 It's a joint committee meeting of the House Natural Resources Suspicion Wildlife Committee and the House Energy and Technology Committee calling in to order now. My name is Amy Sheldon. I'm the Chair of the House Natural Resources Suspicion Wildlife. I'd like to take just a minute to go on the room and have the members of each city say who they are. And I represent the town of Middlebury in the House. I'm Tim Brieglund. I'm the Chair of the Energy and Technology Committee. I'm the Director and I represent four towns in the upper valley. Lawrence and Sibylianna. I'm the Chair of the House. I work at the Energy and Technology Committee. I'm the Chair and I represent four towns in the upper valley. I'm the Chair of the House Natural Resources. I'm from Grand Isle County and Westwood. I'm Tom Theron. I'm from Rockland Fountain and I'm a fish. I live in Natural Resources. Good afternoon. I'm Representative Jim McCullough. I'm a brave little hamlet of Wilson where I'm proud to announce that we have a great town's energy committee. I'm Mark Higley from Lowell. I represent Lowell, J. Westwood, Troy and Heath. I'm the one in the Energy and Technology Committee. I'm Harvey Smith from Madison County. I'm Tom Zulfner. I'm Hayden Weiber. I'm Rick Moore. I'm Paul Faye from Newark. I run the Natural Resources Committee. And I represent eight towns covering northern Aztec, Caledonia and Portland. I'm Travis Whirl. Natural Resources representing Jericho. I'm Robert Chestnut. I'm from Little Town Springs. I'm Energy and Technology. I represent five towns in the upper valley. I'm Chris Bates. I'm Natural Resources. I'm Bennington. I'm Scott Campbell from St. Johnsbury. I'm Energy and Technology. I'm Bob Warke. I'm Springfield. I'm Natural Resources. I'm Chris Bates. I'm Mary Dolan. I'm the Committee for Natural Resources and Sufficient Wildlife. I represent five towns in Washington, New York, San Diego, Wastefield, Warren, East and Bortown, New York Square. I'm Seth Chase. I'm Cold Chestnut. I'm Energy and Technology. I'm Chris Bates. I'm the one in the Energy and Technology Committee. I'm Chris Bates. I'm the one in the Energy and Technology Committee. I'm Chris Bates. I'm the one in the Energy and Technology Committee. The purpose of it is to give our committees a chance to get the information back from the results. We did the study on the decarbonization methods in Vermont. This was a study that House of Natural Resources requested through the budget appropriations process based on a recommendation that was in the Governor's Climate Commission report. And we're going to hold on questions until we get through the report. And each of our committees tomorrow is going to have an opportunity to have more time with the consultants to dig into specific questions that you might have. So if you can hold for that, I don't know if we have time at the end, we will give the opportunity for questions at the time. Energy and Technology has them tomorrow morning at 9.30 p.m. House of Natural Resources at 10.45 p.m. And the climate solutions caucus will be hearing from them at noon. We're getting our monies to work while they're in town. So there's plenty of opportunity to hear more if you don't get enough today. That comes in. Welcome. And I'll hand it over to Captain Benham who's from the Joint Physical Office and helped make this study happen. Yes, I'm Captain Benham with the Joint Physical Office. And last year in the budget, the budget requested a study be done on decarbonization methods. Can you use the microphone? Yeah, please. In the budget call for a study of decarbonization, we put out an RFP. We had some responses and we ended up selecting resources for the future who are here to present their report. The report is posted on your committee pages or will be shortly. It will also be posted on the JFL website as well as the presentation will be in all those places as well. So I'm going to turn it over to Mark and Wes. I'm Mark Afsted. I'm a fellow at Resource for the Future and I'm also the director of the committee for the future. And my name is Wesley Look. I am Senior Research Associate at Resource for the Future. Thank you all for having us here today. All members of the committee, both committees. Pleasure to be here. So I'll start by giving some kind of introductory background information that led into our study. And then I'll pass it to Mark and I will both share the floor. Any initial questions at the outset though? Great. I'm going to wait to take questions until the end, right? I'd like to hold questions. Okay, great. So as Catherine said, this study was requested by the assembly in the budget bill last year. Our study aims to inform the policy dialogue but is not intended to address the complete universe of policy options. And also we really see our role as trying to inform you all in making your decisions and having your deliberative process on policies that may make sense for the State of Vermont. We're not offering recommendations. So we're just trying to give you as much information as we can subject to the limitations of the budget and time that we had to work. So we both represent an organization called Resources for the Future or RFF. RFF is a Washington D.C.-based think tank. It's an independent nonprofit and not a sort of generally a four-higher consulting shop. Nor are we an advocacy organization. The charge of RFF is to improve environmental energy and natural resource decisions through impartial economic research and policy engagement. So this is a nonpartisan organization that is about generating the best information possible, again for policymakers to make their most kind of decisions for you all in this case. So into the actual study. So we have here a simple chart showing the trends of greenhouse gas emissions in the State of Vermont. And you can see that emissions have been generally rising with some trends of declination, but the recent trend is going up. On the sort of bottom and to the right of the graph, these are the State's various stated emissions targets. One of them is in the rearview mirror. There's a 2012 target that is in statute here in Vermont and that was missed. The three orange diamonds going down into the right are all part of that statute. The next one is at 2028. I'd be pointing this. It's kind of square in the middle there. That target is 50% below 1990 levels by the year 2028. As you can see things are going up not headed in that direction. The next statutory target is in the year 2050. And that is 80, 85% blanking on that exactly, but it's close to almost net zero carbon emissions by 2050. Another target that I want to highlight because it's been discussed in the public policy dialogue as far as we can tell here in Vermont is the 2028 U.S. climate alliance. That type though should be 2025. 