McClaughry: What the decarbonization study found

By John McClaughry

Last summer the Joint Fiscal Office awarded a legislatively-mandated contract to Resources for the Future, a Washington consulting firm, “to analyze the costs and benefits for Vermont of adopting and implementing policies to reduce greenhouse gas (GHG) emissions caused by Vermont’s consumption of fossil fuels.”

John McClaughry

John McClaughry is vice president of the Ethan Allen Institute.

The firm delivered its 114-page report last month. As befits this complicated subject, it discusses a wide range of alternative choices for legislators concerned about meeting the state’s GHG emission goals. Here are 12 questions and answers about the study. The text in quotes is from the study itself.

1. Why did the legislature commission the Decarbonization Study? For five years a coalition of environmental groups has promoted the enactment of a carbon tax. Its purpose is to drive up the price of fossil fuels – gasoline, diesel, heating oil, natural gas and propane – so that consumers will reduce their consumption of these fuels. The resulting reduction in GHG emissions, the advocates believe, will contribute to a global effort to reduce emissions and thereby reduce projected harmful and possibly catastrophic increases in global temperatures. When the legislature repeatedly failed to enact carbon pricing legislation, the coalition in 2018 got the legislature to earmark $120,000 for the Decarbonization Study.

2. Have the CO2 emission reduction goals set in statute in 2006 been met? No. Today Vermont is emitting well above the 2005 GHG emissions goal, and emissions are rising, instead of dropping toward 58 % below the 2005 level by 2025.

3. Would a carbon tax allow Vermont to meet those goals? “Vermont is unlikely to meet its emissions targets with a carbon-pricing-only strategy unless the carbon price is substantially higher than the prices modeled in this study ($19-$77 per metric ton equivalent).”

4. How much revenue would the carbon taxes modeled in the study bring in? “$74.7-$433.8 million a year in annual revenue in 2025”, depending on coverage (motor fuels, natural gas, heating oil, propane) and exemptions (aviation gas, off-road construction fuel, Federal, state and municipal fuel use etc..) (Electricity is not included in the study.)

5. How would those revenues be used? The study discusses three options. First, a lump sum rebate to every household; second, lowering payroll or income taxes; and third, spending the money on state programs, such as renewable energy, weatherization, public transit, and electric vehicle subsidies.

6. Since the carbon tax would raise the price of gasoline and diesel fuel, would a portion of the proceeds go to the Transportation Fund to support highway and bridge maintenance? That could be a legislative choice under the third option, but the study does not take a position on that.

7. Would a large carbon tax in Vermont drive consumers to adjacent states to get much lower prices on gasoline, diesel and heating oil? The study does not believe that people would do that.

8. Is there any combination of policies that would allow Vermont to meet any of the declared emissions goals? Yes. “Combining moderate carbon pricing and non-pricing policy approaches could reduce emissions to meet Vermont’s US Climate Alliance target… of 32-38% below 2005 levels in 2025.” This would presumably require using most of the carbon tax revenues for subsidies to promote switching away from fossil fuels.

9. What effect do the various levels of carbon taxes have on economic welfare? “When revenues are returned to households via rebates, total economic welfare falls between $7.1 million and $61.2 million in 2025 (in 2015$), depending on the price level and the scope of sectoral coverage.”

10. How does the study overcome these economic welfare losses? By adding in “climate benefits” and “health benefits”. The economic value of both of these calculations – especially the climate part – are admittedly highly debatable. The calculation assumes that Vermonters will agree to let climate benefits projected to accrue elsewhere on the planet compensate for diminished economic welfare here.

11. What is the payoff to Vermonters, who will bear the costs of “decarbonization”? They will get some slight air quality improvements from moving away from fossil fuels for heating and transportation. But “the success of Vermont’s decarbonization strategy will depend on the extent to which it drives action in other states or other countries Vermont cannot solve the climate challenge on its own, but if Vermont’s policy leadership were to inspire increased leadership and policy innovation in other states or nations – it would indeed amount to a significant impact.”

