boondoggle” and the governors of Maine and Vermont opted to watch and listen.
But as gas prices shot up in late 2021, one by one the three supportive New England governors ran away from TCI, abandoning its motor fuel tax. The Vermont Climate Council, whose Action Plan is due out this week, reportedly still hopes that TCI can be dragged out of the grave and its motor fuel taxes put into effect — in an election year when rising fuel prices are a hot issue among the voters.
Among the council’s new ideas is the Clean Heat Standard, developed by council member and former PUC Chair Richard Cowart. The document acknowledges that carbon taxes high enough to drive down the CO2 emissions to levels required by the GWSA won’t prove practical. But all is not lost.
Enter Plan C: The state will simply force fuel distributors (or their upstream wholesalers) to persuade their customers to make “heat switching choices,” such as replacing petroleum heat with electric heat pumps.
The fuel dealers who will deliver less and less of their product will need to reinvent themselves as purveyors of carbon-free amenities, for which they will be given “clean heat credits.” Bureaucrats at the Public Utility Commission will require the fuel dealers to turn in sufficient credits to satisfy mandatory PUC quotas. Failure to turn in the required credits would lead to “non-compliance payments” (i.e. fines). Workers no longer processing and delivering heating fuel can find new jobs installing insulation, heat pumps, solar panels and wind turbines.
Unlike a carbon tax and TCI, the Clean Heat Standard doesn’t promise to generate any significant revenue for the state to distribute. It just mobilizes the state’s power to drive down and ultimately prohibit the sale of an enviro-disfavored product.
The Climate Council will (irrationally) cling to the hope of resurrecting the revenue-producing TCI. It will also likely propose banning the sale of internal combustion vehicles by 2035, giving out a billion dollars worth of free home weatherization over the coming eight years, and requiring the utilities to deliver discounted or free electricity to those lucky subsidized electric vehicle owners at the expense of other ratepayers.
And then there’s Plan D: If all this doesn’t succeed in driving CO2 emissions down to the GWSA-mandated level by 2025, the Conservation Law Foundation can go to court to get a judge to tell state agencies (and legislature?) to act ever more aggressively to achieve that result.
Vermonters can weigh in on this collection of proposals during the coming legislative session, and on Election Day 2022.
John McClaughry is vice president of the Ethan Allen Institute.