by Guy Page
July 15, 2020 – Yesterday, UVM trustees agreed to divest its endowment portfolio of fossil fuels. Yesterday, Governor Phil Scott committed Vermont to zero carbon-emissions buses and trucks by 2050. In a month or two, the Legislature may approve the Global Warming Solutions Act (GWSA). Some future tomorrow, both decisions will likely increase the cost of living in Vermont, barring unforeseen technological changes in New England energy generation and delivery.
Fossil-fuel divestment – according to the UVM website, “On July 14 the University of Vermont’s Board of Trustees voted to divest the University’s endowment of fossil fuel investments. It was a unanimous decision and it was in keeping with UVM’s ongoing commitment to sustainability focused policy and environmental research. The decision means that UVM will end new direct investment in fossil fuels. And it will fully divest from public investments in fossil fuels by July 2023.”
A 2017 divestment study commissioned by Vermont Treasurer Beth Pearce reports that fossil fuel divestment ties fund managers’ hands, subtracts blue chip stocks that create longterm value, and does little to reduce carbon emissions. That’s because divestment merely shifts ownership to another buyer. Divestment does not make fossil fuel companies “go away” – it merely allows the divester to wash his/her hands of ownership. But even this act of cleansing purification has a practical climate change downside: no ownership means no more influence on corporate policy. UVM will no longer be able to saunter into Exxon stockholder meetings and demand change.
UVM of course is facing a huge pandemic-related deficit. Its endowment funds ongoing programs, and is the “rainy day fund” of last resort. It’s hard to see how divestment would improve the university’s financial standing. But regardless, the long battle with UVM trustees now won and done, climate activists likely will now turn their attention to the big prize: Vermont’s multi-billion dollar state/school/municipal employee pension funds. In 2017 Pearce and the pension fund representatives fought off divestment tooth and nail on fiduciary grounds.
Vermont’s pension fund has declined in 2020. Rep. Bob Bancroft (R-Westford), a professional economist, wrote to Vermont Daily yesterday: “During 2019, the unfunded liability grew from $4.5 billion to $4.6 billion despite a catch up contribution [from the Legislature]. This was on top of the regular actuarial contribution. It was a banner year for the stock market. I can only imagine what the unfunded liability is today. There are only three ways to address this problem, increase taxes, cut spending or declare bankruptcy. People need to be made aware of how significant this problem is.”
The March, 2020 report for the Vermont State Employees’ Retirement System pension fund shows that the fund value dropped 10.9 percent in the first three months of 2020. The less money in the fund, the higher the unfunded liability. Forced divestment would add to the existing woes of unfunded liability and shaky investment value.
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As reported yesterday, Gov. Phil Scott pledged that all new buses and trucks will be zero-carbon emitters (likely electric) by 2050. He said at his press conference, 2050 is a long way off and the intent is to drive the industry away from internal-combustion and towards electric. Cost-conscious electric vehicle advocates hope mass production and better tech will reduce price disparity; electric buses now cost $750,000 compared to $500,000 for diesel.
Public transportation is already a drain on Vermont tax revenue, and will become even more if Vermont’s trend towards fare-free riding and expanding routes into rural areas continues. Like college and health care, transportation should be “free,” progressive policy makers say. In practice they shift the cost from the consumer to the taxpayer or other source of public funds.
The multi-state agreement to which Scott pledged Vermont does not – yet – recommend a “carbon tax.” However, until last year neither did the Transportation and Climate Initiative (TCI), a multi-state agreement to reduce all transportation carbon emissions. Only in its final planning stages did the states roll out a specific scheme forcing gasoline and on-road diesel consumers to pay more at the pump. Until the cost of buying and running electric buses reaches market parity with diesel, that extra cost will need to be recovered somewhere, somehow. And as long as riders stay off the hook, that leaves local, state and/or federal government the likely payors.
The point of all of this climate change advocacy is to transition America from fossil-fuels to renewable power. Transition isn’t necessarily a bad thing. Vermonters breath cleaner air with a lower carbon content due to high-value transition away from coal and oil to natural gas and nuclear power and Canadian hydro power. The pandemic itself has transitioned many Vermonters away from commuting to work – for many of us, perhaps forever.
But consumer-driven transition isn’t what the climate hawks have in mind. VPIRG and other advocacy groups are run by solar/wind renewable power advocates, including many board members who are longtime owners or investors in renewable power companies. For them, low-carbon, low-cost alternatives like nuclear, hydro and natural gas are as much the enemy as oil and coal – perhaps more so because many voters finding these existing, small-footprint plants aesthetically and financially preferable to endless acres of subsidized solar panels. A Senate bill to make Vermont renewable-reliant shows that transition would cost ratepayers $1.2 billion over the next several years.
