c. ross- research paper- carbon fee
TRANSCRIPT
Nate NelsonResearch PaperC. Ross Environmental Service PracticumProfessor Ginger5/13/16
Mitigating Carbon Emissions In North America
Introduction
One of the largest issues that Vermont faces today is the amount of carbon dioxide
emissions released into the atmosphere. The four sectors of energy consumption that
contribute to these emissions are commercial, residential, industry, and transportation.
Transportation is the biggest source of emissions in the state. As much as we need to focus
our time and efforts on reducing emissions from transportation, I believe we need to start
by structuring a carbon fee program that appeals to the public interest. We need to show
that a carbon fee will benefit the general public while holding companies that import fossil
fuels accountable for their actions. In brief, we need to recapture the externalized public
cost of private benefits. The basis of a carbon fee is the “polluter pays principle,” which was
incorporated into international law at the 1992 Rio Summit Principle Sixteen of the
Declaration on Environment and Development (UN, 1992). It is a basic economic idea that
oil companies pay the social and environmental costs of polluting.
Multiple places within North America have successfully implemented a version of a
carbon pricing. These include British Columbia, California and Quebec, Boulder, Colorado,
and the Regional Greenhouse Gas Initiative (RGGI) states in the northeast region of
America. In this paper, I summarize key aspects of these carbon-pricing programs. I also
describe Vermont’s energy plans and goals that have been implemented, in order to gain a
broader perspective for what can be amended to the proposed carbon fee bill, H.412. I also
consider proposals from the Vermont Climate Change Economy Council’s “Platform of
Action” report. Given the two carbon pricing, and three energy efficiency programs
available through home utility products, along with the established energy plans within
Vermont, I believe a carbon fee bill has a future in Vermont legislation.
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British Columbia’s Revenue Neutral Carbon Program
As of 2008, British Columbia was the first territory in North America to successfully
implement a revenue-neutral carbon tax as part of their Climate Action Plan (CAP). It is
mandatory by law that all the money collected from the tax is to be recycled back into the
province’s economy in the forms of tax rebates. To ensure this, the Ministry of Finance is
required by law to annually prepare for the Legislative Assembly a three-year plan for the
recycled revenue, and how it will be balanced with the other tax reductions (British
Columbia CAP, p.12). How this tax works is that the amount of greenhouse gases emitted
when a unit of fossil fuel is burned depends on how much carbon dioxide is actually
present in the fuel. This allows for a generally simple administrative process for regulating
the carbon fee because it is applied and collected at the wholesale price. This makes it
regulated about the same way that motor fuel taxes are applied and collected in Canada.
The only exception here is natural gas and propane, which is regulated at retail price, the
same way as their sales taxes are (British Columbia CAP, p.13). In 2008 the tax rate started
at a base level of $10 per ton of carbon dioxide equivalent emissions, and then increased by
$5 per ton each year for the next four years until it reached $30 per ton in 20121 (British
Columbia CAP, p.13). Gradually increasing the tax rate, gave people and companies time to
reduce make adjustments to their fossil fuel consumptions.
British Columbia’s commitment to a carbon-neutral public sector applies to all
government ministries and agencies, educational institutions, health authorities,
businesses, and crown operations. It requires all public establishments to report the
baseline amount of greenhouse gas emissions they produce in a “business as usual”
scenario, reduce their emissions as much as possible, and offset the remaining emissions
(British Columbia CAP, 22). This reported information is made public, as are future plans to
become one hundred percent carbon neutral. The budget allocated for this program is $100
million, with the majority of the budget appropriated to efficiency upgrades and incentives
to help make buildings more sustainable. The commitment also requires that all owned or
leased buildings be LEED certified by a gold or equivalent standard (British Columbia CAP,
22). Through these commitments British Columbia has taken over the years, it has paid off
1 Amounts are in Canadian currency
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in terms of reduced carbon emissions with a revenue-neutral policy. However, for a carbon
pricing program to be successful it does not have to be based on a revenue-neutral policy.
