 two more members but I'll just ask you guys before we get started you know what the process you went through in the Senate committee was that you kind of present as you did yesterday yeah so we had you know less time today than we did yesterday so we gave them a a pared down presentation but they didn't have slides for a screen so we printed the slides out and we're happy to spend our time with you all however you would like me this to say you've received the initial presentation so we don't want to do that again we could go through the report sort of section by section to give you an orientation to this behemoth if you would like or we could simply just continue the dialogue answering your questions yeah that's actually not a bad idea just warm up exercise for us and I don't want to take a lot of time doing it but see we have an hour with you if I actually that would be helpful I did not make it through the entire report last night about two hours I'm impressed that you don't do at all that actually would be helpful I think if you know in the first 10 minutes of your presentation just kind of touched on each section of the report and I got through the big 60 but that would be helpful if you just quickly touch on each section I was kind of personally I was ready questions of going along Kevin margin and so I've got a few questions I'm sure others do as well so then why don't we take why don't we take 10 or 15 minutes for you guys to do that you know get using your report and outline and then let's use you know our last kind of 45-50 minutes just for questions around the table and it'll be somewhat conversational before we start I'll just let you know and this is typically how most hearings I'll just call on people as they have questions and then what we've asked you to do is to our our hearings are recorded so if you can identify yourself for the record just so the record of your voice and we are and then we'll go from there should we start there yeah let's go ahead all right I'm more capsaid I'm a fellow at resources future and I'm the director of our carbon pricing initiative and my name is Wesley look I am senior research associate that resources for the future and work as colleague on this project pleasure to be here with you all today thank you so yeah we'll literally just walk this through step-by-step so it starts with these key findings on page one these really are just our sort of most digested we think most policy relevant takeaways for them for we talked about a lot of this stuff yesterday the upshots in general right are that Vermont's emissions have been increasing since 2011 Vermont is unlikely to meet its emissions targets with carbon pricing alone it's well first of all unlikely to meet its emissions targets without some kind of new policy carbon pricing alone is not likely to achieve the emissions targets combining moderate carbon pricing and non-pricing policies could achieve some of the state's targets and then we talk about a number of economic outcomes of current pricing the revenue recycling matters a lot in terms of distributional equity how low it can households are impacted etc so there's key findings that we do an executive summary and you know this rises the report it's about 10 pages I'm going to sort of skip over these two first pieces because we will be talking about each of what they are discussing as we go through the section so then on page 12 you just have the introduction this essentially sets the stage for this study which as you all know was requested by the legislature last year we responded to an RFP from the JFO and we're selected to do the analysis though that the study itself came from recommendations from the Vermont Climate Action Commission the governor's Climate Action Commission 17 we one of our sort of high-level messages that we want to convey to you all is that in this report we're not trying to provide recommendations we said this yesterday we just want to kind of underscore that we are just trying to provide you all with the best information that we can to inform your decision-making process your civic deliberation process your engagement with your constituents etc but we're not sort of saying this is what you should do so that's part of what's in the introduction section 2 which starts on page 13 is entitled the Vermont context and in this section we talk about we start by talking about general economic and environmental trends you can see that the state's economy has been growing but along with state emissions on page 14 you see the graph that we showed yesterday which is this increasing trajectory so this is page 14 of emissions and that trajectory is heading north when emissions reductions are the emissions targets in the state need emissions to be headed south we then talk about as we discussed yesterday the share of Vermont emissions by sector I'll just say long story short the alliance share of the emissions are in the transportation sector and in residential and commercial home heating and fuel use of the home and business we just as very quick question can you tell me the difference between industrial fuel use and industrial processes yes so industrial fuel use is literally the consumption of fossil fuels primarily in this model so you know diesel gasoline any fossil fuel kerosene you know in some cases bunker fuel or hog fuel but primarily diesel and gasoline and in other parts of the US economy coal would be in that category and then process emissions are sort of non-energy related or emissions not related to consumption of energy so a good example of a process emission would be in the process of producing cement just the chemical process clinker exactly the details but in the creation of clinker which is an ingredient in cement co2 emissions are released there's nothing to do with energy consumption it's an independent chemical process that is required to make cement that produces greenhouse gas emissions process emissions sometimes although technically this would be referred