Proponents: Carbon tax would cut electric bills

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BURLINGTON — A tax on carbon dioxide pollution could bring Vermont the cheapest electric rates in New England, according to a plan presented at an energy conference in Burlington last week.

The carbon tax was among more than a dozen ideas pitched to Gov. Phil Scott's Climate Action Committee at the invitation-only conference.

The carbon-pollution tax is hoped to discourage Vermonters' dependence on fossil fuels, which represents at least two-thirds of the energy residents use, according to the state's Comprehensive Energy Plan.

New England participates in a carbon dioxide pollution cap-and-trade program called the Regional Greenhouse Gas Initiative that took effect in 2009. Detractors say the RGGI program is a major contributor to New England's regionally high electricity prices.

Through quarterly auctions, the RGGI program has priced carbon-dioxide pollution at between $2 and $7.50 per ton, but only for pollution from electricity. The costs of this carbon-pricing scheme are limited to electricity generated inside New England and its proceeds are invested in energy-efficiency efforts in participating states.

The carbon tax proposed Wednesday by Seventh Generation's mission advocacy and outreach director, Ashley Orgain, would drive down Vermont's electricity costs by imposing what would initially amount to a $5 per ton tax on fossil fuels for transportation and heating.

The carbon tax on a gallon of gas would be 4 cents, Orgain said.

The tax would rise by $5 a ton a year until 2025 when it would top out at $40 a ton, which is about what the Environmental Protection Agency estimated in 2015 as the long-term environmental costs from 1 ton of carbon-dioxide pollution. Over the period, the carbon tax on gas would increase to 32 cents.

Under the plan, 100 percent of the carbon-tax proceeds would be applied to Vermonters' electricity bills, resulting in the lowest electric rates in the region.

Environmentalists around the country are pushing for greater electrification as a means to wean Americans from fossil fuels as their primary energy source, since electricity can be generated from less destructive sources including solar panels, wind turbines and dams.

As with other sales-tax schemes, carbon taxes are often criticized for being regressive, meaning that they take a larger portion of income from people with the least money. Carbon tax proponents often seek to offset this effect through some form of rebate, and the plan that Orgain and 12 other Vermonters propose is no different.

The proposal would return 50 percent of the tax proceeds through a straight per-kilowatt rebate that would show up on Vermonters' monthly electricity bills.

Another 25 percent would be divvied up among Vermonters who take home less than 400 percent of the federal poverty level, or a sum of about $90,000 annually for a family of four.

The other 25 percent would be split up between Vermonters earning less than $75,000 a year who live in rural locations, to offset the additional cost of gas they might incur from long commute times.

If the amount of these rebates exceeds a monthly electric bill, Vermont consumers will receive a check from the utility instead of a bill, according to the proposal.

Orgain co-wrote the proposal with Vermont Law School professor David Mears, UVM economics professor Jon Erickson, low-income advocate David Hoxworth, Ben & Jerry's Ice Cream social mission activism manager Christopher Miller and several others.

The plan was unveiled at Champlain College, in a "pitch session" moderated by Agency of Natural Resources deputy secretary Peter Walke and Vermont Council on Rural Development executive director Paul Costello. Both co-chair Scott's Climate Action Commission.

It was one of multiple carbon-pricing schemes proposed at the event, and about 200 attendees voted it the most popular of the 15 proposals presented. Other proposals included wood stove incentives, "renewable fuels" programs, government bonds for home weatherization and electricity-storage facilities.

While Scott's Climate Action Commission has held several open meetings to solicit ideas about how the state can address global warming, the Champlain College event was the first held in Chittenden County.

At climate commission hearings outside Chittenden County, carbon pricing has been seen as a popular mechanism for helping to stem the warming of the Earth's climate.

Some form of intervention is likely needed for in order for the state to meet greenhouse gas emissions goals, which call for dramatic reductions from 1990 pollution levels.

At the first meeting of Scott's Climate Action Commission, the head of the state's air-quality planning section told commissioners that Vermont "is nowhere near" meeting its statutory greenhouse-gas pollution-reduction goals.

Scott told attendees at the conference that Vermonters "have made tremendous progress in reducing our carbon emissions." Erickson, however, said that the state's carbon emissions have actually risen on average by 1.5 percent each year since 1990.

To meet the state's statutory goal of reducing carbon-dioxide emissions to 50 percent of 1990 levels by 2028, Vermonters must reduce emissions each year between now and then by 4.4 percent, Erickson said.

Scott has repeatedly promised to veto or otherwise block a Vermont carbon tax.

Economists say a tax on carbon dioxide pollution is one of the most effective ways to curb emissions.

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