Is carbon tax a plan Vermont can embrace?

A proposal floated a week ago at an invitation-only conference in Burlington would tax fossil fuels in Vermont — better known as a carbon tax — but then return all of the resulting revenue to electric ratepayers. You'd pay more at the pump, but get some money back on your utility bill, depending on how much electricity you use.

That incentive and higher prices at the pump would begin the process of weaning Vermonters off fossil fuels, and meeting the state's goal of 90 percent renewable energy use by 2050, proponents say.

The tax would start at $5 per ton of carbon emissions — 4 cents per gallon of gasoline — and climb in $5 per ton increments until 2025, where it would top out at $40 per ton, or 32 cents per gallon, by 2025. At current prices, that would raise the price of a gallon of gas that costs $2.56 right now to $2.88 in 2025.

The problem with many carbon tax proposals to date is that they tend to exact the most pain from those who are least able to pay — the working poor and people on fixed incomes. The regressive carbon tax proposal introduced in the legislature in 2015, for example, would have eventually risen to 88 cents a gallon on gas and $1 per gallon on fuel oil. It's not an exaggeration to say that proposal helped elect Phil Scott governor.

But proponents of a carbon tax, firm in the conviction that it would help promote reduction in fossil fuel use, have kept swinging at the idea. Most of those proposals have included some form of revenue redistribution, from reducing the sales tax (as was the case in the 2015 proposal) to returning the revenues directly in the form of rebates.

The proposal unveiled last week would return 50 percent of the tax proceeds through a straight per-kilowatt rebate, another 25 percent among Vermonters who earn less than 400 percent of the federal poverty level, and the remaining 25 percent to rural Vermonters earning less than $75,000. If those rebates exceeded your monthly bill, you'd get a check from your utility instead.

The devil's in the details, but that milder level of taxation and the ensuing rebate, if you use electricity judiciously, makes more sense than many of the previous proposals we've seen to date.

Whether that arrangement of carrots and sticks is agreeable to the legislature, the governor and, ultimately, the voters, is another matter. Energy providers hit by the tax would surely raise prices to compensate. And even some of the money came back to Vermonters with each monthly bill, it would come out each time they bought fuel. Guess which happens more often?

But another newly focused group is focusing on the transportation piece of energy policy. Transportation for Vermonters (T4VT) has its eyes on a closely related problem that contributes to the regressive nature of carbon tax proposals in Vermont — the lack of affordable, reliable alternative transportation across the state's rural landscape that forces Vermonters to rely on their cars.

Research presented by Efficiency Vermont last year made the case that economically vulnerable Vermonters spend a disproportionate amount of their incomes on transportation. By focusing in improving affordability, accessibility and efficiency of transportation, T4VT says, Vermont can help lower those costs.

The group's first proposal, replacing diesel school or transit buses with electric buses that have proven the ability to handle cold climates, seems like a smart place to start. According to the group, 47 percent of Vermont's greenhouse gas emissions come from transportation, and gasoline and diesel represent more than 35 percent of all energy consumed in Vermont.

The trouble is that fossil fuel is a hard habit to kick. Even if the state suddenly went hog wild for electric cars, the electricity to recharge those cars would have to come from somewhere — surely, at first, from fossil fuels. And the state's rural landscape and subsequent reliance on fossil fuels remains a challenge that any attempt to reduce fossil fuel usage in this state must acknowledge if such efforts are to succeed.


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