Commentary

Spencer Putnam: A careful carbon tax could stimulate economy

Editor’s note: This commentary is by Spencer Putnam, who is a resident of Weybridge and a longtime member and officer of the Democratic Party. Now retired, he is a past operations vice president of Vermont Teddy Bear Co. and executive director of Vermont Businesses for Social Responsibility.

Recently the press and airwaves in Vermont have been full of controversy over the effort to put a price on carbon emissions through a “carbon pollution tax.” While some worry about rising commuter costs for working Vermonters, the proposed legislation would offset cost increases through the establishment of an Energy Independence Fund to help Vermonters finance energy-efficiency measures. In addition, the current proposal includes a one percentage point reduction in the state sales tax. The proposal is essentially revenue neutral. Although some fear damage to the state’s economy, a recent study by REMI (Regional Economic Models Inc.) predicts significant economic stimulus as a result of a carefully structured tax on carbon.

What seems to be lost in this debate is the critical importance of moving quickly to confront the effects of climate change. Vermont’s Comprehensive Energy Plan lays out ambitious goals in this regard — reducing greenhouse gas emissions by 75 percent and getting 90 percent of its energy from renewables by 2050. These are important goals for the health of our citizens and our economy, and they are a necessary contribution by the state of Vermont to counter climate change. I am concerned, however, that greenhouse gas emissions in Vermont are not declining — they are flat since 1995 — and that we currently generate only 16 percent of our energy from renewable sources. We have a long way to go in the 35 years remaining for the attainment of these goals. A carbon pollution tax, properly structured, could get us moving toward achieving these goals while protecting low-income Vermonters and actually boosting our economy.

A carbon pollution tax will gradually increase the cost of fossil fuels, but the proceeds will be directed back to Vermonters in tax cuts and rebates.

 

When I hear that Vermont spends $2 billion annually on fossil fuels to meet its energy needs, I see a business opportunity. Currently 80 percent of our energy dollars are sent out of the state. Keeping those dollars in our state will strengthen our economy and create jobs right here in Vermont.

When I was vice president of operations at Vermont Teddy Bear we worked hard to reduce our energy use for heating, cooling and general operations. Saving energy dollars was part of good business operations. Individuals who weatherize their homes can save significant energy dollars while increasing comfort. Switching to a more fuel-efficient or electric car can both save on fuel costs and cut down on emissions. Businesses and families who have taken measures like these have often been supported by financial incentives and subsidies. The transformation in our society called for by Vermont’s Comprehensive Energy Plan requires similar support. We need to discourage what goes against our goals and offer encouragement for what will move us closer to them.

For Vermont, putting a price on carbon can play that dual role. A carbon pollution tax will gradually increase the cost of fossil fuels, but the proceeds will be directed back to Vermonters in tax cuts and rebates. It will also, importantly, help people reduce their consumption by weatherizing their homes and buildings, transitioning them to more efficient forms of transportation, or switching their fossil fuel heating sources to efficient wood or solar heating. Ensuring that rebates and energy programs are smartly structured can also help eliminate the negative impacts of the tax for qualifying low-income residents.

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Reducing fossil fuel consumption in Vermont will save money for individuals, businesses and public institutions while moving us toward the goal of reducing greenhouse gases. The fewer energy dollars we send out of state, the more dollars will circulate locally, strengthening our economy. The jobs created in weatherization and other efficiency projects cannot be shipped abroad — they are, by nature, local economy boosters.


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