By Rob Roper
The unelected Climate Council put forward its Climate Action Plan (CAP) in December 2021 with two major components: 1) The Transportation Climate Initiative (TCI), which was basically a cap-and-trade-style carbon tax on motor fuels, and 2) a Clean Heat Standard (CHS), which is basically a cap-and-trade-style carbon tax on fossil based home heating fuels (oil, propane, natural gas, kerosene).
Well, TCI is dead. It imploded when two of the only three states to sign onto the multi-state agreement (CT and RI) pulled out late last fall prompting the only remaining state (MA) to admit defeat and do the same. This outcome was obvious to anyone paying attention, but for whatever reasons the Climate Council either overlooked or chose to ignore the warning signs.
That leaves the Clean Heat Standard.
The way the Climate Council envisioned the CHS working, a few large-scale wholesalers of fossil heating fuels would be forced to purchase “clean heat credits” in order to sell their products to distributors (the folks you buy your fuel from). The costs of the credits would, of course, be pass along ultimately to hundreds of thousands of consumers, but the point of regulatory contact for the state would be small.
The problem – either overlooked or intentionally ignored by the Climate Council – is that most Vermont fuel dealers don’t buy their fuel from wholesalers based in Vermont. They get their products from wholesalers in New York, Massachusetts, New Hampshire, or Canada. And, minor detail, Vermont has no authority to make wholesalers in those states buy Vermont’s clean heat credits. Attempting to do so would violate what is referred to as dormant commerce clause of the US Constitution. Oops.
This should have killed the proposal as no longer workable.
Now, for the Clean Heat Standard to work, Vermont must force not a small number of usually large-scale financially sophisticated businesses to buy these credits, but rather lots and lots of generally small, unsophisticated, mom & pop businesses to do so. This makes implementing, monitoring, and managing the CHS vastly more complicated and economically disruptive than originally envisioned, and a state-created and regulated market for clean heat credits was never going to be simple.
Proponents of the CHS compare it to the Regional Greenhouse Gas Initiative (RGGI), which is cap and trade program affecting power plants, and the Renewable Portfolio Standard, which is applied to electric utilities. These are “pumpkins to peas” comparisons. These programs are feasible because they apply to a small number of entities who have substantial technical, legal and economic resources, and who exercise control over the decisions necessary to comply. The Clean Heat Standard, as proposed, lacks all of these essential features.
A good comparison for CHS regarding its requirement for lots of small businesses being forced to purchase credits in a far less stable market is… TCI. And, we saw how that ended up! Time to start a pool on how long it will take the CHS to meet the same fate.
– Rob Roper is president of the Ethan Allen Institute
Categories: Commentary
First of all Rob, when have democrats ever respected the Constitution when it wasn’t in their interest?…You sound like a cup half full type of guy, whereas, I’m a cup half empty when it comes to our dysfunctional govt…Hear that telling last comment?…Instead, I see opportunity here for Vermont Democrats to do what they do best…Create another committee to study the Climate Council committee’s dilemma. In fact, maybe even an agency overseeing the committee that is overseeing the Climate Council…Of course, they’d have to be supported by a huge section of attorneys because of the “Constitutional” issues that would arise and naturally the attorney’s would need their support staff and so on and so on…You’d no doubt see this as a great opportunity for employment for Vermonters cause you’re a cup half full guy, again. I’d see it as more waste of taxpayer dollars by an inept govt cause again, I’m a cup half empty type of guy.
Fossil fuels…guns…reproductive mistakes; As usual Mr. Roper’s incisive analysis elicits thoughts about other issues of our governance. A significant portions of our neighbors have made passionate moral investments in three simple propositions: …increased atmospheric carbon will bring a imminent cataclysm, gunsbad, guns-shoot-people and human “reproductive” rights includes eliminating our mistakes. Those who have ascended to such enlightenment are usually quite zealous. In the grip of such zealotry the carbon issue has spawned the Climate Action Plan with its Transportation Climate Initiative and the Clean Air Standard…that is, eliminate individual enterprise and the “pursuit of happiness” enshrined at our founding. When this crashes, as Mr. Roper has predicted here, we can expect similarly desperate schemes. These empowered zealots are legion. Let’s not be surprised when they call for reduced exhaling soon. For the guns-shoot-people issue every legislation session brings more inventive “get rid of them” schemes. …next session, outlawing triggers perhaps? The diversion from crimes&criminals to a quest for eliminating implements of crime will continue. Let’s not be surprised when this logic is extended to other crimes…rape perhaps? For the reproductive mulligan’s issue we’ll soon actually be voting on a constitutional change to enshrine the deaths of such errors. Is this what we want from our elected officials and the forest of regulatory commissions blooming around them?
Rob is quite right. It puzzles me why the Climate Council wizards, after learning that they couldn’t tax motor fuel sellers in other states under TCI, got the idea they could tax heating fuel sellers in other states for the Clean Heat Standard..This is just incompetence. The legislation in the House Energy & Technology committee makes the Vermont distributors the “obligated parties” who have to buy the PUC-issued funny money credits (and will pass the cost on to Vermont consumers.). That’s probably constitutional – we already tax heating oil to finance low income weatherization. But the whole scheme is a stealth carbon tax scheme that richly deserves to perish, as our heating fuel prices march steadily upward..
Thank you Rob for pointing out the insanity under the dome. The GSWA should be repealed. It’s costing Vermonters time and money. There are many other issues of greater importance that the legislators could actually make a positive contribution to.
As has been the case all along, the need to explain to the end user what the costs are going to be in this fantasy land scheme are non-existent .Apparently, the taxpayer’s concerns don’t matter in all this non-sense, until the bill comes due. Then, you guessed it, the cudgels will come out, and be wielded.
Constitution? What’s that?