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Posts Tagged ‘carbon tax’

Five Key Questions to Ask About a Vermont Carbon Tax

Wednesday, May 11th, 2016

On March 30, 2016 I gave testimony about the proposed carbon tax to the Vermont House Committee on Natural Resources and Energy in Montpelier. Here’s a summary of my remarks and the key questions that I feel are important to ask as the State of Vermont considers a carbon tax:

I come not as a supporter or opponent of a carbon pollution tax, but as someone with questions. I’m speaking as an individual, and not to represent the views of the Co-op’s members, Board of Directors or employees.

The Energy Co-op provides the same services as many full service fuel dealers. But we’re different, because we’re organized as a cooperative, are owned by our 2,000 members and governed by our Board of Directors.

Unlike many fuel dealers, we want to help our members and customers use less fuel. Our long-term vision is to place efficiency and renewables at the heart of our business, because we believe that doing so is in the best interests of our members and our planet. Structured as a cooperative, we value outcomes beyond just the bottom line.

I believe in climate science and know that burning fossil fuels is the primary contributor to global warming. I note that each of the past four months has been the warmest on record, with February beating the old mark by more than two degrees. Just recently came the news that the Arctic winter ice sheet now covers the smallest area ever recorded.

That said, fifteen years after our founding, the Energy Co-op of Vermont is still largely a fossil fuel dealer. While our strategic plan calls for diversification away from fossil fuels and towards efficiency and renewables, today’s low oil prices make many energy efficiency projects less financially attractive to homeowners, and that is slowing development of the efficiency division of our business.

Last spring, we asked our members for their opinions on the proposed carbon pollution tax. We did our best to frame the question as neutrally as possible, with assistance from Ben Walsh of VPIRG and Matt Cota from the Vermont Fuel Dealers Association. About 22% of respondents agreed that a carbon pollution tax should be implemented in Vermont, 31% were opposed and 47% were either undecided or did not know enough about the proposed legislation to make a decision.
As I said, I’m not a supporter or opponent of a carbon pollution tax – nor am I a policy expert – but I do have questions about how one would be structured in Vermont. I’d like to ask five questions: who, what, when, where and how? You may not have the answers to these questions today, but as you craft legislation I hope that you will give them your consideration.

1. Who gets taxed? A carbon tax — whether it is levied on wholesalers or retailers — will ultimately be paid for by the end consumer. For the sake of simplicity, it seems to make sense that the state collect the tax from the small number of wholesalers operating in the state rather than the hundreds of distributors – the gas stations and fuel dealers. Please do not put additional administrative burdens on the fuel dealers.

2. What gets taxed? Some Vermont fuel dealers are selling BioHeat blends. Typically, these fuels combine between two and ten percent renewable biodiesel with 90 to 98 percent fuel oil. To be fair, it seems to me that a gallon of fuel that is 90% non-renewable should only be taxed at 90% of the full tax. We expect that sales of BioHeat blends will increase in the future, especially once the provisions in the Vermont Energy Act of 2011 kick in.

3. When is the tax adjusted? The proposals I’ve seen call for gradually increasing the carbon pollution tax over a ten year period. At two dollars per gallon oil and gas that’s one thing. But what if the price of oil climbs back to four dollars per gallon or higher? You may want to consider a pressure relief valve. If the market alone drives the transition away from fossil fuels, can the carbon pollution tax be reduced or paused?

4. Where are the border controls? Vermont fuel dealers compete with dealers from New York, New Hampshire and Massachusetts. Those out-of-state dealers are supposed to pay Vermont’s gross receipts tax, but if we add a carbon pollution tax, it will be essential that the state make certain that these out-of-state dealers – or the wholesalers that supply them – are paying what they owe.

5. How can a carbon pollution tax help Vermont fuel dealers like the Co-op transition to offering more efficient and renewable products and services? This proposal will certainly reduce the volume of fossil fuels we deliver and have an impact on our financial viability, so I hope that you’ll dedicate a portion of the revenue to assist businesses like ours train employees on new technologies, invest in new equipment, and make the evolution to a cleaner energy future.

The answers to these key questions are critical to many Vermont fuel dealers, including the Energy Co-op. We will follow the proposed carbon tax legislation with interest.

Cigarettes, Coca Cola and the Carbon Tax

Friday, August 14th, 2015

At the Energy Co-op of Vermont, one of our key goals is to help our members stay informed about important energy issues that will have a direct effect on their lives and their bottom line. No energy or tax-related issue in recent memory seems more confusing than the Vermont legislature’s attempt to introduce a carbon tax. In fact, 47% of our members who responded to a June 2015 survey said they didn’t know enough about the carbon tax to take a position for or against it.

What does this have to do with cigarettes and Coca-Cola? A simple way to understand the carbon tax is to point out that it works in some ways like the familiar “sin” taxes. For example: taxes on cigarettes are used to fund quit-smoking campaigns. The recently passed tax on sugar-sweetened beverages supports programs to fight childhood obesity. Similarly, the carbon tax is designed to discourage the use of fossil fuel while benefiting a range of popular tax reduction options and energy efficiency programs.

Vermont’s Carbon Tax Bill (designated as H.412) will, in some form, probably come up for a vote in the Vermont legislature next year. The current draft proposes to establish an excise tax on fossil fuels that emit greenhouse gases. The intention is that reflecting the external costs of greenhouse gas emissions in the price of fossil fuels will result in reduced use. It also proposes to offset 90 percent of the carbon tax revenues through:

• Reduction of the sales and use tax
• A refundable tax credit to personal income taxpayers
• A low-income taxpayer rebate
• A per employee rebate to employers

The remaining 10 percent of the carbon tax revenues would fund low-income weatherization and a Vermont Energy Independence Fund (VEIF) to promote energy efficiency and reductions in fossil fuel use.

The question becomes – Is a carbon tax the best way to reduce fossil fuel use or is it just another confusing government bait-and-switch tax rebate program?

A good place to look for a case study is to our Canadian neighbors in British Columbia. In 2012, B.C. implemented a carbon tax that has so far been successful on many fronts. David Roberts, a former energy policy staff writer for, cites some important reasons why. His concluding point is that the B.C. carbon tax program, as implemented, is currently revenue-neutral, thanks to cuts in other taxes, mainly corporate and personal income.

According to a June 2015 New York Times op-ed titled “The Case For a Carbon Tax“, top executives of six large European oil and gas companies such as the BP, Royal Dutch Shell and others, have already called for a tax on carbon emissions. A world environmental summit in Paris later this year will certainly continue this dialog.

Opposition to a carbon tax in the environmental community often focuses on the exclusion of biomass as a taxable carbon source. In Vermont, it could be argued that a carbon tax on fossil fuels will increase the use of wood and wood pellet stoves, which would cause carbon emissions to increase, at least in the short term. Pending legislation in Vermont does not address this concern, so we will be watching to see if Vermont legislators find a compromise on this issue.

The bottom line is this: Climate change is real. It’s impacting our daily lives, endangering our planet and threatening the future well-being of our children and grandchildren. Burning fossil fuels is the major cause of climate change. Using less fossil fuel is a large part of the solution. By learning about and taking a position on the carbon tax issue you are taking a small step towards being part of the solution.

Member: Vermont Fuel Dealers Association, Vermont Businesses for Social Responsibility, Renewable Energy Vermont, Local First Vermont

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