2025, that's right. U.S. climate alliance target which is between 26 and 28% emissions reductions from 2005 levels. Again, it's clear that business as usual trajectory is not headed in that direction. We estimate a slightly different trend based upon national data sets produced by the energy information administration. That's why you get this slightly declining line here. If we were to do nothing, we estimate that those are where the emissions levels would be headed based on federal policy. Of course, that's a constantly changing landscape, but that's why we show this shift to a downward trend and that again is in the absence of any additional Vermont policy. But it's still shy of the targets. And so one initial takeaway is that additional policy or our estimate additional policy at the state level or at the regional level here in Vermont or in New England would be required to hit any of the targets that Vermont currently has in the books. In addition to looking at the sort of overall trends we drawing from the state's existing greenhouse gas emissions inventory represent the shares of emissions by sector in the state. Vermont's shares are on the left and the U.S. shares are on the right for comparison. No, it's okay. If you would like me to have one, I'm happy to. One of the things that to us jumps out in this comparison is that the orange piece of the pie, the sort of light orange piece of the pie on the left side of each of the pie charts is much larger in the state of Vermont than it is nationwide. The pie is transportation. Transportation sector emissions which are the result of consuming gasoline and diesel primarily but any fuels that produce greenhouse gas emissions. The other significant difference is the other orange wedge, the dark orange wedge on the top right in each and that's end use, residential and commercial fuel use. So that's again home heating fuels, home heating oil, natural gas in some parts of the state but not much. And again, it's a much larger share of Vermont's greenhouse gas emissions come from those home heating fuels than they do nationally. The other thing that we'd point out is that the blue, the sort of there are a couple blue shades of blue there but electricity generation which is a very large wedge is about 30% in the U.S. emissions pie is only 10% in Vermont. So that's also significant from the perspective of what policies may be most cost effective in Vermont in terms of reducing greenhouse gas emissions and we'll go into this in more detail but sort of the upshot of this is that transportation and home heating fuels, home or business heating fuels are some of the least responsive areas of the sector areas of the economy to carbon pricing. In economics speak they're the least elastic. So as prices change people are least likely to change their behavior patterns in terms of consuming transportation fuels which we can see as the prices go up and down sometimes even by a dollar at the pump and it doesn't change consumption patterns that much. So we'll go into this in more detail but we wanted to give you this as a lay of the land. So this will be my last slide for a little bit and I'll pass it to Mark. In this report we look at two types, two main categories of decarbonization policies. The first is carbon pricing policies and that's really where our strength lies and what the RFP with the JFO emphasized which is I think why we thought it would be a good fit to do this project. To us carbon pricing policies include at least two types of policy. One carbon tax policies and two cap and trade policies. We refer to both of those as carbon pricing policies just to be very clear because I think people see that in different ways but we refer to those as both carbon pricing policies and the reason why cap and trade is part of that is because it puts a price per ton through the value of the permits. We do a quantitative analysis of carbon pricing policies only and it's a very a very rigorous quantitative analysis we'll be talking about that. We also though in response to our visit here which involved conversations with some of you all we recognized that the state of Vermont also considers non-pricing policies to be an important component of their decarbonization strategy and so we wanted to at least include some if limited analysis of non-pricing policies as well to look at both as a holistic package because that's most likely how the state will continue to sort of pursue decarbonization as we heard from folks stakeholders as well as elected representatives when we were here in September and so we've done what we consider to be largely a qualitative review potential from non-pricing policies this though does have some numbers associated with it and we say qualitative on our end because we're relying on other people's quantitative analysis and particularly the quantitative analysis of the Vermont Climate Action Commission the commission as you may all be familiar was appointed by the governor created by the governor in 2017. In addition to taking the estimates from the VCAC we do our own very simple estimate of what emissions reductions would result from increasing the existing renewable energy standard in Vermont which would require a number of different things but the tier one renewables requirement would be 75% renewable energy by 2032 and we assume 100% by 2030 and then we basically take a mid-range between that and go into more detail on that if you're interested but so we have carbon pricing policies on one hand carbon tax and cap and trade and then on the other hand these non-pricing policies and again to sort of put a little more flesh on the bones there that's electric vehicle incentive some examples of non-pricing policies are electric vehicle energy efficiency incentives weatherization programs investments in low carbon agriculture as well as then some of these regulatory policies like a renewable energy standard so with that we'll pass it to Mark okay so carbon pricing maybe means a lot of things to a lot of different people so just to be clear here on what we looked at so we're looking at carbon pricing policies that are going to vary across a number of different dimensions so the first dimension is going to be with the prices and that's either through the tax or indirectly through the price allowances we're also going to consider covering different number of sectors so a policy that covers only the transportation sector or a policy that covers all sectors except for electricity and in between really importantly to the kind of the impacts of carbon pricing is how what you do with the revenue and so we're going to show that that the revenue use how you decide to spend the money that was raised is very very important and then we're also going to consider briefly looking at Vermont only policies or policies where Vermont teams up with some of its neighbors to pursue carbon pricing and to just give you a sense of what we're talking about here in terms of scale $20 carbon tax is equivalent to a tax of about 18 cents per