by Rob Roper
The Public Utilities Commission (PUC), which is charged under the Clean Heat Standard (Act 18/S.5) with operating the “carbon credit” system created by the law, is now soliciting ideas for how to fund said operation. Keep in mind that the carbon credits on their own are estimated to add at least 70¢ to every gallon of fossil-based home heating fuel (oil, propane, kerosene, natural gas) purchased by Vermonters. This amounts on average to over $500 per household per winter. Just the cost of the credits.
The bureaucratic cost of operating the credit system is, well, extra. And the leading suggestion for how to cover that extra cost is – guess what – ANOTHER TAX ON HOME HEATING FUELS! On top of the coming carbon credit “tax” and the existing excise tax on same.
The PUC’s Order Seeking Recommendations for Funding Report of November 3 ends with, “The Energy Action Network’s [a truly awful conglomeration of special interests] Clean Heat Standard whitepaper identifies a small surcharge on fossil-fuel sales to provide the funding necessary to support the Department’s role in verification of compliance and evaluation.” “Small,” of course, is different in the eyes of the person forced to pay the tax than those of the ideological zealot proposing it.
Not surprisingly, the PUC leaves out one key detail regarding what might allow for an informed suggestion for where the money should come from to run their carbon tax program: how much revenue they need to do so. For some reason they don’t say. For some reason our legislators didn’t want to be associated with such a number either and made no effort to find out before they passed the law. Maybe – just maybe – that’s because they know it’s going to be a very unpopular number.
The current excise tax on fuel oil, kerosene, propane, and other dyed diesel fuel is $0.02 per gallon and raises between $4 to $4.5 million per year.
Advocates for these carbon taxes often point to the Regional Greenhouse Gas Initiative (RGGI), a regional credit system for large-scale electrical generation as an example. In 2023, RGGI reported an operating budget of $3,118,019 (RGGI website). Let’s take that as a base cost. But RGGI is a far simpler a program, and therefore far cheaper to run, than the Vermont Clean Heat Standard.
The number of credits in RGGI are determined and issued by the single entity, RGGI, and then auctioned off on a quarterly basis to the small handful of major utilities required to buy them. “Verification of compliance and evaluation” in this case is not particularly complicated. Vermont Clean Energy Carbon Credits, on the other hand, will be generated, not issued, literally by thousands of individuals performing hundreds of thousands of “clean heat measures” — a wide variety of activities from installing heat pumps to replacing appliances to insulating buildings – at just as many locations all around the state, each of which needs to be independently verified and assigned a credit value by someone, either directly or indirectly, on the state’s payroll. This is complicated. Way complicated. Probably impossibly complicated. It will take an army of bureaucrats to do this work if you don’t want to open the program up to massive fraud and abuse. (Important possibility: maybe they do!)
Equally if not more complicated than generating Vermont’s carbon credits is keeping track of them. RGGI, as mentioned above, just auctions them off on a quarterly basis and that’s it. Vermont’s system requires setting up what is essentially a commodities exchange – that will, by the way, be subject to federal financial regulation – where these financial instruments (credits) are expected to bought, sold, and kept track of until ultimately retired.
Establishing and running this exchange will require highly skilled (read expensive) oversight and a very sophisticated (read expensive) IT system. How much this will cost? I don’t pretend to know, but the IT upgrade that the Vermont DMV just got cost something like $45 million. No IT intensive program is cheap to set up or properly maintain.
In conclusion, operating the Clean Heat Carbon Tax will be a massively complicated and grotesquely expensive bureaucracy to run. It will be much more labor intensive than RGGI, the cost of which is, unlike the Vermont program, shared by multiple states. More people equals more salaries plus more sophisticated technology equals much higher overall costs. I can easily see these costs far exceeding $10 million per year, not including start up costs. That’s admittedly just a gut guess, but whatever the number is, look for it to come out of your even higher heating bill.
So, I do have a suggestion for the PUC… and the Energy Action Network, and the lawmakers who passed this monstrosity of a law and their never ending appetite for other people’s money. Not a suggestion of how to pay for it, but where they can stick it.
Rob Roper is a freelance writer with 20 years of experience in Vermont politics including three years service as chair of the Vermont Republican Party and nine years as President of the Ethan Allen Institute, Vermont’s free market think tank.
Categories: Commentary
Lest we forget, the great benevolent state of vermont already collects Vermont sales tax and Vermont fuel tax on each and every gallon of hydrocarbons used for home heating… that’s 6%, plus local options if applicable and another .02 per gallon in an excise tax, as Rob reports above. Render unto Caesar- but the little caesars in out legislature are too greedy.
One of the concerning aspects of this ill conceived legislation is that it now puts the sale of heating fuels, oil, natural and propane gas and electricity under the sole control of a three-member ‘public’- but appointed board. Cordwood and Wood pellets are next- in the name of ‘climate change’
Gravity will correct the aspirations of the ruling class here in the Green Mountains.