California and Quebec Cap and Trade Linkage System
A system that is not revenue-neutral but has the same end goal of a carbon fee
program is the California-Quebec cap and trade linkage system. The term “linkage” is
defined by the Environmental Defense Fund as the “approval of compliance instruments
from an external greenhouse gas emission trading system to meet compliance obligations…
and the reciprocal approval of compliance instruments issued by California to meet
compliance obligations in an external program” (Carbon Market California, 2014, p.26).
The linkage system was established by the California Air Resources Board and began in
2014 under the Western Climate Initiative, which is a “non-profit corporation formed to
provide administrative and technical services to support the implementation of state and
provincial greenhouse gas emissions trading programs” (Carbon Market California, 2014,
p.11, 27; WCI, INC, 2014). The board of directors for the Western Climate Initiative includes
officials from Quebec, British Columbia, and the state of California.
The purpose of the linkage system is to expand the carbon market to provide
regulated entities greater flexibility in accomplishing their compliance goals in the most
cost-efficient way. Activities of the Initiative include developing a compliance system to
track allowances and offsets certificates, administering allowances, conducting market
monitoring of allowance auctions, and allowance and offset certificate trading (WCI, INC,
2014). The linkage system can open up the market to initiate other possible linkage
systems to be implemented. This could generate greater environmental and economic
benefits all over North America (Carbon Market California, 2014, p.9).
To ensure the success of the cap and trade system California enacted the Global
Warming Solutions Act (AB 32). This act established the Emissions Market Assessment
Committee, and the Economic and Allocation Advisory Committee to aid in the regulation
development of the linkage system. As well as establishing these committees, California
conducted research to gather lessons from the European Union Emissions Trading System,
and the Regional Greenhouse Gas Initiative, which is currently implemented in nine of the
northeast states in America (Carbon Market California, 2014, p.11).
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California’s cap and trade program works by setting a stringent cap at the state
level. The cap tells independent company owners their carbon emission allowance for the
calendar year to be in compliance with the mandated regulation. The allowance is
distributed to the regulated companies within the state, which are either given for free or
sold through an auction (Carbon Market California, 2014, p.12). If a company does not
reach compliance then penalties can and will be awarded to the companies that release a
higher amount than their cap allows them to. Each company is allowed to purchase
additional allowances external to the ones they receive for free from another companies in
order to be in compliance. This can incentivize companies to invest in emission reduction
technology. That is because a company is allowed to sell unused emission allowances; they
can make an extra profit from other companies while saving money through energy
efficient technology. One of the reasons companies may be motivated to do this is because
at the end of the calendar year, they have give back any leftover allowances; they are not
allowed to have allowances carry over to the next year (Carbon Market California, 2014,
p.12).
The amount of allowance in California’s cap and trade program is designed to
decline every year. From the first to the second year the program was implemented the cap
tightened by about 3 Million metric tons of emission, or 1.9% (Carbon Market California,
2014, p.12). In 2015, when suppliers of transportation fuels, natural gas, and various other
fuels were brought into the regulation, it regulated up to 1.5 times more of carbon
pollution. After these new fuel sources got mandated into the statute, the cap began
tightening by approximately 12 million metric tons of emissions each year, which is an
average annual decrease of 3.3% (Carbon Market California, 2014, p.12). The cap will
continue to decrease as the years go by, making it harder for companies to be in
compliance with the regulation. This will push the larger companies to make changes with
their infrastructure and transition to “best available practices” in order to reach the state
carbon levels.
Regional Greenhouse Gas Initiative
A regional program that multiple states within the Northeast region of America have
implemented is called the Regional Greenhouse Gas Initiative (RGGI). It is the first market-
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based regulatory program in the United States that aims to reduce greenhouse gas
emissions from the electricity power sector. The nine states that are apart of this program
are Connecticut, Delaware, Maine, Maryland, New Hampshire, Massachusetts, New York,
Rhode Island, and Vermont (rggi.org/Design). RGGI is a cap and trade model that works by
states selling the majority of their emission allowances through auctions; this is done very
similarly to the cap and trade program between California and Quebec. If you recall some of
the roots in which the linkage system is built upon, you will recognize that it comes from
the RGGI model. The proceeds from the cap go towards investments in energy efficiency,
renewable energy, and various consumer benefit programs aimed to spark innovation in
the clean energy economy, while producing employment opportunities in the RGGI states
(rggi.org/Benefits).