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And as John McClaughry of the Ethan Allen Institute reports, the Vermont Legislature is poised to regulate strenuous carbon emissions reduction in virtually every aspect of life.
Global Warming Solutions Act Needs a Scott Veto
Six weeks from now the Global Warming Solutions Act (GWSA) will likely reach Gov. Scott’s desk. There are five compelling reasons for him to veto it.
The bill declares that to deal with a “climate emergency” Vermont must observe the carbon dioxide emissions limits prescribed by the UN’s Paris Agreement of 2016. In particular, Vermonters must somehow be made to cut their yearly CO2 emissions from the present about 9 million metric tons of CO2, down to 7.5 MMt (-16%) by 2025, and down to 1.73 MMt (-80%) by 2050.
First reason to veto: The bill sets up a 23-member Climate Council within state government. The governor would have eight appointees; the House and Senate leadership will appoint the other 15. The Council will spend a year creating a sweeping Plan to instruct state agencies to adopt whatever rules (regulations) that they find necessary to get Vermonters to stop using gasoline, diesel fuel, home heating oil, natural gas and propane, to achieve the meaningless CO2 emission reductions. (Vermont emits approximately one seventh of one percent of U.S.CO2 emissions.)
This is clearly intended to put Gov. Scott on the sidelines. The climate change lobby groups are clearly fed up with the governor dragging his feet on supporting its lengthy list of “climate solutions”, notably a carbon tax that Scott has resolutely said he would veto. No governor worth his salt, of any party, would stand still for this hijacking of his or her responsibilities as head of the Executive Branch of state government.
Second reason to veto: Under the Plan the bureaucrats could require all new homes to use electric heat with superinsulation, ban the sale of low mpg internal combustion vehicles, prohibit fuel-intensive entertainment events (such as Thunder Road), prohibit the sale and use of snowmobiles, ATVs, and pleasure boats, decree zoning changes to keep people from building homes in rural areas, limit cattle populations to reduce methane emissions, license home contractors and prohibit them from doing anything that fails to comply with LEED standards, restrict new natural gas connections, and force manufacturing plants (such as craft breweries) to reduce their CO2 emissions.
There will be few limits on what the agencies can require by rule, except that they can’t impose a carbon tax, and they can‘t magically come up with enough subsidy money to persuade 86,000 more Vermonters to buy pricey electric vehicles.
Third reason to veto: no legislator will ever vote on these sweeping, invasive and costly rules. This is a shocking abdication of our legislators’ accountability to the people. House Republicans moved to require a record vote to approve these bureaucratic rules. The backers of this bill crushed it 99-44.
Fourth reason to veto: The bill literally invites “any person” to go to court to sue the state of Vermont for not moving fast enough or far enough to drive down “carbon pollution”. This is a gift to the Conservation Law Foundation, which in 2016 won a suit against the Massachusetts Department of Environmental Protection for not pushing hard enough to implement that state’s GWSA.
Not only does the bill open wide the courtroom door to CLF, but it also specifies that if that organization “substantially prevails” in its lawsuit, the taxpayers will pay its legal costs and attorney’s fees. The same taxpayers will pay the Attorney General to defend the State against the lawsuits, which could well go on for years.
Fifth reason to veto: the House version of the bill appropriated $972,000 to launch this Climate Action Plan adventure. The Senate Appropriations Committee, confronted with a projected $400 million all-funds deficit for the fiscal year that began two weeks ago, struck out the appropriation altogether.
This ponderous enterprise can’t get under way without funding. Getting our economy up and running again after the pandemic, and helping Vermonters who were crippled by it, are far, far more pressing needs than throwing away a million dollars to support this counterfeit government instructing unaccountable bureaucrats to hatch sweeping, costly and invasive rules to achieve no detectable effect on the global climate.
Late in August the House will likely accept the zero-funded Global Warming Solutions Act (H.688) and send it to the Governor. If he fails to veto it, or lets it become law without his signature, watch for this sly move. The legislative leadership will slip the $972,000 into the billion dollar appropriations bill coming out in early September to fund state government for the nine remaining months of this fiscal year.
Those five reasons make a powerful case for a Scott veto, notwithstanding the outraged protests of the climate warrior lobby. He can take his stand on the liberties and economic well-being of Vermonters, accountable democracy, constitutional separation of powers, far more important spending priorities, and protecting the state from costly virtue-signaling nuisance suits, all in a misbegotten bill that will produce no detectable effect on climate.
John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).
Wikicommons Photo Credit
Correction: a headline in yesterday’s post incorrectly stated the number of Vermont dairy farms that have closed during the pandemic. The correct number, as stated in the body of the news story, is 25.