That which goes UP, will come down.
Money and the lust for it (and power) is driving our beautiful State in to a ditch.
The good news is that those that remain in the private sector after the crash will survive. We will work hard to make Vermont better again, Those of you that expect a retirement check from the SOV in the future beware. Good luck.
These idiots think that charging Vermonters an arm and a leg is going to save the planet from the climate bogeyman. Hey, Congressional idiots, even if the bogeyman is real, tiny Vermont isn’t going to put in even a tenth of a percent toward less carbon overall. To stop the carbon bogeyman, why, you’d need to kill off several billion folks in China, India and Indonesia. So stop raising people’s bills over this absolute nonsense and start, I don’t know, addressing your epidemic of imported drug murders. You absolute knobbing clowns!!!
There are mainstream media reports coming out warning of black outs this winter. The energy overlords are saying the grid can’t handle a heavy load demand and of course, there are the terrorist attacks looming as well. Another dark winter warning? I am so glad we plastered solar panels over the open fields and erected giant wind turbines on the mountain tops! Certainly, Vermont can’t be included in a grid down event with all that “green” energy we put forth? Let’s all call our representatives, the Governor, and our local energy overlords for confirmation that all our clean energy will not fail us – right?!
Unlike government, most of us have to live within a mostly fixed budget. Put simply, there are only xxx dollars to go around.
So what’s going to happen when they tax us further to fund “program administration”? People are going to continue to cut back elsewhere. Maybe it’s at a fast food joint. Maybe it’s at the grocery store. Maybe it’s at their favorite boutique coffee shop. Maybe it’s deciding to keep the old clunker on the road for another year.
Let’s use the fast food joint as an example. People eat there less, what happens? Revenue goes down. So what’s is the short-sighted response? Raise prices. Then folks eat there even less often. What’s the response? Raise prices higher. More consumer dis-incentive. And the circle goes on until the joint goes out of business. Yes, I know, there are other factors, like labor and food costs, but those are really tangential to the bigger picture, the cycle of raising prices to cover lowered revenue.
There are only so many dollars to go around, and every time the legislature cuts into those dollars, someone else pays the price, directly or indirectly. Economics isn’t rocket science, despite what we’re programmed to believe. Economics is simply common sense.
Which is my roundabout way of wondering, why is everyone so accepting of the foundational premise, anyway? It’s far from decided science that humans have anything more than a negligible effect on the climate. One active volcano easily spews more carbon dioxide than all our fossil fuel powered vehicles do in a year. How much more? All fossil fuel powered vehicles in the US = 1627 tons. One active volcano? At least 1.8 million tons. Tell me again… How many active volcanoes are there? And all this doesn’t even take into account the sun’s effect on the climate, which is the biggest factor of all.
And for anyone who wants to know, those figures are taken from the US government’s own data.
The good Lord gave us all brains. Granted, some more than others, but we still need to collectively start using them. Once you know the numbers, it becomes quite obvious that “climate change” is just another way to transfer wealth from the (ever-shrinking) middle class to the elites.
Be awake, not woke!
They wont be happy until everyone is on the streets and homeless!
Thanks Rob, but how about you continue to post the names of all the legislators and senators and Governors who voted for this at the behest of lobbysts and ignored the pleas of the voters? You know just to remind people come voting season.
Pretty much all of the Democrats and Progressives voted for it. All of the Republicans voted against it. The governor vetoed it. Pretty much all of the Democrats and Progressives voted to override the governor’s veto. All of the Republicans voted to sustain it — but they are only 43 out of 150. Voters get what they deserve.
How about doing away with this stupid “tax”-it’s no t too late
Meanwhile, India will increase coal consumption by 60% by 2030. That increase will erase anything we would do here in the US.
But let’s face it, nothing we do will reduce CO2 (more is better, IMO) levels, nor reduce temperatures. All we’re doing is wasting taxpayer money while enriching the connected lobbyists, politicians, and “green” corporate pigs at the trough.
How about this? Add a box on the 2023 VT income tax form reading “Choose the following amount to be added to your tax payable (or subtracted from your refund ), to be paid to the Public Utility Commission to enable it to design and administer the Clean Heat Standard law (Act 18 of 2023) to increase the cost of heating oil, propane, natural gas and kerosene and thereby reduce Vermont’s carbon dioxide emissions in support of the 2015 Paris Agreement?
$0 (default) $50 $100 $250 $500
If these idiots are going to continue this expensive farce, we need to assure that there are NO subsidies or waivers given to hide from the public the politicians responsibility for this economy destroying policy. All we really need is a good old winter with black outs and power grid failures.
By the way, don’t forget that pellets and wood burning are terrible for the particulate problem.