How the RGGI program works is each individual state is composed of Carbon
Dioxide Budget Trading Programs that set emission limits for electric power plants, issues
the carbon allowance, and establishes participation in the regional allowance auctions. This
is policed through independent regulations that are based on the RGGI Model Rule of 2013
and the changes that have occurred within the rule over the years (rggi.org/Design). For
Vermont specifically, the Vermont Public Service Board and the Vermont Agency of Natural
resources are responsible for participating and regulating the RGGI program under statute
30 V.S.A section 255. This title mandates how to implement the allowance auction
provisions and regulations under RGGI. More specifically, under 30 V.S.A section 255, states
that the Board must “establish a process to allocate the carbon credits that Vermont
receives as part of its participation in RGGI” as well as “authorize to appoint a Trustee or
Trustees to receive, hold, bank, and sell tradable carbon credits under this program”
(Vermont Public Service Board, 2016). Pursuant to 30 V.S.A section 225, under statute 30
V.S.A section 209(d)(3) an electric energy fund was created to deposit all of Vermont’s
auction revenue, in order to provide funding for a variety of services and incentives that go
towards improved building infrastructure and efficient heating systems. The purpose of
this is to create jobs while saving Vermonter’s money on home heating costs, with the end
goal of reducing greenhouse gas emissions (Vermont Public Service Board, 2016).
The benefits of a RGGI model is more than clear on the amount of carbon dioxide it
has helped mitigate over the years. RGGI as a whole has mitigated over 40% of the carbon
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dioxide pollution since 2005, while at the same time the northeast regional economy as
grown by a total of 8% (rggi.org/Factsheet). In April 2015, RGGI released a report called
“Investment of RGGI Proceeds through 2013” that tracked the investment of the RGGI
proceeds and the benefit it gave the region over the past two-three years through the
various programs statute 30 V.S.A section 209(d)(3) has helped implement. The report
estimates that more than $395 million have been saved in terms of energy bills but lifetime
savings could be as high as $2.9 billion to the 3.7 million households and 17,800 businesses
that are currently participating in the programs. In terms of energy and emissions, to date
1.3 million short tons of carbon dioxide have been avoided which is equivalent to taking
245,000 cars off the road, 1.8 million megawatt hours have been saved, as well as 2.9
million mmBTU’s saved. In terms of creating employment, to date 3,700 workers have been
trained in the field of clean and renewable energy (rggi.org/Benefits). All in all more than
$1 billion in RGGI auction revenue was invested in programs that revolve around energy
efficiency, greenhouse gas abatement, direct bill assistance, and renewable energy. The
largest sum of money continues to be allocated towards energy efficiency because it has
proven to be the one of the most cost effective ways to reduce carbon emissions while
boosting the economy in a positive direction (rggi.org/Benefits). In addition to the energy
and emissions mitigated in terms of numbers, investment in energy efficient systems can
provide benefits to people who do not participate in the programs. As the overall energy
demand decreases it will lower the wholesale price of electricity saving people money on
their energy bills overtime. This can provide additional economic benefits in local regions
because instead of sending those dollars out of state or to a large corporation, they can be
spent within the local economy (rggi.org/Factsheet).
Boulder, Colorado’s Climate Action Plan
After looking at carbon reduction programs on a regional level, it is time to see what
independent states are doing in terms of mitigating pollution. An example of this through
Boulder Colorado’s Climate Action Plan with their strong carbon fee they implemented in
2007. The revenue from the fee Boulder generates is allocated towards city funded
programs and services that are designed to reduce local greenhouse gas emissions by
encouraging people to reduce energy waste, save money on costs of appliances and utilities
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overtime, and to minimize reliance on external energy companies (Climate Action Tax,
2016). The fee levied is based on the amount of electricity city residents, commercial and
industrial businesses consume. This has approximately generated just under $2 million and
has lead to avoid 50,000 tons of emissions between 2007 and 2015. Boulders overall goal
through their fee is to reduce emissions by 80% before 2050 (Climate Action Tax, 2016).