gallon on gasoline so as I say different carbon pricing numbers you can kind of just scale up or down to see how big that would be in the pump so in this analysis we consider four alternative carbon price paths we choose these for a number of different reasons but I just want to mention that these are illustrative and we are not any time we look at one specific policy we're not trying to say that this is what the state should be doing and so we consider the Essex price path from the Essex plan that policy phases in from a $5 tax level reaches $40 we consider what we call the WCI price path the western climate initiative so we're considering a cabin trade program where Vermont joins with Quebec and California and the western climate initiative that price in that cabin trade program has a floor and that floor grows over time and the price has been historically at that floor and so we assume going forward we'll be at that price floor and so we use that price floor path and then we have just two kind of other medium and high price paths just for to show people what would happen if we increase the price starting at either $30 or $60 and rising over time so again I mentioned that what you do with the revenue tends to be very important for the environmental economic impacts of carbon pricing so here we're going to think of we're going to consider three alternative revenue uses although we acknowledge there are more uses so the first one we're going to consider is lump sum rebates this is where the revenues are returned equally through equal per household payments to each household in Vermont we're going to consider a policy that takes the revenue and uses it to reduce taxes on wages and this will have some stimulative effect and will offset some of the negative impacts the policy might have on GDP or employment the Essex plan is is the first carbon pricing policy where I've seen this type of revenue use so it was interesting to look at it in this context where the Essex plan devoted some of the revenue to finance reductions and electricity rates for residential, commercial and industrial customers and this was really an idea to give households an incentive to switch to clean electricity because most of the electricity in Vermont is carbon free and so we're going to look at these three different alternatives as using all the revenue for lump sum rebates or all the revenue for rebates electricity rebates we do acknowledge that a policy could do a little bit of each so there's no reason why you have to choose to use the money all in one place you can spread it across different baskets and we also note that due to time budget and modeling constraints we're not able to look at what happens when the revenue is reinvested in non-pricing policies although we'll have some we'll be able to talk about that a little bit but we're not going to be able to really look at the deep economic impacts of that type of revenue use as I mentioned we're going to look at covering different types of sectors we're going to consider the kind of the broadest type of policy we call economy wide electricity exempt this covers every sector except for electricity as we know Vermont is a participant in the regional greenhouse gas initiative program and we don't see a reason for Vermont to to pull out of that program and so we just left that program on its own untouched you can also the no policies required to be economy wide and so we're looking at also two different types of smaller policies one that covers transportation and heating fuels another that covers just transportation emissions and again I mentioned that we're going to consider some different regional scopes where Vermont acts on its own to implement these policies and a regional policy where all the new England states act together under one type of policy okay so that's kind of just a rehash of explanation of what we did and now we can get into some of the key findings the first key finding we have is that carbon pricing only is unlikely to meet the US climate alliance targets which are 26 to 28% below 2005 levels in 2025 and so here I've chosen four different types of programs just to give you an example although we have many many more types of policies in the report itself but just for a high level here we can think of just these few different types of policies so the first the TCI program is the cap and trade program on transportation emissions only and when we were doing this analysis the state had not yet actually signed on to the transportation and climate initiative statement to craft a program or craft a policy proposal over the next year so we kind of had to take some liberties with this one we assumed a price path that was similar to the western climate initiative price path it's purely speculative and a true transportation climate initiative policy will probably look different you can imagine that the price could be much lower and again that's going to depend on negotiations between states and then we also consider the western climate initiative cap and trade program where Vermont links its transportation heating emissions to California and Quebec's program and then we also consider the Essex plan which as I mentioned is an economy-wide carbon tax and then just for kind of full scope we consider the policy that kind of has the highest price and most coverage to give you an example of what it could be possible from the type of carbon pricing and we call this high price path that has a carbon tax of about $77 in 2025 but you'll notice here on all four of these policies none of them are achieving emissions 26 to 28% below in 2005 so the high price path comes the closest but on its own it does not we are not projecting it to meet those targets based on our modeling analysis okay and I'm going to turn it back over to Wes to talk about some of the non-pricing analysis so again the analysis we did on non-pricing policies was assembling research and estimates that others had done for the most part and that was primarily the Vermont Climate Action Commission there are over around 50 individual policy recommendations in that document as I mentioned before this includes things like EV incentives, weatherization programs energy efficiency programs we also as I said before looked at this 100% renewable energy standard and what we find essentially is that while with carbon pricing alone the state we do not estimate that the state would achieve its emissions targets that with a combined approach between carbon pricing and non-pricing the state would be estimated to have emissions reductions commensurate with and actually beyond the U.S. Climate Alliance or Paris target and that's again that 26 to 28% by 2025 and actually that is for all of the scenarios we modeled here so you can see under TCI WCI Essex and the high price of all emissions reductions that are above or greater than that 28% threshold so that is one