By Guy Page
On Tuesday, UVM trustees agreed to divest its endowment portfolio of fossil fuels, and Gov. Phil Scott committed Vermont to zero carbon-emissions buses and trucks by 2050. In a month or two, the Legislature may approve the Global Warming Solutions Act. The decisions will likely increase the cost of living in Vermont, barring unforeseen technological changes in New England energy generation and delivery.
According to the UVM website, “On July 14 the University of Vermont’s Board of Trustees voted to divest the University’s endowment of fossil fuel investments. It was a unanimous decision and it was in keeping with UVM’s ongoing commitment to sustainability focused policy and environmental research. The decision means that UVM will end new direct investment in fossil fuels. And it will fully divest from public investments in fossil fuels by July 2023.”
A 2017 divestment study commissioned by Vermont Treasurer Beth Pearce reports that fossil fuel divestment ties fund managers’ hands, subtracts blue chip stocks that create longterm value, and does little to reduce carbon emissions. That’s because divestment merely shifts ownership to another buyer. Divestment does not make fossil fuel companies “go away” — it merely allows the divester to wash his/her hands of ownership. But even this act of cleansing purification has a practical climate change downside: no ownership means no more influence on corporate policy. UVM will no longer be able to saunter into Exxon stockholder meetings and demand change.
UVM of course is facing a huge pandemic-related deficit. Its endowment funds ongoing programs, and is the “rainy day fund” of last resort. It’s hard to see how divestment would improve the university’s financial standing. But regardless, the long battle with UVM trustees now won and done, climate activists likely will now turn their attention to the big prize: Vermont’s multi-billion dollar state/school/municipal employee pension funds. In 2017 Pearce and the pension fund representatives fought off divestment tooth and nail on fiduciary grounds.
Vermont’s pension fund has declined in 2020. Rep. Bob Bancroft (R-Westford), a professional economist, wrote to Vermont Daily yesterday: “During 2019, the unfunded liability grew from $4.5 billion to $4.6 billion despite a catch up contribution [from the Legislature]. This was on top of the regular actuarial contribution. It was a banner year for the stock market. I can only imagine what the unfunded liability is today. There are only three ways to address this problem, increase taxes, cut spending or declare bankruptcy. People need to be made aware of how significant this problem is.”
The March, 2020 report for the Vermont State Employees’ Retirement System pension fund shows that the fund value dropped 10.9 percent in the first three months of 2020. The less money in the fund, the higher the unfunded liability. Forced divestment would add to the existing woes of unfunded liability and shaky investment value.
As reported Tuesday, Scott pledged that all new buses and trucks will be zero-carbon emitters (likely electric) by 2050. He said at his press conference 2050 is a long way off and the intent is to drive the industry away from internal-combustion and towards electric. Cost-conscious electric vehicle advocates hope mass production and better tech will reduce price disparity; electric buses now cost $750,000 compared to $500,000 for diesel.
Public transportation is already a drain on Vermont tax revenue, and will become even more if Vermont’s trend towards fare-free riding and expanding routes into rural areas continues. Like college and health care, transportation should be “free,” progressive policy makers say. In practice they shift the cost from the consumer to the taxpayer or other source of public funds.
The multi-state agreement to which Scott pledged Vermont does not yet recommend a “carbon tax.” However, until last year neither did the Transportation and Climate Initiative (TCI), a multi-state agreement to reduce all transportation carbon emissions. Only in its final planning stages did the states roll out a specific scheme forcing gasoline and on-road diesel consumers to pay more at the pump. Until the cost of buying and running electric buses reaches market parity with diesel, that extra cost will need to be recovered somewhere, somehow. And as long as riders stay off the hook, that leaves local, state and/or federal government the likely payers.
The point of all of this climate change advocacy is to transition America from fossil-fuels to renewable power. Transition isn’t necessarily a bad thing. Vermonters breath cleaner air with a lower carbon content due to high-value transition away from coal and oil to natural gas and nuclear power and Canadian hydro power. The pandemic itself has transitioned many Vermonters away from commuting to work — for many of us, perhaps forever.
But consumer-driven transition isn’t what the climate hawks have in mind. VPIRG and other advocacy groups are run by solar/wind renewable power advocates, including many board members who are longtime owners or investors in renewable power companies. For them, low-carbon, low-cost alternatives like nuclear, hydro and natural gas are as much the enemy as oil and coal — perhaps more so because many voters finding these existing, small-footprint plants aesthetically and financially preferable to endless acres of subsidized solar panels. A Senate bill to make Vermont renewable-reliant shows that transition would cost ratepayers $1.2 billion over the next several years.
Read more of Guy Page’s reports. Vermont Daily is sponsored by True North Media.