This goal has kept their level of pollution generally consistent despite a growth in
population, jobs, and economic activity.
The city allocates the revenue in four different sections being residential programs,
market innovations, climate commitment, and commercial programs. Within these sections
a variety of effective efforts have been made to meet their goal. Currently, a portion of the
2015 revenue is being allocated to a program called EnergySmart, which is an energy
advising services and rebates for residents. In this program over 7,500 housing units have
been involved since 2010, with about $1.5 million in rebates paid back to the people, as
well as almost $11 million in private investments have been made (Climate Action Tax,
2016). To put it in terms of electricity savings, it is like taking 1,325 cars off the road since
the start of the program through September 2015 (EnergySmart Progress Report, 2015).
Another program that has been successful is SmartRegs, which states energy efficiency
requirements for rental properties that residents and landlords have to be in compliance
with by December 2018. SmartRegs passed their initial “Stretch goal” by reaching 3,000
compliant rental units between 2014 and 2015, and currently 74% of all units evaluated
are in compliance with efficiency requirements (Climate Action Tax, 2016; SmartRegs
Progress Report, 2015). The electricity savings from this program is equivalent to taking
647 cars off the road each year (SmartRegs Progress Report, 2015).
Green Leasing
A part of EnergySmart and SmartRegs is this component called “green leasing,”
which is the process of “integrating green elements into lease agreements between the
landlord and tenants” (Energysmartyes.com). Parts of the negotiations that are
incorporated into the lease are resource and energy efficient building designs, equipment,
and operations. The main purpose of the “green lease” is to be in an agreement that, “it is in
their [landlord and tenant] mutual best interest that the buildings and premises be
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operated and maintained in a manner that is environmentally responsible, fiscally prudent,
and provides a safe and productive work environment” (Energysmartyes.com/greenlease).
In the “terms and conditions” section of the lease it lists multiple aspects both
parties agree upon to reduce their environmental impact. For instance, the section
“Environmental Performance Objective” states that both parties are to give reasonable
efforts to minimize direct and indirect energy consumption and greenhouse gas emissions,
water consumption, the amount of waste they produce, and negative impacts regarding
indoor air quality and around the premises of the property. Another section called “Energy
Saving Improvements” states that the cost of any capital investments made by the landlord,
such as improvements with utilities, can be included in the “operation costs” of the housing
lease agreement. The costs of the improvements will be paid off over the minimum period
acceptable for federal income tax purposes at the current market rate, which is determined
by the Landlord’s accountants. The next aspect of the lease called “Utility Providers” says
that if the building requires more than one service provider than the landlord as the right
to make a judgment call on whom to hire. To make this decision they take account for the
environmental impacts of each alternative provider as well as the cost of service. By letting
the landlord make the decisions of who to hire, it keeps it consistent and forms exclusive
arrangements for long-term partnerships. The next section called “Environmental
Performance Regulations” states that the landlord has the right to adjust or fully change the
service provider in order to be in compliance with the mandated laws, rules, or regulations
they are facing. This covers the landlords liability of maintaining the compliance level if the
current tenant does not agree with the new decision the landlord has to make
(Energysmartyes.com/greenlease). It is generally the whole point of the lease to have the
landlord and tenants on the same page because they both want to cut down on energy
costs, while cutting down on carbon emissions at the same time. There are other terms and
conditions listed in the “green lease” but these are generally the important ones in relation
to utilities and cutting down on energy consumption. An implication to the “green lease” is
the potential for rent prices to increase. This will make it harder for low-income families to
be able to afford living in these rental units that are compliance under SmartRegs and
EnergySmart.
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Pilot Programs
In addition to the previous programs, Boulder has created pilot projects aimed at
sparking market innovations and local renewable energy generation. For instance one of
the projects is the “Boulder Energy Challenge” which is a grant program that provides
$300,000 to fund innovative solutions to cut emissions (Climate Action Tax, 2016). The
Climate Action Tax revenue funds five to ten projects, and will range from $10,000 to
$100,000 per project depending on the application proposal you submit. Some of the past
projects the grants have been awarded to are the Boulder Housing Partners: Affordable
Housing Energy Empowerment and Evolution7 Labs: Solar-Plus-Storage Demonstration
Project (Boulder Energy Challenge, 2016). The success of the Climate Action Tax in
generating approximately $1.8 million each year is the reason why Boulder, Colorado has
been able to cut down on level of emissions released since the start of the program
(Boulder Energy Challenge, 2016).