of I think the key findings from this report is that there these two approaches together could achieve these targets and even with some relatively modest carbon pricing policies one thing that we have not emphasized in the report but I will say is that there is somewhat of a fit between pricing and non-pricing policies in that pricing can generate revenue that will be able to help implement non-pricing policies because in some cases the non-pricing policies may call for public expenditure programs like an electric vehicle purchase incentive for example or weatherization programs and so if the aim is to have a revenue policy then you all will be looking for revenue from somewhere to pay for those policies and carbon pricing may be a good source we will talk more about though how the use of revenue will require a number of trade-offs but that's the basic estimate okay so as we mentioned we did a pretty thorough analysis on the environmental and economic impacts of carbon pricing so here I want to run through some of those results so there are costs and benefits of carbon pricing and so the costs are going to be increased prices for fuels and energy intensive goods that's how carbon pricing works we can't run away from the fact that we will increase the price of gasoline it's also going to change income and we could also maybe see some of those changes going to be realized in changes to state GDP or employment levels on the other side there are benefits and we're going to measure two types of benefits here we're going to look at the benefits of GHG reductions and we're going to measure the value of those reductions using social cost of carbon estimates and there are also benefits of reduced criteria air pollutants and so when you burn fossil fuels in your car or other places those often emit other particles other forms of pollution besides carbon dioxide or other greenhouse gases those include sulfur dioxide nitrous oxide particulate matter there's two different types of particulate matter PM 2.5 is the one that actually has the health impacts it's a particular matter that can actually just kind of go through your skin into your lungs it's so small and so what we do is we use EPA estimates of what the value of those reduced emissions are and so to get another quantitative dollar value of those benefits and so kind of I think the main key finding is that the economic impact of carbon pricing policies we studied is projected to be small so if we look at this first row the first if we look at this table the first row is the change in economic welfare per household we consider this to be the most complete measure of the costs of carbon pricing policy it takes into account the changes in prices and the changes in income now for each of these policies this is also the kind of the average cost for the average person obviously impacts will be different across different types of people people who drive more will have larger impacts of people who drive less so these policies are running in the range of $28 per person to $240 per person and just to be clear what we're doing in the TCI WCI and high price path is we are looking these are the costs when we use the revenues to be rebated to households and then in the Essex plan this is where we are combining rebates to low income households and revenues for electricity subsidies as called for in that plan I just want to underscore here that this is these are costs for an average household so in terms of average income level we will in a couple of slides talk about costs per income quintile so you'll see for low income households for upper income households what the different estimated impacts are and so but again as I mentioned this policy is going to have costs and benefits we project that the benefits per household will exceed the costs for every single policy we look at so in example of the TCI we project that the environmental benefits per household are $56 versus the cost of $28 now to give you an idea of where these benefits are coming from about 60% of these benefits are from the climate benefits the reduced GHG emissions about 40% of the benefits are from reduced local air pollution you know having done this in the done this type of analysis the federal level you know in Washington DC everyone wants to know what's going to happen to jobs and kind of the economy and so we look at that here as well and we see that these impacts would be small these are very tiny changes regardless of policy design to give you an idea about this change in state GDP this is a percent change from business as usual if the state economy was to grow 1% per year in the absence of a policy between now and 2025 if you introduce this policy that's equivalent to reducing the growth rate from 1% to 0.997% it's such a small number you wouldn't be able to see it in the rounding error and it would be very hard to separate from statistical noise and also to point out that there's some fluctuation between costs and benefits that Essex plan is showing a positive impact to GDP again it's very small but I was going to emphasize here that how you use the revenue matters here when you use some of the revenue to size electricity we actually see a growth in GDP and we see an increase in the level of employment again these numbers are small either way, either direction but you can actually could have some increased GDP or employment if you use the revenues for electricity subsidies and we don't have this on this table to reduce taxes on wages and importantly, a carbon pricing policy would generate significant revenue for the state depending on the carbon price level and the number of sectors covered so as we go from left to right the price is increasing and the number of sectors is increasing so really it's just driven by the price level and how much emissions are being covered as we mentioned these costs that I showed are for an average household and we take kind of a state level cost number and we divide by the number of households to put into a per household number but we understand and we'll show that the economic impacts are not evenly distributed and one of the reasons for this is that low income and rural households spend a larger fraction of income on energy and of course we would expect carbon intensive industries such as fuel suppliers would be affected more than other industries so we're not anticipating big impacts on the services industry but you might see some impacts in the sectors that you would expect so transportation natural gas utilities those are the types of fuel dealers those are the types of industries we would expect to be more affected than others and I don't have any tables the industry impacts in our slides today but they are in the report and so I think another one of our key findings is that although low income and rural households spend a larger fraction of their income on energy we can design these policies