to as fugitive emissions but can be associated with energy and that's like leaking methane through leaky pipes and whatnot so the methane is actually in the fossil fuel industry so zero percent but the fossil fuel industry number here is actually methane emissions associated with transfer transmission and distribution of natural gas and the other thing that in the industrial processes emissions here is greenhouse gas emissions associated with superconducting manufacturing superconducting manufacturing plastics computer parts and what I'm asking is plastics would plastics be another example of industrial processes so I actually don't know the plastic plastics industry a lot of the plastics it uses uses like oil but doesn't actually burn the oil it's a component into the plastic so that's not actually an emission but to the extent that they were burning the oil as well that would be in the industrial fuel use so on page six teams moving along I think what we want to convey here is that the state of Vermont has a number of different emissions reduction targets greenhouse gas emission production targets there are four that we talk about in this report and sort of the emphasis throughout is placed on the first two so those four are the statutory targets the targets that are associated with the US climate alliance which map to the Paris targets that the Obama administration before the nationally determined contribution under the Paris agreement that the Obama administration is basically the US emissions reduction target over Trump administration is pledged to withdraw the United States from the Paris agreement so that's why the US climate alliance arose states saying we are still in we're still committed to this global cause of addressing climate change that's that target under two MOU is also part of that response and then the energy ECP target but we focus on the statutory target and the US climate alliance target we normalize so the way targets just to pause for a moment because I recognize that perhaps everyone is familiar with this but stop me if you are the way targets function you have three important numbers one is your base year that you're comparing against so you're comparing against 1990 levels is a common base here 2005 is a common base here so that's what you're comparing against and then is your target reduction so we want to reduce emissions below that base year level so we would say we want to reduce emissions 27 percent below 2005 levels and then your third number is your target year so by year X we want to achieve that emission reduction to sum that up for example the US climate alliance target is by against a 2005 base year we're going to reduce emissions by 26 to 28 percent by the year 2025 so we've got four targets here we we try to normalize them all to 2005 levels for ease of comparison which is the the fifth column the right in that table you then talk about some existing state actions this is what the state is already doing to reduce greenhouse gas emissions I'm not going to go into the details on that and you all are probably more familiar with that list than we are section 3 which begins on page 21 is where we we discuss non-pricing policy options so the non-pricing policy options is a very broad group or category of policies it includes things like EV purchase incentives so similar to what Green Mountain Power has had recently or various electric utilities have in the state for buying down the cost of electric vehicles for consumers if we reduce the notion there is reduce that that sticker price consumers are even more likely to buy that car which is itself one of the most powerful ways to reduce emissions in the state so that's an EV purchase incentive that would require a public expenditure or if it's it could be structured through the utility where ratepayers are subsidizing it there are various ways of doing it but that's one example of a non-pricing policy another example would be public investment in weatherization programs so low-income weatherization understood as a priority in the state so further advancing that work and then sort of incentives to purchase various energy efficient or clean technologies like advanced wood heat or electric heat pumps as heating sources in addition to those kinds of technology focused incentive policies non-pricing policies includes regulatory programs so the primary regulatory program that we look at is increasing the stringency of the state's existing renewable energy standard so for those who aren't familiar the renewable energy standard sets a target currently that by the year 20 30 to 75 percent of Vermont's electricity will come from tier one renewable energy sources and there's three tiers if you don't want to go into the RES right now I assume but we we estimate increasing the stringency to 100 percent by the year 2030 that's an example another example of a non-pricing policy we an important caveat on our work related to non-pricing policies which is articulated in here is that our contract with JFO included nothing non-pricing policies so we do a sort of broad brush treatment of it because we felt as though we heard what we heard directly from elected members we're here in September at the beginning of this project in the public that they that non-pricing policies are an important part of the Vermont picture going forward and so we need to look at it in some way we've relied heavily on the research of others primarily state agencies in Vermont that have done their own independent estimates of the emissions reductions associated with those non-pricing policies we've wrapped that in but it doesn't get incorporated into our model it's sort of the best we can do and in some respects beyond the call of duty but we felt like it's going to give you all the most comprehensive picture of the different levels you have to work with to draw down on emissions okay yeah so let's go on to flag briefly that we also did this kind of side analysis and the non-pricing policies of