Think tank report pans Vermont carbon tax plan

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The Ethan Allen Institute took aim Wednesday at a proposed carbon tax for Vermont in a report that pointed to a litany of negative economic consequences and "no measurable impact on climate."

The conservative research center examined the ESSEX Plan, which calls for taxing carbon-based fossil fuels and using the money to push the state toward more use of electricity generated with renewable resources. It was conducted by Jonathan Lesser, a former planning director in the Department of Public Service under Republican Gov. Jim Douglas and now an economist based in New Mexico.

ESSEX in this case doesn't refer to the town, the village or the county, but is an acronym for Economy Strengthening Strategic Energy Exchange. Under it, companies that distribute fossil fuels in Vermont would pay a fee of $5 per ton of fuel in the first year, which would increase by $5 each year until the fee hit $40 per ton.

Much of the money would go for rebates on electric bills, which supporters of the ESSEX Plan say would result in Vermont having the lowest-cost electricity in New England. Extra rebates would go to moderate- and low-income Vermonters and to rural residents, to offset the higher costs of motor fuels.

Gov. Phil Scott has said he opposes any kind of carbon tax, and the idea is seen as unlikely to be enacted into law this year. But the Ethan Allen Institute's president, Rob Roper, said the idea has come up repeatedly since 2014, making discussions of it timely. Legislative leaders recently said they want to try to pass the ESSEX Plan this year.

Lesser's report cast doubt on claims that the plan's rebates would effectively lower Vermont electric rates by 25 to 40 percent, with commercial and industrial customers seeing a rate drop of 27 percent. He argued that upward pressure on rates in Vermont comes from several sources, among them net metering, in which customers with solar projects can sell excess generation onto the electric grid.

"In 2016, the average wholesale price of electricity in New England was around 3 cents per kilowatt-hour," Lesser wrote. "By contrast, the average Green Mountain Power residential ratepayer paid over 17 cents per kwh, while customers of Burlington Electric paid over 15 cents per kwh," he added. Some of the higher figure was attributed to the requirement that GMP pay a premium for power from net-metered customers. The price for net-metered power, about 15 cents per kwh, is "about five times greater than the New England wholesale price," Lesser wrote.

The upshot, Lesser said, was that electric costs in Vermont would be going up, not down. He argued that "the more the plan increases the demand for electricity, and the more that electricity is sourced from in-state renewable generation, especially solar PV (photovoltaics), the higher will be retail electric rates. Those higher costs will, in turn, reduce economic growth and may cause some Vermont residents and businesses to relocate out-of-state."

Lesser went on to label an "economic fallacy" the ESSEX Plan supporters' claims that, while money paid for fossil fuel goes mainly out of state, money spent on renewables means "clean energy jobs" for Vermonters.

He said "bus drivers are considered to be clean energy jobs." Accountants and bankers who work on financing for renewable energy projects are considered to be in clean energy jobs, Lesser said.

Ben Walsh, climate and energy program director with the Vermont Public Interest Research Group, argued it was legitimate to count among "clean energy jobs" positions that exist to serve that sector of the economy. "It's not just people on roofs" installing solar panels, he said. Bus drivers operate vehicles that enable people to reduce their use of private vehicles, for example.

Walsh also took aim at some of Lesser's other claims. Lesser put the cost of installing new solar panels at $4,000 to $5,000 per kilowatt of generating capacity; Walsh pointed to national industry figures putting the figure at $2,900. A 30 percent tariff recently imposed by President Donald Trump on imported solar panels also could increase the costs of installed systems slightly. But Walsh said Lesser is "getting his numbers wrong by a lot more than the tariff."

Walsh also took aim at a statement by Lesser that "one cannot even purchase standard incandescent light bulbs in the entire U.S., for example." The bulbs are being phased out, but are still available in stores currently, Walsh said.


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