in a way that will offset those impacts on those households so in the TCI scenario the rebate if we give this rebate straight back to households it's equal to about $200 rebate per person and that rebate is more than enough to offset the increased energy prices for quintiles one and quintiles two and I have an email from my colleague that will tell you exactly how much these so quintile one is a household that has $23,000 income or less quintile two is between $23,000 and $45,000 quintile three is households between $45,000 and $70,000 and quintile four is households $70,000 to $105,000 quintile five is anyone making more than $105,000 per year if you notice that as you kind of go left to right you'll see that actually it doesn't really because we're using the rebates because all these policies are rebating revenues to low income households they're better off than they would be otherwise in each case now if we use the revenues another way that might not be true but in these particular four scenarios using the revenues to give rebates back to the households offsets that increased income that they're receiving that revenue rebate is enough to offset the higher energy costs and costs of other goods and you also see here that we do we aren't able to do income by county but we are able to do income or county and so just summarizing here we do show that that that counties besides Chittenden County have slightly larger impacts than other counties and primarily that's due to longer driving but we would also expect that we know that the average household in each county represents someone around quintile three and so we still expect that low income house even though we haven't specifically shown that we do expect that low income households in rural counties would be would be better off and so average is an average household in each quintile and so there is heterogeneity, no two households are the same and we do have to remember that and caveat that when we're looking at these results so not every single household in quintile one might be better off but we expect that the person with the average expenditure pattern would be and so we I think our last kind of main key finding is that the revenue use introduces tradeoffs that need to be considered by policymakers so according to our analysis as I've shown these per household rebates more than offset the cost of increased energy prices for the average low income household if we instead use the money to reduce taxes on wages this would actually increase the state GDP increase the level of employment but for most low income households these changes in taxes would not be enough to fully offset their higher energy prices and so finally although we didn't look at it quantitatively we didn't do a deep dive into the economic impacts of non-pricing policies we we do know that to the extent that we don't devote revenue to finance those policies that can reduce emissions further but it would also reduce the amount of money we're able to give back to the households to offset the economic impacts of the higher prices for those households and so there's this tradeoff here where where you need to consider if you do decide to consider a carbon pricing policy this is a very important tradeoff between trying to think about how you're going to think about the distributional impacts of the policy or trying to use the policy to have deeper emissions reductions and try to achieve some of those emissions targets and again I just want to emphasize our results here are for putting all your money into one basket or the other and so I don't want you to think that you can't do some type of hybrid approach that mixes how the money is spent ok and so we plan for 40 minutes and we've gone through most of our time here so I just want to give you some caveats here we do not model policy induced innovation so we are not able to look at what would happen if by implementing the policy that the costs of renewables or the costs of EVs would decrease so we're holding those costs constant across our analysis as I mentioned on the last page the average household impacts potentially large differences impacts for specific households one thing we haven't talked about too much and we don't have a slide for that is that the remodeling policy the New Hampshire border could be an issue now we don't have a very good job we don't have a very good understanding from Washington DC how many drivers are going to increase the number of state purchases so what we did is we assumed that the drivers who already drive by their gasoline in New Hampshire would continue to buy their gasoline in New Hampshire people who currently buy it in Vermont continue to buy it in Vermont now to the extent that we've missed that to the extent that people are going to try to shift their purchase behavior more we would be overestimating the emissions reductions going to New Hampshire and then I just want to emphasize again that we looked at a range of estimates for the emissions reductions potentials of the non-pricing policies but we weren't able to do a full economic impact analysis of those non-pricing policies and so we think that further analysis and research is going to be warranted there we want to be able to answer the question you have how many jobs is this non-pricing policy going to create by investing in our local economy in our local infrastructure and that's not something we can answer right now do you have anything to add okay, thank you I guess we do have time for some questions the committee members have questions representing you on time to go yeah the range of fluctuation the mic did you look at the how much gas fuel prices fluctuate over a year without the price you had to I mean it's not something we particularly looked at but yes fuel prices can go up or down 50 cents very easily and we've seen that quite a bit over the last couple of years and so the transportation and climate initiative policy we considered had a price of about $20 to the cap and trade program that's like an 18 cent additional cost for gasoline under that policy I'd just add that we did use our business as usual projection uses the projections from the energy information administration the federal energy information administration and those projections include fuel price projections over the next 10 to 20 years were you able to tell how much consumption would we ground as prices increased about 50 cents per gallon yeah our report does go into like changes in prices and in demand for the goods off the top of my head I can't give you a very specific number but it's in the report Representative Chestnut Benjamin did you work to quantify carbonization benefits of applying $20 million to electrification of transportation versus weatherization so that would be in that category of non-pricing policies and so we include basically include the emissions benefits of all of the policies that