electric vehicle purchase incentives one of our colleagues at resources for the future is a specialist in this area so he modeled of Vermont EV purchase incentive and we we speak to it very briefly in here but it's something that you're interested in we go into detail on that policy in appendix a we kind of we didn't want to take up too much time in the body of the report that's already very long but we think that there's potentially a significant value out there and further research section for the past to work here which starts on page 29 is where we go into carbon pricing policy options which again is what we were really contracted to study primarily and is what we emphasize in the report that work so section 4 just starts with the theory behind carbon pricing to give just some background on on kind of the economics behind the theory and and the the using the price as an incentive to change behavior when the behavior is associated with a negative externality so so there's a page or two of discussing that next we go through kind of the key dimensions of a carbon pricing policy design we went through this a little bit yesterday but kind of the when you're setting a carbon pricing policy design you have to you want to do a carbon tax or you want to do cap and trade but really it comes there's a lot more kind of dimensions they're involved in the first dimension is if you're doing a tax or is the price path if you're doing a cap or is the cap and so this price path or cap level is obviously one of the very important design decisions and then as we flag yesterday what you do with the revenue we call it revenue recycling and economic speak the revenue use is very important we went through that yesterday and obviously also what kind of sectors you cover is important you know you don't have to design a policy to cover all emissions you could target certain subsectors and and so that's that's a potential source of variation across different policies and there's like the geographic or regional scope Reggie regional greenhouse gas initiative is covers emissions in 10 states British Columbia and carbon tax just covers this missions in British Columbia so there's different ways so you could look at a Vermont only policy or you could look at policies that covers emissions beyond just for month and so we kind of go through so that's kind of just the general description of that and then the next section is really going to tell you how we're going to evaluate these carbon pricing options the model descriptions are very very brief here but appendix B does include a little bit more model description and if you want way more model description than you could possibly handle there's a hundred pages of appendix in the back of this book that explains a very similar economic model to the one that we used to analyze here and so this is the gory gory detailed hundred pages of appendix and equations if you're interested in that this is the appendix yes so when we want to evaluate carbon pricing options we want to look or we want to look at both the environmental and economic impacts of those policies we want to look at the cost and the benefits and so to do that we're going to look at a lot of different dimensions and so for each policy design we're going to look at how those different policy designs affect these different metrics so the metrics that we look we evaluate our obvious one is greenhouse gas emissions the policies designed to reduce those and so I think that's the first thing we should look at we also want to look at what we call leakage which is the change in emissions in neighboring states so that's so we look at both the change in emissions in Vermont but also the change in emissions in the neighboring states and then as we mentioned yesterday criteria air pollutants are associated with burning of fossil fuels and as you reduce fossil fuel we use through a carbon pricing mechanism you will also reduce some of these local pollutants and so we quantify those both in just kind of the percent change and then we try to monetize using some EPA estimates monetize the value of those reduced emissions and then kind of going through the those are kind of the environmental impacts we're looking at but we're also obviously interested in the economic impacts and so we go through the the carbon revenues how much revenues is raised the macro economic impacts what happens to say GDP what happens to output by industry it's a data question I heard you yesterday talking about the differences between rural Vermont yeah and I and I think we have a lot of average data here yes so in Vermont with our economy the Chittin and County economy is growing rural Vermont's economy is declining and so what my question is as if there is a way there are key places that you think it would be important for us to try and pull things apart so we better understood the impacts okay does that do understand what I'm asking you so I do understand what you're asking one thing you could you could think about is these would be I would call back of the envelope calculations but we do show the change in in output by sector and the change in labor demand by sector if you know the share of those sectors by rural versus urban you could you could kind of calculate the back of the envelope how much the change like the change don't occur in Chittin versus change that would have to occur otherwise we don't have that data our data is at the state level so we weren't able to dive much deeper besides that distribution analysis results we showed that was the only place where we were really able to look at but I think there are ways that you could you could you could try to address that another way you could look at it is and this is what we did in the consumer and the household analysis is one of our impacts is the change in consumer prices as a carbon price is designed to change relative fuel prices so one thing that the information we did have was the share of expenditures on energy by different counties