Commentary

David Farnsworth: TCI has flexibility to meet Vermonters’ needs

Editor’s note: This commentary is by David Farnsworth, of South Royalton, who is a principal with the Regulatory Assistance Project, a Montpelier-based nonprofit organization. From 1995-2008, he was a staff attorney and hearing officer for the Vermont Public Service Board, which he represented on the Regional Greenhouse Gas Initiative Staff Working Group.

I recently read former Commissioner Jeffrey Wennberg’s commentary “Transportation and Climate Initiative doomed to fail,” about the Regional Greenhouse Gas Initiative and plans for the Transportation and Climate Initiative. I would like to challenge some of the points he makes in the hope of clarifying current discussions about these programs.

In 2003, when Wennberg was commissioner of Vermont’s Department of Environmental Conservation, his air director, Dick Valentinetti, and I represented Vermont in discussions with energy and environmental staff from nine other Northeastern states. We were engaged in designing the RGGI program so it would work for a specific market — electricity. The biggest lesson from that work was that the approach we were developing can be flexible in useful ways.

We recognized, for example, that for a very low price – in other words, with a hardly noticeable effect on consumers – RGGI produces revenue that lawmakers can direct for investment purposes to the things that they want to see happen. We thought we’d developed a cap-and-trade program. That wasn’t right; we’d developed a cap-and-invest program. 

Good news: TCI possesses the same flexibility. It can be designed to put a low or a high price on transportation fuels. The highest price TCI planners have considered so far is 17 cents on a gallon of gas.  Before we go through the roof over that, TCI state staff indicate that over the last 10 years, per-gallon prices have gone down by as much as a dollar and gone up by as much as a dollar and half over current average per-gallon prices. 

If this would cost too much for low-income households or our most vulnerable communities, the state could decide to rebate that amount to, for example, the bottom third of Vermont earners, and shield them entirely. The point: TCI can price flexibly, and decision-makers can make those adjustments. 

The same flexibility for pricing is available for investing. TCI can be designed by lawmakers to produce the effects they want. Just as we can buffer low-income Vermonters from program costs, we could direct investment on their behalf as well. We could pay for needed rural transit. We could fund programs to make available new EVs or lower-cost, preowned EVs either through ownership or leases. Lawmakers could decide.

Wennberg also argues that cap-and-trade programs create an expensive bureaucracy. That is not what happened with RGGI. Vermont pays only about 1% of its RGGI revenues to participate in that program. It is also important to remember that this is precisely the advantage in sharing program functions like an auction platform and an independent market monitor, and their related costs with other states. This is something that lawmakers should watch, but it’s unlikely to be a problem in a regional cap-and-trade program that only applies to a small number of major fossil fuel importers and wholesalers in the Northeast.

So I hope we’ve busted a couple of myths:

  • “The price on transportation fuel has to be high to get any results.” No, it doesn’t. You will get more resentment than change with a high price. You drive change by agreeing to a modest price, and by investing proceeds for the benefit of Vermonters.
  • “TCI will hurt low-income Vermonters.” It doesn’t need to. If necessary, carve out the most economically vulnerable Vermonters from any price effects. Then, invest aggressively on their behalf. After all, climate change is more regressive and investment in energy-saving transportation choices, targeted first to our vulnerable fellow citizens, will save them money and, we hope, improve their lives.
  • “TCI will be an expensive bureaucracy.” No, it doesn’t need to be. Program costs are modest and would be shared with 11 other states. Lawmakers can require reporting that shows how much Vermont plans to pay, and how much it actually pays from program revenues.
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Evidence shows that much of Vermont’s transportation system – the way we move people and goods around the state – is outdated, expensive, inefficient, and doesn’t meet everyone’s needs. Furthermore, when compared with other Vermonters, lower-income Vermonters pay disproportionately more to get to work, to the hospital, and to places where they can shop and enjoy other services. A 21st century transportation system that is more affordable, and meets everyone’s needs, will address the challenge that many Vermonters face in trying to access basic services. If we remember the lessons that we learned from RGGI, the Transportation and Climate Initiative can be useful to our state and help us invest our way into the future.


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Scott Beck

Just call it what it is, a Carbon Tax.