had an emissions benefit estimate given to them in the VCAC report that does include weatherization programs it does include electrification of transportation programs but basically the way we do this we just sort of take it all as a group we don't do a trade-offs analysis if that's what you're asking so what would be the relative benefit between one versus another or down one policy pathway versus another we don't do that kind of comparative analysis we look at it all as one group and assume that it all gets implemented within that group there are in sort of broad brush categories and actually the report itself has more granular detail that's a public document that we could point you to or others in the room here who have worked on it directly so I'm wondering has anyone else or other states been successful in doing like the rebate policies actually implementing one? no so there's not to my knowledge correct me if I'm wrong so a province British Columbia has his carbon tax is revenue neutral and it's a combination of rebates and business tax cuts so they have implemented a partial rebate program yes and then I'm also wondering do your benefits primarily focus on health care benefits what's in the model the benefits that accrue to Vermonters from these policies so the health benefits are the benefits of reduced particular matter pollution in Vermont so that would accrue to Vermonters directly can you articulate more of the other specific benefits? so we looked at those health benefits and then we looked at the climate benefits from reduced GHG using a social cost of carbon estimate obviously those benefits are global and so we were not able to do a kind of Vermont specific social cost of carbon estimate beyond the scope of our analysis so we can't say specifically how much those benefits are Vermont or New England or global but we do provide that number because at the end of the day if you care about climate it's because you should care about you should care about the global well-being representative from Williston thank you very much one is a follow-up from the chair did you monetize in the report the health effects from diminished particular matter? yes and the second question is around the California and Quebec initiative and is that fully explored in the report with what's going on with that? yeah so we in section 4.7 section 4 of our report is analysis of carbon pricing policies and most of that just uses kind of illustrative examples of what happens if you have a high price versus a low price but in section 4.7 we do do specific analysis of the western climate initiative our representation of what we thought could be one potential outcome of the transportation climate initiative and the Essex plan representative Dolan the benefits that you described over a certain time period where you brought those benefits to present value yes there are the present value of reduced emissions in that time period but the benefits could accrue over years and they are just coming back to the future to the present does that assume that there's no increase in emissions from other states or jurisdictions that could overwhelm those benefits? that's a great question we do look at changes in emissions in other northeast states in our report generally we find those changes to be relatively small so we expect that very little of the emissions reductions in Vermont would be offset by increased emissions in its neighboring states so to underscore that when Mark says the changes would be relatively small it's the changes induced by the implementation of a policy in Vermont I'm not sure if that's what you were asking but that's what he's referring to there what we call leakage that if Vermont implements a policy does it lead to emissions increasing elsewhere that's what we call leakage the other thing I want to say about the benefits is that most of the things that are quantified both emissions reductions and public health and climate benefits in this report are done on an annual strictly an annual basis so when we say that emissions are at a certain level in 2025 and then there are commensurate benefits associated with the emissions reductions so that's just for that one year it's not quantifying let's say we're just talking about the benefits it's not quantifying the benefits that have accrued over each of the years say we're talking about 2025 and the policy starts in 2020 you're going to have emissions reductions every year along the way going down the reductions will be greater the emissions will be less and so you're going to have cumulative benefits does that make sense benefits that are achieved in each of the years we don't estimate so basically we are providing in some sense a conservative low ball estimate because we're just looking at one year instead of the cumulative benefits over a 5 or 10 year window I had a question about some of the costs and benefits that you highlighted and I was searching for other things you had a small handful I think in terms of the costs and the benefits I'll just suggest one of each and I wonder if these fall in there in terms of costs were there issues that related to exacerbating income inequality and how some of these different pricing initiatives would be more challenging for lower income people and other initiatives might be less challenging yeah if we go back to this slide this is quintile one is the lowest income households and so what we're showing here is when you use the revenues to give the direct rebates back to the households they're better off monetarily than they would have been otherwise and so we would say that this is reducing inequality but what I haven't shown you here and is in the report is if you use the revenues to reduce say wage income that doesn't give as large of a benefit to low income households as the rebate and so that could actually exacerbate inequality and I have worked at the on federal carbon pricing that looks at even further like capital tax cuts or corporate tax cuts and those are another type of policy that doesn't address that doesn't address this potential issue of inequality and what's really fascinating about the rebate approach is that it it actually improves the inequality situation by reducing it on the benefits side it wasn't clear to me with a carbon pricing mechanism with the idea that in terms of reducing carbon fuel usage would simply define what was assumed that there would be substitution with other clean fuels so the model does allow for some substitution although we don't predict a lot of substitution and so it's really it's reductions coming from for transportation for example it's reductions coming from improved efficiency of the vehicle fleet vehicle miles traveled but not necessarily substituting electricity we do allow for that but we don't see a lot of that substitution occurring at these price levels and what I was trying to get at there is there actually