For a couple of years now, progressives and Vermont bureaucrats have emphasized how important they believe reducing carbon emissions is. In order to sell this vision to those outside the far left, they often describe how spending more upfront will result in long term savings. For example: Vermont needs to spend millions on solar to get “free energy from the sun.” The argument goes something like, “even if you don’t have to believe in earth-rending climate change, these policies make financial sense to implement anyway, at some point in the distant future.” This was part of the attitude undergirding the passage of the Global Warming Solutions Act. At that time in 2020, no one bothered to put a serious price tag on these policies before they were voted upon. Part of that façade is starting to disappear in 2022, and the costs are becoming disturbingly apparent.
Two weeks ago, David Hill of the Energy Futures Group (EFG) presented EFG’s model before the Cross-Sector Mitigation (CSM) Subcommittee Meeting of Vermont’s Climate Council. As directed by the CSM Subcommittee, they analyzed 17 proposals to meet the Global Warming Solutions Act’s emissions reduction goals in by 2050 (they also considered the 2030 requirement). Ever since the Climate Council directed the ESG to create a model with a 2% discount rate, all proposals already had a leg up on the alternatives for whatever else the climate money could have been used for (a discount rate of 2% considers money a year from now as valuable as 98% of money today). For reference, Vermont has used a 7% discount rate for its pension fund the past several decades (which is a little above standard pension predictions of 6%).
It wouldn’t have been surprising to hear ESG give all 17 proposals the “good to go” with net positive benefits for Vermonters. Which is why it was alarming to see so many of the proposals look like bad investments, even with the generous discount rate. And of course, Climate Council members insisted that we must do them anyway because of the GWSA.
Hill believes all 17 are necessary to meet the 2050 GWSA requirements, so the model calculates the dollar savings (or costs) and forgone emissions reductions if any one proposal is not implemented (while leaving the other 16 proposals intact).
Hill mentioned the importance of not “only do(ing) the ones that provide net savings and (not) more expensive measures…. That risks not meeting the (GWSA) requirements. The emissions reductions from all of these are part of the cap scenario and are required to meet the requirements of the GWSA. Higher cost measures may require incentives and support (ie state funding). Lower cost measures shouldn't be assumed because they provide net savings to be things that will happen without any policy intervention or potential support.”
With a generous discount rate, 4 of these proposals are expected to benefit Vermonters if implemented, on a dollar value basis over the next 28 years.
However, 13 of the proposals are expected to cost Vermonters money over the next 28 years. After including a global Social Cost of Carbon at $146/tonne of emissions (nearly triple the Biden administration’s estimate of $53/tonne), 4 of these 13 go from net negative to net positive, leaving 9 still very much in the red. In other words, these 4 activities would be worth it if we only had to worry about the costs to Vermonters, but not worth it if we included the costs to the global population at large.
Given Vermont’s status as the third oldest state in the country, many Vermonters won’t be around to see the climate funds invested now reap benefits in 2050. Assuming these proposals are remotely accurate, betting on the technological improvements and supply chain bottlenecks resolving themselves.
In case you’re wondering, here are the 17 proposals, ranked from most expensive to least expensive, factoring in dollars invested to dollars of benefits. The last 4 proposals are predicted to give net benefits by 2050:
1 Vehicle Miles Traveled Reductions
2 Renewable Electricity
3 Agricultural new technology efficiencies
4 Weatherization at Scale
5 Gas and diesel vehicle phaseout by 2035
6 Renewable Industrial Gas
7 B100 (Biodiesel) Heating
8 B100 (Biodiesel) Industry
10 Advanced Wood Heating
11 Sustainable Aviation Fuel
12 B20 Biodiesel
13 E15 Ethanol (15% ethanol in gasoline/diesel)
14 Managed EV Charging
15 Fossil Fuel Cooking Phase Out
16 Heat Pump Water Heating
17 Heat Pump Space Heating