Tim Vincent

What problem is TCI supposed to solve?
Saving the earth from global warming?
That’s ignorant nonsense…..and dishonest.
Providing “feel goodism” for various vocal activists who exclusively own THE TRUTH.
Getting warm.
Putting more money in the hands of politicians and bureaucrats?
BINGO !!

John McCormick

Start with issuing a credit card similar to the EBT card used to purchase food and other services.

Vermonters with wealth in the lowest three quintiles would be eligible for the new card that cancel the TCI increase at the pump. They would be held harmless.

Frank Westcott

I must be a suck egg mule! Explained this way you can sign me right up! What could possibly go wrong?

Peter Chick

Vermonters need less of a tax burden. How will TCI accomplish that?

Kim Fried

Simple-DOA!

Annette Smith

This commentary raises more questions for me than it does provide answers. Note it is written by someone who likely has a pretty high salary, as do many people promoting policy in Vt.

The idea is we are all supposed to drive electric vehicles, which currently are expensive (even with rebates) and lack adequate range especially in cold weather. The WSJ recently produced the first of a series of road tests of different electric vehicles in different parts of the country and world.
It is quite illuminating, especially about range anxiety and cold weather battery life. https://www.wsj.com/video/series/shifting-to-electric/the-electric-vehicle-road-test

If the majority of people do switch to EVs, then there will not be much paid in gas taxes, which means that the success of TCI will also result in its failure because gasoline won’t be taxed when people aren’t buying it.

And the gas tax currently pays for roads. What is the plan under the EV regime to support roads?

Isaac Bissell

This conversation conveniently sidesteps the reality that we need structural change and not a gradualist approach, which is what TCI and the suite of legislation offered by the Vermont Democratic Party represents. The promotion of this legislation is a distraction from the honest conversation we should be having about our future. This type of legislation protects the comfort of those who will not have to live through the devastation that is coming. The price of this nice soft transition will be that future generations will have a desperate and tenuous existence on an earth that does not resemble the one we now know and love.

edward letourneau

How did this guy get through law school?

Glenn Thompson

Putting sugar on a turd doesn’t make the turd taste better.

Tim Vincent

“Start with issuing a credit card similar to the EBT card used to purchase food and other services”
That’s great, another government fiat currency that can be sold for dollars to buy…. oh I don’t know…. drugs maybe.
And remember the bureaucracy to administer this would not be free.

Karen McIlveen1

Having fuel to heat your home should not be priced by your “wealth” or lack there of. That is illegal.

Chuck Lacy

Fuel taxes pay less than half the cost of the roads. Let’s start by insisting the fuel tax (and some kind of mileage charge for electric vehicles) pay for the roads.

Stop paying for roads with property taxes and income taxes and federal budget deficits. You don’t have to call it a carbon tax. Just call it a “paying for the roads tax”.

Robert Roper

This is just a scam to shake down Vermont taxpayers for another $90 million a year.

If the goal is to save the planet, a low tax won’t do it, nor will a high one.

If the goal is to simply lower Vermont’s carbon footprint as an example to the world, a low tax won’t do that either, and only a very high tax (enough to get gas over $4 a gallon) would be likely to have any impact on an otherwise price inelastic product. If you rebate the money to low income Vermonters -the folks who tend to live further out of town and have longer commutes – that’s nice but you’re not doing anything to curtail that CO2.

If you’re worried about how to pay for roads, then you should really hate TCI, because it removes tax capacity for road maintenance and shifts it to EV subsidies, weatherization, etc.

And lastly, it’s a bad deal for VT. The states that profit from the scheme drive the least; those that lose drive more. And VT drives most of all. This is a tax VTers to pay CT, MA, etc. No thanks.

Jeffrey Wennberg

Mr. Farnsworth has inadvertently proven my central argument: TCI is a tax by another name – “Cap and Invest”. What is the point of the “Cap” if all the benefits result from the new revenues the state now has to “Invest”? As for the expensive bureaucracy, check out the RGGI web site- rggi.org and compare that with a tax that can be applied without adding a single new position. The only reason anyone would use this mechanism to fund government climate policies and programs is to avoid using the word “Tax” in the legislation.

Paul anderson

Just more taxes, rationalize all you want but that’s what it is. VT needs to cut spending and taxes period

 

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