Vermont Energy Plans and Goals
After looking at what other states and regions in North America have implemented
in terms of reducing carbon emissions and mitigating energy costs, it is time to narrow in
on what Vermont is doing as a state to reduce energy consumption. Luckily for Vermonters,
we have energy plans and goals we are trying to accomplish to reduce our carbon footprint
in all of the four energy sectors noted earlier in the paper. For instance, the 2016 Vermont
Comprehensive Energy Plan, developed by the Vermont Department of Public Service in
collaboration with other agencies, provides a guideline-template of solutions to achieve
Vermont’s goal of using 90% renewable energy by 2050. The main focus of the 2016
energy plan is to “provide a framework to advance our goals, along with specific plans and
recommendations for action by the public and private sectors” (Vermont Comprehensive
Energy Plan, 2016, p.2). The goals to which this statement refers are: to reduce total energy
consumption per capita by 15% by 2025, and by more than one third by 2050; to meet
25% of the remaining energy need from renewable sources by 2025, 40% by 2035 and
90% by 2050; as well as the end-use sector goals by 2025, which is 10% renewable
transportation, 30% renewable buildings, and 67% renewable electric power (Vermont
Comprehensive Energy Plan, 2016, p.2). Solutions that this report proposes to meet these
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goals include energy efficiency with home utility products through education, regulation,
and incentives.
Strategies for Implementation
The comprehensive energy plan describes four types of strategies in order to
promote change to help reach the energy goals noted above, these being market-based
policies, information and access, strategic investment, and code and standards (Vermont
Comprehensive Energy Plan, 2016, p.7). The market-based policies take an incentive
approach to establish a new market, or reconfigure the pricing in an existing market to
promote change. Some examples of these policies are cap-and –trade programs, renewable
portfolio standards, and carbon fees, which is discussed earlier in the paper. The
information and access policies serve to educate consumers about efficient markets and
products so they can create their own incentives by having information provided to them,
technical assistances, or access to capital, in order for them to make effective decisions on
the lowest lifecycle costs. This approach gives the consumers the knowledge they need to
make the best cost-efficient purchases with utilities and other household products in order
to save money on electricity. Strategic investment is a long-term goal approach that aims at
changing early adopted programs and technology, through research and development, to
build upon markets aimed to achieving Vermont’s energy goal by reducing the prior costs.
The codes and standards strategy is a regulatory-based approach that aims to decrease the
loss of efficiency within buildings, such as companies and households, in order to reduce
the amount of energy that is consumed per capita. This approach is more applicable to
long-lived products such as toilets and refrigerators, and other infrastructure like heating
units that with the right technology can save a consumer a lot of money over the years.
Great examples of this strategy are the SmartRegs and EnergySmart programs that have
been implemented in Boulder, Colorado. If we incorporate these four strategies into
programs such as a carbon fee, then I believe it can reduce the amount dirty energy we use
on a large scale, while putting money back in the hands of the consumers.
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Platform of Action
The Vermont Climate Change Economy Council developed a report and action plan
for a more sustainable energy economy. In this report they established a “platform of
action” which lists seven steps to advance economic activity. In step number five titled
“Carbon Pricing,” the report addresses various provisions and considerations that the
council encourages the Vermont legislature to investigate. The first aspect is to ensure
equity throughout Vermont. The report identifies the concern that putting a price on
carbon could negatively affect low-income people. A provision to address this is to provide
an offset for any regressive burden that may affect low-income families and those
vulnerable to the low-income tax rebates, and to ensure a smooth transition for these
people (VCCEC Report, 2016, p.30). Providing an offset could balance the negative effects
that carbon fees will have on Vermonters, farms, manufacturers, and regional commerce
around the border areas of Vermont. For example, this would help support local
businesses while providing benefits to the local people through investments with energy
efficient products.