and so we're able to use that that data to help us look at how the impacts would be would vary across across the state so then the kind of the last things that we look at we also want to look at the change in household income how do incomes change when you implement a carbon price and that will have different impacts on kind of labor capital income and then this potential rebate income if you chose to to use the revenues to to rebate households what we define is the change in economic welfare is really going to capture the changes in prices and income on the average household and so we think this is kind of our best measure of costs and then what we want to do is we want to compare that to a measure of benefits and so we look at we kind of do some dollar analysis of the environmental benefits from reduced emissions to do a cost benefit comparison and then finally you know as just addressing here is that the last thing we do is we look at distributional impacts we're able to look at impacts across different households with different types of income we do that by quintiles so we have five different types of households by income so we're looking at the average impact on the lowest 20 percent of the state in terms of income and going up towards the highest 20 percent of the state in terms of income and we'll see much potentially much different impacts across those households we're also as I mentioned able to look at how those impacts vary across the counties using the data on how energy expenditure is vary across different counties but we're not able to do a low income by county analysis we didn't have the data to separate out income within a county and I just underscore there that that we didn't have the data because the data doesn't exist it's not sort of a shortfall of hours but we really worked quite quite diligently with all of the data sources in the state of Vermont to get the best data we could and it was impressive to see the work that had been done facilitated by efficiency Vermont on the mapping the total energy burden which is a report that was done I think in 2016 I'm blanking on the year but but that's what we use their data to look at this this the change per county and energy expenditure and therefore the change in relative costs per per county but they don't have this broken out by household income levels just sort of again your average energy expenditure by county which is again itself impressive that much data exists and then to go to that next level does just it's not there yeah yeah so just real quick so what we want to do here is I guess all these things I just told you we evaluate really the bulk of the report is going through different types of carbon price plans and showing how these things differ these these these outcomes change with different carbon price designs so different policies that have the same sectoral covers the same revenue use the same regional coverage but differ in terms of the price so we're trying to do in each of these sections section 4.3 we're trying to do an apples comparison where we're holding all the policy options fix except for the price path so you can see how the policy changes when you change the price path section 4.4 we do the exact same deep dive across all these different impacts but when you change the revenue use fully fix the price the next section 4.5 does the same thing by looking at whether you cover transportation or transportation heating or transportation heating commercial and industrial or an industrial so that that kind of gets us through quite a bit of the report because it takes quite a bit of time to for each one to go through all those different outcomes so that brings us to section 4.7 in 4.7 we do some case studies of three particular carbon pricing options the first one is the Essex plan and so we do try to make sure that we age 102 yeah and so in 4.7 we're really trying to look at these these three different types of policies kind of snapshotting in 2025 and 2030 and and so it's particularly the Essex plan we're trying to make sure that we account for the hybrid revenue use design where some of the revenue was allocated to low-income or rural households some revenue was dedicated to reducing electricity rates so we do incorporate that both those into the analysis there and then we do a will be as I was describing yesterday a Western Climate Initiative example where Vermont's transportation heating emissions are covered by the cap and trade program that includes California and Quebec and then finally we do what we call the TCI example transportation climate initiative again as I was explaining yesterday this policy proposal is going to be negotiated over the next year between Vermont and the other states that signed on to this memorandum of understanding and so we don't really know what it's going to look like and so this is kind of a speculative of exercise to say if you had a price somewhere around $20 this is what it would look like if the price was more towards the Reggie price Reggie has allowance price somewhere around $5 right now you'd expect that the impacts would be much smaller due to the chain lower price and then finally 4.8 is when we get back to this combining the carbon pricing and non-pricing approaches which we spent quite a bit of time talking about yesterday is what type of emissions reductions can you get from combining carbon price and the not the suite of non-pricing policies that were recommended by the Vermont Climate Action Commission and then finally section five is just some other observations we talk about which I mentioned yesterday the ability for us to look at innovation and that we don't include this kind of new innovation that would occur through Vermont policy although we imagine that in theory that could that could certainly occur but we're not able to kind of measure how much that would occur and then we also talk briefly about how we we'd like to see more analysis of the non-pricing options and something that was that was beyond