a benefit there substituting consumers paying for fuels that come from outside of our economy and replacing them with fuels that come from outside of our economy actually contributing to that kind of approach as a great question we again the model does kind of take account for that so the state does import all its fuels and so we see those imports go down and so consumers have they can choose where to spend that money and so we find that it's a mix of goods some of it is there the models predicting increased imports of other types of goods representative pat two things first is the clarification because I couldn't always redefine the print when you're showing either a cost or a benefit to her household it's number one is that an annual an annual benefit an annual benefit thank you and my question is for in the options where you are mitigating the impact of the higher energy cost on one side by targeting benefits to rural reminders or lower income reminders as a report get into it all how that would be done and how people would be found eligible for that or anything like that no we don't I think that's obviously a very important policy consideration how exactly that administration would work there's some interesting research that's been done on the implementation of such a program at the federal level by an affiliate and colleague of resources for the future named Chad Stone I think much of that would apply at the state level and if you all get to the point of having a discussion around that we'd be happy to provide some additional resources that could help inform that discussion so looking at under the pricing section we look at taxing and cap and trade systems do you differentiate between I mean it looks like putting together the level of price but do you look at compared to the effectiveness of those two approaches so effectively in our modeling the two approaches are our equivalent and so what really matters is just what the price is and so you can if we play with the model and set the price of ten dollars and the model tells us that the emissions will be nine units and if we set the cap at nine units the price will be ten dollars and so to that extent there's no distinction I would say that an important distinction on cap and trade versus carbon tax is where the uncertainty lies so under a cap and trade program we have uncertainty over what the price will be and so the price will fluctuate over time you see that with Reggie where in the lead-up to the Clean Power Plan people thought they were going to be able to use Reggie Allowances to comply with the Clean Power Plan that drove the price up when President Trump was elected and rescinded the Clean Power Plan those prices fell but you still have the certainty of the cap there with the tax you have a certainty of the price you know what the price is going to be it's not going to fluctuate but you don't know exactly how much the emissions are going to be we've done projections here we've done best guess but they're not going to be perfect we've done as best we can but we know that we're going to get that level wrong because there's going to be unanticipated things going on to the Vermont and federal economy in the meantime so that's where this other uncertainty lies and so you don't know exactly what the emissions levels are going to be I'd say another important distinction and this is not necessarily answering your question directly which Mark did that we kind of modeled them similarly but just an important distinction between the two policies is around revenue as well that's more common for permits to be freely allocated under cap and trade programs which would mean that there would be no revenue associated with that program whereas with carbon pricing there's kind of always inherently revenue stream so that's another important distinction can you talk about some of the variables among the different scenarios like why are they different? why is the Essex Plan the Essex Plan looks like it might have the most benefits to Vermont but explain a little more about why so the Essex Plan is let me just go back to these couple of ones here the Essex Plan is economy wide and so it covers industrial emissions as well as commercial residential and transportation emissions one reason that you see particularly large benefits from these types of policies is that that's where a lot of the particular matter emissions are actually coming from the industrial sector and so even just small changes in the industrial sector can have large impacts on these particular matter emissions and have impacts on the health benefit but then so the only real difference between the TCI scenario and the WCI scenario as in this chart is that one includes the transportation heating emissions and the one just includes transportation emissions so really the if you go from the TCI column to the WCI column the change there is the extra emissions reductions you would get from covering the the heating emissions and then another distinction which Mark had spoken to before which kind of shows up here where we see that there is this distinction between Essex and the other policies in terms of the effect to GDP and the change in labor demand which is how we model change in jobs is that first of all you have assigned change right so going from negative impacts to a positive impact and Mark was saying and correct me if I'm wrong or please fill in the details one of the primary reasons for this is that the Essex plan uses some of the revenue to invest in electricity bringing the electricity prices down so that sort of foments further economic activity other reasons do you think why the we have a positive effect the Essex and yeah it's here at least for the this impacts like the it's driven entirely by the use of revenue to lower the price of electricity which is going to be beneficial to to businesses and homes that use the use electricity their costs are going down and they'll be able to have more money to spend elsewhere representing again yes when you talking about the value of the benefits or costs you said that was a per year right yes in this slide it's per household per household and it's also the quintile yeah this is also per household representative Lefebvre maybe outside your model but take a look at what impact would be carbon pricing carbon taxing on people who live in urban one and are also poor so we were not able to look at we looked at buy income or buy county not buy income and buy county we just didn't have the data available to do that analysis we do find that rural households are on average slightly worse off from the policy than the Chittenden County residents but so here you see that the average rural household is in the TCI scenario $7 on average worse off than the Chittenden County residents so we kind of expected that change would be similar in quintile one so quintile one at $53 we would probably expect