12. And that impact would make up for the much higher tax burden and economic disruption that a carbon tax would impose on Vermonters? (Insert your answer here).

John McClaughry is vice president of the Ethan Allen Institute.

Images courtesy of Wikimedia Commons/Public domain and John McClaughry

12 thoughts on “McClaughry: What the decarbonization study found

  1. A Vermont carbon tax….harming working Vermonters and the elderly so liberals can feel smart and morally superior. While having ZERO measurable effect on climate change.

  2. They is no mention in this study on what a carbon tax burden that this will impose on rural Vermonters that have to travel 10-60 miles to work every day where carpooling is not feasible and electric cars are not reliable enough for Vermont winters. They also cannot afford to install solar panels or wind to obtain their power. From what I’ve read, the result would have less than a .01 percent effect on the nations carbon footprint.
    These liberals that are running this State will pass it anyway because it is part of their agenda and they could care less about rural Vermonters. If they did, you would see wind generators or solar farms in Burlington harbor. Excuse me, that would interfere with their views. Typical do as I say and not as I do..

  3. Email just came in about Alabama from a SD friend (also a nice state).
    https://www.foxbusiness.com/features/this-is-the-most-financially-friendly-state-for-seniors

    I can attest to it, been here a lot. Just hope VT people rush here and overwhelm the state. But if that happens, leave the Libs in VT to freeze and pay their carbon tax. This state has so many new jobs and industrry. So there a few hot summer months, survivable. VT has more cold months, hard to survive. There are many options for people sick of VT. Some commenters I’ve noted are in TN, NC and elsewhere and they like it. All kinds of hunting & fishing & country areas. Boone & Crockett deer are taken around Gadsden AL, NE of Birmingham. But no Moose. Being around here and NW FL (Pensacola) is an enlightening experience. Life is far simpler and laid back.

    PS. I’m not getting paid for this.

    • I’m a former Vermont’er and now live in the SE and could not be happier. Best financial decision I have made. I can now fund my kids college education accounts and my vacations are now withing driving distance. I now clearly have a smaller carbon footprint now then I did in Vermont.

      As you said, ” Life is far simpler and laid back.”

      • For me being in southern AL at times, in a days drive I’ve often driven in a day I-10 West of San Antonio, I-20 up past Dallas to west of OK City, North to west of ST Louis also up north to MD. Been to SD many times. All much closer than from VT.
        Went from VT one time to WA. Left VT at 5:30am, stayed beyond Chicago that night. Next day at 9:00pm was in Rock Springs WY. Stayed at my brothers a few days, Left at 4:30 am and at 8:430 pm was in Shelton WA (Olympia Peninsula). Stayed a while visiting, drove by Mt Rainier, Yamaha to Priest River ID and stayed with friends. Then stayed at Escanaba MI. Next day thru Sault Ste Marie-Montreal and back in VT. Averaged about 1100 a day.

        The country is beautiful, and I have seen a lot. I have places other than VT where I’ll settle, but still be central located. Going where it’s cheaper and people are friendly.

        So I travel a lot over the years, all the 49 Continental states. A free bird.

  4. Just another Liberal Boondoggle case to raise a tax, then find a way to squander it on more
    liberal foolishness……………………..

    Liberals, they are running the State, right into the ground !!

  5. John, what person no matter how educated can possibly follow this discussion/proposal. It is 10 times worse than our school funding scheme. The study was a way to get another foot in the door. Vermonters need to stand up and reject this sophisticated money grab.

      • David, Why? I understood my ideology wasn’t going to win in VT. I could through money at a loosing -sinking- ship or I could jump and better the economic lively hood of my family. Sometimes you gotta know when to cut and run. There is no winning this in VT. It’s not going to happen, and as soon as zuckerman takes the helm it’s game over.

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