our report and then we conclude with with much of the same kind of conclusions we we concluded the executive summary with. So something I haven't heard you guys talk a lot about in your presentation I want to make sure that I'm not either over emphasizing or under emphasizing this issue and I think a lot of the discussion that goes on around carbon pricing people jump you guys are economists jump to how does this change people's behavior are they going to buy less of a certain type of fuel are they going to drive less are they going to turn their thermostat down as well as kind of the the redistributive context of is this going to affect rural people is this going to affect lower income people is it going to move wealth around in some way is it going to take wealth out and invest that towards certain technologies that are going to further reduce submissions in addition to changes people's behavior that's kind of what this is all about something that really struck me in here it's on page five at the bottom and it talks about the health effects again I haven't heard you guys talk a lot about this but you know you're right decarbonization will lead to reductions in local criteria air pollutants and you lost some of the pollutants including particulate matter and then farther down you say using estimates on the value of reduced mortality and morbidity from these certain emissions reductions in these emissions are projected to provide annual benefits of six point seven billion oh that's a typo it should be billion I'm actually still surprised at that number that I think well for myself I don't read certainly in reducing pollutants there's certainly advantage and reducing our greenhouse gas emissions and contributing to what's really got to be a national and global effort to reduce the Vermont's not going to solve global warming by what we're doing here but in contributing to what other states we might work in concert with I think we can have an effect but looking at you know some pretty serious you know health consequences again you guys aren't probably health experts your economists but you know to the extent that seven to thirty nine million dollars annually from health effects those are real numbers can you speak a little bit about some of the work that you've done there and today you know to the extent for monitors are affected including dying you know with some of the action yeah again as you mentioned them economists I'm not a health expert and so what we've done here is so p.m. 2.5 is is a very harmful pollutants it's it's it's so small that it can actually travel into your lungs three years through your skin and it can cause a lot of problems in your lungs and so there are a lot of health consequences of that in terms of people passing away in mortality or people having expensive hospital visits and being a less healthy morbidity we take these numbers from the EPA EPA in 2018 did a detailed analysis of of particulate matter pollution in the United States concentrations and emission sources and then used used values on mortality and morbidity from another study to estimate the dollar value you get from reducing one ton of that particular emission from 17 different industries and so we're able to we just take those numbers and apply them so the numbers really have a national context and are applied so those it's a it's not camera if it's east average or the national average I think it's the east average there's actually higher concentrations of emissions in the east than there are the West and so the health effects of going from the health effects of increasing or decreasing emissions are larger the larger your concentrations are and so there's larger effects in the east and so yeah again we just take those EPA estimates remembering to that those are estimates that are per ton so it's not applying an aggregate number to Vermont but it's from this overall research it's identifying what are those costs per ton of emissions and we've been applied and that's referred to as an emissions factor and we apply that emissions factor to Vermont's emissions levels and and the what we're estimating we look at the benefits are the reduced emissions the emissions that wouldn't have happened as a result of these policies and I think again I'll speak for myself you know I kind of view these as almost they're not secondary they're important but they're almost second derivative things that come out of changing I think we as policymakers focus on the reduction of greenhouse gas emissions that there are economic issues that play there and certainly when you're talking about carbon pricing you're you're dealing with dollars and cents so they're very tangible whereas you know we think of ourselves as living in a pretty green state we don't think of air pollution as being a kind of first-order issue in Vermont but again that's why this struck me that you know people thinking about producing greenhouse gas emissions and reducing carbon fuel use as a health issue that relates to people's quality of life their health and people dying you know morbidity as we say here so thank you well one way to think of it too perhaps and this is somewhat outside of expertise but more just colloquial understanding is that even if we don't even if in Vermont it's not high concentrations of ambient air pollutants to live I have a diesel vehicle for example to live with that in your life is exposure to pollution on the daily that has for me a man's choice that I'm making personally right now has health consequences and if I were to shift and not drive a diesel vehicle anymore and drive an electric vehicle I would no longer be exposed to those emissions so it's a way of sort of trying to make it a little bit more grounded in a Vermont context that even if it's not living in the middle of the city or these high concentrations of air pollutants many Vermonters are still exposed to these pollutants and that does have genuine health impacts. Is there a direct correlation between PM 1.0 