Another consideration the Council proposes is to leverage capital through a revenue
bond against the projected carbon pollution fee in order to gain immediate economic
benefits within the first year of the implemented program by expanding opportunities with
job creation and efficiency programs (VCCEC Report, 2016, p.30). There is five proposed
ways in which a carbon fee could create job and economic opportunities. These being
residential and business rebates, transportation shifts, expand small business
development, and farm and forest enterprise support. The residential rebate is a tax rebate
that gives incentives for clean energy development for single and multi-family homes,
which could be coordinated by the Vermont Comprehensive Energy Efficiency Partnership
and/or the Climate Economy Finance Collaborative (VCCEC Report, 2016, p.31).
The Vermont Comprehensive Energy Efficiency is a proposed partnership between
Efficiency Vermont, Burlington Electric, and Green Mountain Power, which focuses at
advancing innovative new efficiency services and initiatives with both public and private
companies. The goal is to advance research and development to identify and implement
new key ideas that go from “innovation to market transformation” while providing a stress-
free and consistent change for their customers (VCCEC Report, 2016, p.22).
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The proposed Clean Energy Finance Collaborative would be led by Efficiency
Vermont through the Vermont Energy Investment Corporation, in collaboration with
various utility companies, banks, and the Vermont Economic Development Authority. This
collaboration aims to simplify making rational decisions regarding cost-effective
investments for home and business weatherization and energy projects. The Governor and
the Vermont state legislator would appoint the collaborative with an executive leader, a
board, and funding by the state (VCCEC Report, 2016, p.28). The business rebates would
give incentives for them to make the changes they need to invest in efficiency
improvements and to help develop new energy sources to be more sustainable by
supporting them financially. For the business development, the revenue generated by the
carbon fee could be invested into small business opportunities within the climate economy
sectors, which are led by the Climate Economy Network Development Initiative (VCCEC
Report, 2016, p.31). The purpose of the proposed developmental initiative is to “invest in
the economic future by strengthening the network of businesses that reduce our need for
carbon-based energy sources and the enterprises that support those businesses” (VCCEC
Report, 2016, p.24). This initiative will be an expansion of the Clean Energy Development
Fund and will driven through statutory authority and investment capacity (VCCEC Report,
2016, p.24). The transformation shifts would be in the forms of tax credits or incentives
that support the change to electric vehicles, advancement with public transportation, and
encourage shared mobility. The farm and forest enterprise support encourages a transition
to sustainable management on farms through smart tillage practices, manure digestion and
energy development, composting, as well as other natural resource practices that prevent
the use of fossil fuel price increases that may potentially effect their economic viability
(VCCEC Report, 2016, p.31). Through the proposed provisions and considerations the
Council has suggested through offsets and rebates, along with the various agencies it has
proposed to create, the carbon pricing “Platform of Action” has provided significant
potential for the state of Vermont to implement a carbon fee, while making job creation and
economic opportunities a priority.
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Implications for the Next Steps in Vermont
After looking at the success that British Columbia, California, Quebec, and Colorado
had over the past decade, along side Vermont’s ambitious energy and economy goals they
have set, I believe there is a bright future for a carbon pollution fee program. The resources
are generally there for Vermont to implement or join forces with an already existing carbon
fee model. One way could be joining the cap and trade linkage system with California and
Quebec, and/or amending the RGGI program to take on other sectors of the energy
industry such as transportation and heating because of how similar the models are to each
other. A second way could be to create their own “Climate Action Plan” at the state level
that is similar to Boulder, Colorado’s while implementing programs similar to SmartRegs
and EnergySmart, and/or by forming new agencies such as the Vermont Climate Change
Economy Council has proposed in their “Progress for Vermont” report. In addition Vermont
could combine their Weatherization Assistance Program (WAP) with SmartRegs and
EnergySmart because they all serve to accomplish the same goal. This could enforce the
strength of the WAPs by expanding the role it plays. Either one of these options included
aspects from the Vermont Comprehensive Energy Plan in terms of how to accomplish the
states energy goals through market-based policies, information and access, strategic
investment, and codes and standards. Same with the Vermont Climate Change Economy
Council in terms of it’s considerations and provisions with rebates, offsets, transportation
shifts, and by expanding small and local businesses. Either option you look at is aimed at
creating employment opportunities, boosting the economy, and reducing the amount of
carbon emissions that is being released.
