What Could We Do with a One-cent per Gallon-of-gasoline Carbon-pollution tax?

By Rick Wackernagel

In Vermont – and elsewhere — we need to accelerate adoption of low-carbon practices and technologies to achieve our climate goals. To increase adoption rates we need to address four main barriers:

• high upfront costs of energy efficiency and renewable energy,

• limited financial resources,
• lack of knowledge of low-carbon alternatives, and
• lack of confidence that low-carbon alternatives will perform as advertised.

A small carbon tax could significantly help us address these barriers. It could pay for cost-effective programs currently limited by lack of funds. A tax of $1 per metric ton of carbon dioxide would cost less than 1¢ per gallon of gasoline and generate about $5 million per year¹. Here are possible ways this tax could help.

• Reducing energy use in low-income households. These households have very limited capacity to pay for energy efficiency. Vermont’s Weatherization Assistance Program (WAP) is the state’s largest effort to help them, prioritizing households below 60% of median income². In some places, WAP has 3-year waiting lists. Vermont has a goal of getting 90% of its energy from renewable sources by 2050. At current funding, WAP could reach just 79% of these households that year. Adding $2 million per year gets us to 88%. If research and development (R&D) efforts can reduce weatherization costs 10%, we can get to 93%.
• Relieving the shortage of Park & Ride (P&R) space. Eight areas of Vermont with high residential densities have no P&R areas within 10 miles³. Eleven of 79 P&R lots are frequently over capacity. We could reduce the number of underserved areas by half and reduce the shortage of spaces at existing lots by 20% for a little over $1.5 million.
• Reducing the cost of low-carbon technologies. Although costs of renewable energy have dropped, high upfront costs still plague low-carbon technologies. In the long term, these technologies are cheaper. In the short term, however, they take a lot of money. Vermont’s Energy Action Network (EAN) estimates the upfront costs of investments needed to achieve our 90%-renewable-by-2050 goal at $33 billion⁴. R&D can reduce these costs. The public sector has an important role here. It can undertake R&D the private sector finds unattractive, for example, emphasizing low-cost practices and technologies.
  • Niches for R&D in Vermont exist. These are in the form of combinations of unique need and resources. One need is thermal-efficiency upgrades, which EAN estimates will cost $9 billion. One resource is Vermont’s housing stock, among the oldest in the country. Vermont also has an abundance of skill, knowledge and motivation. Just as one indicator, roughly 1,000 building professionals attended Efficiency Vermont’s 10th Building Better by Design conference this February. A technology-development council could be the means. Such councils have produced rapid innovation in East Asia. Drawing members from public, nonprofit and private sectors, these councils identify and prioritize opportunities, and coordinate their development. To the building professionals above, we could add architects, engineers, physicists and other scientists from Dartmouth, Middlebury, UVM and VTC. If the only thing the council accomplishes is reducing the cost of thermal upgrades by 10%, we will come out $880 million ahead.
• Informing, educating and demonstrating. Recent pilot projects build familiarity with and confidence in low-carbon alternatives. Here are just three in and around Vermont.
  • Solarize Upper Valley tripled installed photovoltaic capacities within a year in participating communities⁵. The project director then developed a do-it-yourself Solarize toolkit. Now, technical specialists can remotely support communities running their own Solarize campaigns. Two specialists, costing $270,000, could cover Vermont’s remaining towns in three years. Meanwhile, studies show faster adoption after the campaign than before, and diffusion into neighboring communities.
  • Zero Energy Now⁶ converted 22 conventional Vermont homes into high-performance, energy-efficient homes with photovoltaic power systems. The conversion produced an average return on investment of 9%. A statewide demonstration group of 50 homes would cost $150,000, with homeowner incentives and site visits for prospective ZENers.
  • Addison County Community Trust and Cathedral Square Corporation redeveloped a blighted mobile-home park into Vermont’s first net-zero-energy, affordable rental community, “McKnight Lane⁷.” It features modular homes constructed by Wilder, Vermont-based VERMOD. This project replaced an uninhabitable mobile-home park with much needed new affordable housing. Each home includes a Sonnen back-up battery, which provides energy resiliency. Rent for these Vermods is less than an average member of WAP’s high-priority group pays for rent and energy in a conventional manufactured home⁸. A feasibility study for redeveloping other suitable mobile-home parks will cost $130,000.

Financial assistance, lower-cost low-carbon alternatives, information and demonstrations add up to increased rates of adoption. A carbon tax can be a way to make adopting low-carbon practices and technologies easier, cheaper and less risky. These principles can support plans for other states.

Rick Wackernagel is an itinerant climate activist.

Rick appreciates very much the help he received from Anita Kelman, Jenna Koloski, Phoebe Howe, Richard Faesy and Sarah Brock in writing this article.Acknowledgement

Sources

 Regional Economic Models, Inc. 2014. The economic, fiscal, emissions, and demographic implications from a carbon price policy in Vermont.

http://www.energyindependentvt.org/wp-content/uploads/2015/04/REMI_Final.pdf

2 Wilcox , Geoff. January 31, 2017. Performance Indicators for the Vermont Weatherization Assistance Program.

http://legislature.vermont.gov/assets/Legislative-Reports/2017-Wx-Legislative-Report-2017.01.12.pdf

3 RSG, Inc. December 2015. Statewide park-and-ride facilities plan.

http://vtrans.vermont.gov/sites/aot/files/planning/documents/planning/VTrans%20Statewide%20Park%20and%20Ride%20Facilities%20Plan_2015-12.pdf

RSG, Inc. December 2015. Statewide park-and-ride facilities plan: Appendix.

http://vtrans.vermont.gov/sites/aot/files/planning/documents/planning/Appendix_2015-12.pdf

4 Vt Dept of Public Service. 2016. Comprehensive Energy Plan 2016.

http://publicservice.vermont.gov/publications-resources/publications/energy_plan/2015_plan

5 Solarize Upper Valley was conducted by Vital Communities. Sarah Brock was the project director.

http://vitalcommunities.org/energy/solarize/

http://vitalcommunities.org/energy/solarizetoolkit/

6 Zero Energy Now ™ is a program to increase energy efficiency and replace fossil energy in homes and small businesses. It was developed by Building Performance Professionals Association of Vermont.

http://zeroenergynowvt.com/

For more information contact

Info@BPPA-VT.org

7 The mobile-home park is called McKnight Lane. An informational booklet is at:

http://www.addisontrust.org/uploads/5/0/0/3/50034487/mcknight_marketing_book.pdf

8 U.S. Census Bureau. 2017-01-15. Public Use Microdata Sample – Housing file – Vt [for 2010-2014]. American Community Survey – Housing.

https://factfinder.census.gov/

ACS – PUMS – Hous’g.xlsx – https://goo.gl/uC5ubJ

9 Budgets for this allocation of the carbon-pollution-tax revenue are available at https://goo.gl/uC5ubJ.