and 2.5 and greenhouse gases and like question one and two is that higher or lower with some of the non-possile fuel heating sources like advanced would heat that you yeah so the there's a stronger direct correlation between like sulfur dioxide and burning fossil fuels or nitrogen oxide. PM the difference between PM 10 and PM 2.5 is just the size of the particulate matter and PM 2.5 is the one that has the whole larger health impacts. PM 2.5 comes from a variety of places driving in dirt roads and so there's a lot of dirt roads in Vermont that that that that creates particulate PM 2.5 pollutants and so we're not able to look at the change in driving on dirt roads as a part of this policy so we don't take that into account here but they're also you know it's a consequence of manufacturing as well and so some of these are not are not direct effects of the pricing it's if the pricing slightly reduces and as what we find it slightly reduces the construction which is another construction dust is another source of PM 2.5 we slightly reduce construction activity then we're gonna slightly reduce PM 2.5 emissions and that's I mean we do we don't find very large you know changes in those emissions there was actually the ones that were kind of least responsive so I want to go back to if I could go back to your question about people being responsive to prices you know we the model is has a lot that goes into it a lot of data a lot of elasticities that kind of govern how the household in our model changes this behavior relative to price to change the prices we try to be kind of balanced in what those are we don't want to take the high range or the low range we try to be somewhere in the middle to try to give a better sense of what we think is maybe it's appropriate to take the middle ground I would just say that there is I just saw study this was on Canadian gasoline taxes and so in in Canada including the the carbon tax in British Columbia and Quebec's cabin trade program with this all included in look how gasoline taxes have changed in Canadian provinces over time they found that households were three times more responsive to changes in taxes than they were to changes in prices so they didn't change their behavior as much response price they did taxes they found that about 60 percent of the change in driving the change in energy use was associated with people buying more fuel-efficient cars 40 percent was associated with people just driving less lowered vehicle miles traveled it's not just one study there are others out there there is some evidence that people are more responsive to taxes than they are to prices but I say also I think when you just look out on the road between the last 10 years when we've seen wild fluctuations in gasoline you see that the the vehicle fleet has changed you saw you know I don't think I saw as many F-150s on the road when the price of gasoline was was $5 a gallon when I lived in California but as it's fallen you've seen that those sales have continued to go up and so we do see this behavior over time and just response to the fluctuations in gas gases are high price they're high people drive less and they drive more fuel-efficient vehicles than when it falls they do the opposite yeah so a couple of questions in the economic welfare results that you have there when you show that say pretty sx plan on page 103 for the second quintile you have plus 24 so that's people in the 23,000 to 45,000 dollar range right they would see an economic benefit of about $24 per year per year for also and then if they're in the rural area you have a minusc so does that mean you subtract the eight from the 24 or that's the simplest math you can do that's what I've done is I say that it seems to be about an eight dollar differential between urban and rural so there's about an eight dollar difference between urban and rural and so during the second quintile yeah but again these are average households and so it's there is a lot of heterogeneity one of the important things that got out of this was the any elasticity for transportation and eating fuels respect and the the carbon pricing models or proposals that we're looking at here don't go anywhere near enough to change behavior I think this your point do do all these models and assume that they that they're revenue neutral close to yeah so the carbon pricing only policies we look at our we're assuming that they're revenue neutral where we have a there's some page here we we talk about very briefly about why we can't look at the direct directly expending the money on on non-pricing and do an economic analysis of that so on page 61 we kind of have an explanation of what would happen if you just kind of like just in words what we think would happen if you if you use the revenue to finance green investment I think the point I was trying to make yesterday with the trade-offs and the revenue uses that yes it's it's certainly true that you can take those revenues to finance green investment to the extent you do that though you're reducing the revenues you can return to households through rebates or through tax cuts or through electricity rate reductions those those those ways we know those revenue neutral ways that we've looked at our ways to help offset the the increased price in electric of energy and so for every dollar you spent there's an opportunity cost there for green investment every dollar you spend on green investment you might get more emissions reductions but you you you lose the ability to give that money back to households and so there's a trade-off there and and so if and so I think one of our things is saying is that if you are committed to those climate goals then our modeling suggests you would have to take a hybrid approach because the pricing policy wouldn't do it by itself so take looking at the Essex plan that goes from five dollars per ton the first year up to forty dollars per ton after eight years and that's supposed to be revenue neutral is supposed to help reduce electric