that number to be in the 40s so they're not going to be because this quintile one number is the average low income household not the average low income rural household because we know rural rural residents drive more we would expect them to have slightly higher energy costs and therefore slightly lower benefits it would also be relative to the fact that they had no other alternative as far as the public presentation that's correct one of the, I'll just say that one of the nuances of the rebate policy is that it can be targeted so the level of rebate that's given to an individual household could be tailored that's not something we talk about in this study it's not something that we model either but there's no reason why that couldn't be how the policies implemented per the gentlemen's comment on implementation sure what I mean by that is so oftentimes when this type of analysis is done first we look at the expected costs for a given household and then the rebate is set to at least match those costs so we keep that household whole now that's generally done for a representative household and frankly that is an analysis that's usually done at the federal level so you have a massive data set of all these different households in a state the size of Vermont that's I think more feasible perhaps to have more detail on what those costs are that are going that are these incremental costs to households and you could go by county so you could know by county and by quintile potentially you could even have a mechanism that would allow a household to petition saying this is our annual energy cost and you could have a benchmark baseline and then their rebate is equal to their increased costs now that could be administratively quite complex so there's probably in calculating it for every individual household and having one big lump sum number for the whole state but just to say there's a great spectrum of policy implementation potential there that I think could meet your needs which are important so it would be relative to the first location and then it comes I think that it could be done that way that becomes an administrative question not so much an analytical one but I think it could be done that way I wanted to ask a little bit more about non-pricing effects that you talked about and what I'm wondering particularly about is the effect on the economy if we invested money in several fourth development and people to make buildings more efficient for example and can you talk a little bit about any analysis along those lines sure yeah so that unfortunately again falls into the category of analysis we weren't able to do just because of the limited scope and budget and the original scope of work didn't include analysis on non-pricing policies you took some assumptions from the climate actually yeah and those were just emissions reductions assumptions sort of an important recommendation from our report just in terms of further analysis would be to do further analysis on those types of questions pertaining to non-pricing policies so what kind of jobs effect would they have what sort of effect on local and state economy would they have you know again we have initial estimates on the emissions reduction potential but I think further estimates on that and really looking at going from sort of relatively broad brush policies to specific more fine grained policy formulation I think would be good too so most likely we would expect to see positive effects on GDP and Mark may disagree with me on this I'm not sure but positive effects from investing in you know if we're investing in energy efficiency projects or weatherization those are construction jobs it may not actually be necessarily a new job that's created but sort of increase in demand for those services from the construction industry and that can lead to increase in jobs and also wages what are things like that representatives I have clarifying questions and necessary but the wage levels the wage levels on the quintiles yeah so quintile one is for anyone who has income below twenty three thousand dollars quintile two is twenty three to forty five thousand dollars the next quintile is forty five to sixty nine and then it's sixty nine two hundred five and then the top quintiles a hundred five and over and that's in twenty sixteen dollars great and can you clarify did I hear correctly that quintiles three through five would offset additional costs than quintiles one and two so what we're showing here is that our analysis is suggesting that under these policies that quintiles one and two are always going to be have their costs offset through these rebates but for these other quintiles the rebates the rebates are not large enough to offset their their increased energy costs and on a share basis you know the low income households have higher share of their expenditures on energy but they actually have lower levels of overall spending because their expenditure levels are much lower and so you actually a majority of the energy expenditure takes place by quintile five or quintiles four and five and so that's why you're seeing you know those are the quintiles that have the higher the higher costs here representative representative we were talking about petitioning for individual we were talking about the possibility of participation is there any state that does that now and does anybody look for instance at car inspection time on what reads on the odometer thinking about people who live rural but don't use their cars that much and people who live in an urban area that do quite a bit of travel to get to their jobs yeah I mean there's there are moral hazard issues in that type of that type of setup and by moral hazard issues I mean people have an incentive to to misreport you have an incentive to say you were lower income than you really were to receive the to receive that rebate if there was a cutoff these rebates are on the magnitude of two hundred to a thousand dollars in these cases so I don't you know if the cutoff is say sixty thousand dollars and the rebate is two hundred dollars I don't think you're going to see very many people trying to go from sixty five thousand dollars fifty five thousand dollars to make sure they because they want that ten thousand dollars a lot more than two hundred dollars so I do think you have there are some issues with that type of setup and no I am not aware of any of any jurisdiction that that does that Representative Jantoska yes yes incentives for low-income households did you take that consideration when you did the assessments as well we did yes I think the cutoff for low-income households is four times the federal poverty level and then rural households with incomes less than seventy five thousand dollars are eligible for an additional rebate on top of that first rebate and so we did include that in this analysis thank you any members thank you everyone has a lot to read tonight