Policy Prospectus
In relation to the current H.412 bill that was introduced and then not passed, I
propose to change a specific aspect to the bill as introduced. What I am proposing to change
is the offset revenue percent from a 90-10% split to a 70-30% split that transitions over
time. Originally the 90% was going to be given back to Vermonter’s in the form of tax
rebates and the other 10% was going to be allocated to the Vermont Energy Independence
Fund (H.412 As Introduced, 2015). The reason I propose the shift is to allocate more money
for the home weatherization fund, as well as other programs that incentivize a transition to
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more energy efficient products and utilities. The revenue split will start at 90-10% the first
year but then the split will transition incrementally and gradually over the next 10 years,
along side the proposed tax increase. By starting with this percent split it will prove to the
people that they will actually get their money back by refunding the dividend through an
in-hand check delivery system. Then on the 3rd year move to an 85-15% split and transition
to a tax filing process. This would only be leveraging existing bureaucracy because
collecting and returning the money will still be done through the already implemented tax
department; it just may require for a few more personnel to be added to the pay roll, which
is not a negative aspect because it just calls to hire more people within the agency. In the 5th
year, the rate will move to a 80-20% split, then a 75-25% split on year 8, and finally end at
a 70-30% split on year 10, the same time when the tax rate will be $100/ton of carbon
dioxide. The issue with this percent change is that it will decrease the amount of tax
revenue people will be receiving directly back through the in-hand delivery system and
then the tax filing process. While a lot of policy is about persuading public opinion to
enhance change, the split I proposed may be less attractive to the general public because it
is aimed to benefit low-income households.
In H.412, the original amount of money allocated for weatherization programs is $8
million but with this new revenue split I propose to increase the fund by a total of
approximately $1.7 million at a flat rate each year. The reason for choosing the increase of
$1.7 million is because at a compounded rate with the increase from 10-30% over 10 years
that $8 million would switch to $9.7 million. At the end of the ten-year period, a grand total
of $87,412,550 will be allocated to the home weatherization fund, but like I said before, it
will level off at that ten-year period a constant amount of $9.7 million. The purpose of this
is to jump-start the home weatherization programs. Currently 20% of energy that heats
Vermont homes is renewables but the state is trying to increase that number to 30% by
2025. To help reach this goal Vermont wants to weatherize 80,000 homes by 2020, while
installing 35,000 cold-climate heat pumps by 2025 (Vermont Comprehensive Energy Plan,
2016, p.8). This will significantly help the transformation from building heat to renewable
energy within households and industries.
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Conclusion
If a carbon fee program were to be implemented in Vermont, it would open the
doors for a clean and bright future. The numbers listed above go to show just how much we
could improve our low-income infrastructure, while transitioning the state of Vermont to
an all around higher quality of life. Granted there is a lot of work that needs to be done with
our energy industry, but if we could adopt a similar carbon fee model as California, Quebec,
or British Columbia it would be a huge step forward. This is a step that Vermont needs to
take, and we need to take it now. In the words of the current Speaker of the Vermont House
of Representatives, Shap Smith, “We [Vermont] need to have carbon pricing, no two ways
about it but is a regional approach better than Vermont doing it alone?” Speaker Smith
went on to say that he thinks Vermont trying to implement it alone is not the best option.
Senator Virginia “Ginny” Lyons also had a similar perspective on this topic as well. She said
that a regional approach for a carbon fee could be a better option than Vermont trying to
implement a program alone. Senator Lyons said you could write a bill for all of the RGGI
states and see if it passes through any of the committees. Whichever ones it does pass
through, then you could implement it those states. Although these perspectives come from
creditably people within the Vermont Statehouse, it is just two perspectives out of a whole
municipality. Either way, through the examples that I have provided about various
programs in North America, it is proven a carbon fee can be done either on an individual
level or as a combined effort.
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References
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