bills and it's probably not going to change behavior that much because at forty dollars a ton people are not going to and with the amount of rebates they can get on their electric bill they're not going to be investing any of that return into anything that will help them reduce the greenhouse gas emissions like weatherization or buying electric vehicles like that so one of the questions I asked yesterday was how the prices fluctuate over a year and as we know they can go up and down 50 cents within a year price of gasoline and heating oil is the same so just as a I don't know what you can do this on the back of the envelope type of estimate or not but if we were to take a very minimal carbon price that's well within that range of fluctuation say five to fifteen cents per gallon and take the revenues and use them entirely for programs that would help people weatherize, purchase electric vehicles, things like that. In your opinion based on what you've studied and everything would that have an effective influence on reducing greenhouse gases? So without having a major economic impact in the households because Exxon raises the price 15 cents a gallon which can happen in a week we don't get anything extra for that whereas if we put a 15 cent per gallon price on carbon we can take that money and help people do good things. So just if you go to page 107 we have like the changes in economic welfare by household groups and this is for 2020 I think we have somewhere around I have the number for 2025 it's a 2020 I think the number is somewhere around $50 million of revenue that's going to equate to 40 or 50 so that's going to equate to the rebate size here is somewhere around $200 per person. So 107 just looking at TCI that's the impact in 2025 is about a 16 cent increase in gasoline on page 107. And so that policy is going to raise that the amount of revenue is going to be about $200 per person those rebate sizes are about $200 per person per year or and then growing over time as the price increases. But so on page 107 if you just take $53 for Q1 well if you don't give them that revenue then you have to subtract that $200 so instead of being $53 for the good it would be $150 for the worst. So you could take that revenue and spend it but you're taking it away from these households who are using that revenue to offset their higher education prices. So long story short I mean just to make sure that's really clear that it's around $150 cost one of your questions right is what would that cost be and is it a reasonable cost if you didn't use the revenue to offset cost is about $150 right. Now one thing we did not estimate is basically that these same kind of cost benefit analysis per household of taking that revenue and investing in weatherization that's a very important caveat. Again it points to the limitation that we had on our ability to do a detailed analysis of these non-pricing policies. We don't know what that will be we do think that there will be some benefit to those households of taking that money and investing in weatherization or investing in something else that improves energy efficiency because energy efficiency reduces costs. Now there's a whole lot of literature out there that points to the fact that those cost savings may be less than are estimated by engineers because of the behavioral response and something called the rebound effect. We think there's some benefit though right so I think you shouldn't see that as no benefit we don't know what that benefit would be and it is a good subject for further study. Our understanding is that the regulatory assistance project or RAP is doing some work on these non-pricing policies that may be published within a month or two but that's an important consideration. You're also asked would we expect that the investment of those revenues in weatherization or whatever it may be would further reduce emissions and what we find is that yes it would. That seems quite clear. Very short clarification you said households and persons $200 per person or $200 per household. I know this information is available somewhere else but I'm wondering if you know offhand you did this dividing income into wind tiles. How those wind tiles relate to population percentages? So each one is 20% of the population. So that's how the parameters were set. So we basically order all the households by income take the lowest 20% wherever that cutoff is they go and bin one next 20% they go and bin two. Can I just say something on that briefly actually in terms of the revenue use so therefore the way we've done this lump sum rebate which is that rebate in the revenue use calculations is taking 20% per quintile. So it's taking that whole pie dividing it by five and then you get 20% in each of those slices of the pie and that gets given to each quintile. And so the reason why I want to communicate that to you all is that you could have as some policies do have a more stylized rebate where the rebate is only delivered to certain income levels. If for example the concern were to keep whole so to speak the lowest two or three income quintiles in our current framework if it's the lowest one that's 20% of your revenue is the lowest two that's 40% of your revenue is the lowest three that's 60% of your revenue. You have the remainder to invest in weatherization or whatever else may be a policy priority. What you've done here is simply flat and it would be less actually if you were aiming at keeping again the average household there's heterogeneity within the quintiles just as the quintiles represent heterogeneity across the entire population. But within a quintile is heterogeneity so if you're just looking at the average household and keeping them whole let's say in the lowest income quintile that would be less than what we're currently giving them. Because what we're currently giving them gives them a surplus of about you know $7 and $50 depending on your pricing scenario. Does that make sense? So we did one little calculation yesterday