Top House Democrat To Push Carbon Tax In 2015

Nov 13, 2014

A coalition of environmental groups wants Vermont to become the first state in the country to impose a pollution tax on fossil fuels. And one powerful Democratic lawmaker says he intends to make it happen.

East Montpelier Rep. Tony Klein is the Democratic chairman of the House Committee on Energy. He made a roomful of environmental advocates very happy on Thursday when he outlined what he said will be a top legislative priority for him next year.

“And we are drafting and introducing a carbon pollution tax bill that will grow our economy,” Klein says. “And we have every intention of moving this bill through the entire committee process and onto the floor of the House this session.”

It isn’t the first time Klein and some of his like-minded lawmakers have sought to pass a tax carbon-dioxide emitting fossil fuels. But this time around, they’ll come armed to the debate with a new study that purportedly shows the economic benefits that would accompany heightened taxes on unleaded gasoline, heating oil, natural gas and other fossil fuels.

"We are drafting and introducing a carbon pollution tax bill that will grow our economy. And we have every intention of moving this bill through the entire committee process and onto the floor of the House this session." - Rep. Tony Klein

“This policy will create jobs for Vermont,” says Ben Walsh, clean energy advocate for the Vermont Public Interest Research Group. “It will grow Vermont’s economy. And it will cut carbon pollution.”

VPIRG has joined forces with some of the state’s highest-profile environmental groups, as well as some for-profit renewable energy companies, to form a new group, called Energy Independent Vermont.

Carbon taxes are designed to curb consumption of fossil fuels that emit the carbon dioxide responsible for climate change. But a $40,000 study commissioned by the coalition says a carbon tax would be good for jobs and economic growth as well.

The benefits are slight, according to the study, and represent less that one percent improvement over where the economy would be headed without the new surcharges. But Energy Independent Vermont will try to use the study to beat back carbon tax opponents, who say new taxes on gasoline and other fuels would increase the cost of living and drag the economy down.

"This policy will create jobs for Vermont. It will grow Vermont's economy. And it will cut carbon pollution." - Ben Walsh, VPIRG clean energy advocate

Jon Erickson, a professor at the Gund School of Environmental Economics at the University of Vermont, says it isn’t the first analysis to show the financial benefits of carbon taxes. And while most of the money spent on fossil fuels ends up in the pockets of someone outside Vermont, dollars spent on efficiency projects or locally sourced renewables, Erickson says, are more likely to remain in the Vermont economy.

“We tax the things that we don’t want – pollution. And we invest in the things that we do want – jobs and economy,” Erickson says. “Economists have long, long argued that for prices to work best, prices must tell the truth. It’s very simple.”

Matt Cota, executive director of the Vermont Fuel Dealers Association, says the proposal certainly wouldn’t improve the household economies of the 300,000 Vermonters who rely on heating oil to warm their homes every winter.

“Putting this expense, this tax on Vermonters to heat their home just isn’t justified, and it would do more harm,” Cota says.  

"Putting this expense, this tax on Vermonters to heat their home, just isn't justified, and it would do more harm." - Matt Cota, Vermont Fuel Dealers Association executive director

Gov. Peter Shumlin says that while he supports the idea of a regional or national carbon tax, he says Vermont can’t afford to go it alone.

“If you have a high carbon tax in the gas station on this side of the Chesterfield bridge, and you have no carbon tax on the other side of the bridge, it’s pretty clear what you’re going to do to fill up your tank. So there are some real challenges for a small rural state,” Shumlin says.

Klein says the specifics of his carbon tax legislation are still being developed.

"If you have a high carbon tax in the gas station on this side of the Chesterfield bridge, and you have no carbon tax on the other side of the bridge, it's pretty clear what you’re going to do to fill up your tank." - Gov. Peter Shumlin

The proposal from Energy Independent Vermont would impose a tax on fossil fuel distributors – anywhere from 45 cents per gallon to $1.35 per gallon for gasoline, for instance – and phase the surcharge in over 10 years. A portion of the money would be invested in energy efficiency projects; the remainder would go to individuals and businesses in the form of refundable tax credits.

Energy Independent Vermont says lower-income Vermonters would get a special financial dispensation, to offset the impact of the new taxes on the costs of things such as heating oil and gas.