that showed that it would be more like 12% of the revenue to keep the lowest income quintile whole instead of the 20% that we're giving them currently which is giving them a surplus. Now maybe you want to give them a surplus these are all your decisions right? This is the public policy decision making process. But just I think one of the things that's important for us to convey in this is that it can be much more nuanced than it is being represented as here. We had to bound our analysis somehow. Another question is for the purposes for your purposes is wood heat, biomass, carbon neutral. Yes, right. Because you know we look at important products as a way to stimulate local economy and I'm just wondering how that figures in and also carbon neutrality is a different question than particulate matter. Yes. I don't know if your calculations were based on removing carbon fossil fuels out of the mix and not increasing wood particulate emissions. So just removing carbon and assuming that whatever replaces that is clean, no particulate emissions. Was that your basis? So not quite. We have, it's actually in our model the most distinguished we can get is fuel oil and other fuels. And so that represents heating oil and wood heating. And so we can't, and so the emissions factor represents kind of the average emissions for the combined. So we can't, we haven't been able to piece out exactly how much the shift is fuel oil and wood. But we do have some emissions factors for wood consumption. And in terms of the PM 2.5 and I think we do see a little uptick in that. Mark, I asked you this after the presentation yesterday, but I know we've been a CTC carbon tech center. And it's talked about how it would be very difficult if not impossible for the individual state to administer such a carbon tax scheme. Do you, did you look at the industry board doing about the actual administrative costs to any of these proposals? No, we didn't look at the administrative costs. I think there are, there has been research out there on how you can implement these within the existing framework of how the state already taxes entities. So for example, adding a tax on gasoline that you already have a gasoline tax. And so you just change the, you can easily implement a change there. Whereas somewhere you didn't already taxing something it might be more difficult. That's something I don't have at my fingertips now, but it's something that over the next week or so I could try to find some of those reports that show how you would implement, administratively implement these programs. I'm trying to get my head around how much additional analysis we would need to do for months specific if we wanted to proceed in any of these options. Yesterday I asked a question about whether you would consider the cost of income eligibility determination if we were going to give a benefit to lower income people and that's not, you hadn't done that. So if we wanted to do that, that would be part of what we would need to consider and a different level on the sort of benefit side rather than the cost side. Did you get into things like on advanced, would heed for instance, the economic and employment benefits of promoting a Vermont based economic activity or is that something that was outside of what you were doing? So I would say that the model does account for changing and spending money outside Vermont versus spending the money inside Vermont. The way these models work is every dollar has to go somewhere and so if it doesn't go out it can stay in and that dollar might stay in or might stay out. Maybe 50% stays in depending on how that dollar is spent. So we don't have, I don't have any analysis that would tell you how much of the fossil fuel spending was now kept in state. That's all part of this big contraption that at the end of the day you can't really ease that out but it's in there. But I think some more research on those types of things would be great. So my question was sort of following up on Mark in our room about the administrative costs of a rebate system. I mean there would be some cost in setting such a thing up and you did really try to quantify that as what I'm getting, right? That's correct. Well then the other questions I was thinking about sort of again globally. If there were a carbon tax or carbon pricing that would affect actually not just fuels but really all the economy because everything that we consume has a carbon footprint. Did you consider that as well? Yeah, so the way that our model works is that kind of the, we call it a social accounting matrix and what it does is it tracks how people spend the money and how it flows through the economy. And so what you see is that for, we have 18 sectors, we know how much each of those sectors is purchasing in fuels versus purchasing in other goods. And so you'll see for example that like the services industry spends a lot more of its revenue or expenditures on labor than it does energy. So it's a relatively energy, a non-energy intensive industry whereas the natural gas utility has to purchase the natural gas that is obviously very energy intensive. And so we do allow for looking, so the model does account for differences in intensity across different types of industries and goods. And then lastly, just one last follow-up about electrification. As the economy electrifies both with electric vehicles and heat pumps, is that also built in? Is there an increasing dependence on electricity for heating and transportation? Yeah, the model allows for substitution from different types of fuels to electricity. You see that especially in the part of the report where we allow for the rebates, the revenues to be used to reduce electricity prices. You see a large increase in demand for electricity. So we're three minutes over time and we've got another hearing that started three minutes ago. Three hours more questions. We were saying to the last group that we spoke with that if you do have follow-up questions to please send them to Joyce and Catherine.