The Case for a VT Carbon TaxRationaleCurrent Energy TaxesCarbon Tax: Pro/ConCarbon Tax ProposalRevenue EstimatesPrice Effects on FuelsEnergy Savings and CO2 Reductions2004 Energy Tax Revenues (Existing)Energy Tax Revenues (Including Carbon Tax)Slide 11Trading Carbon OffsetsCarbon Trading Potential for VT Agricultural/Forest LandThe Case for a VT Carbon TaxRationale•Simplification–Replace existing energy taxes with a single tax on carbon content of fuels.•Behavioral Change–Encourage reduced consumption of fossil fuels and reduced CO2 emissions.•Revenue Leveraging–Make use of revenues to purchase energy saving efficiencies and stimulate growth.Current Energy TaxesRate ‘04 Revenue Gasoline Tax $.19 / gal 71.9Diesel Tax $.16 / gal 18Sales Tax on Comm. Energy5%* (with exceptions)15Utilities Gross Receipts.3-.5% of gross oper. revenue5.7Fuel Gross Receipts.5% on retail sales5.5TOTAL 116.1Carbon Tax: Pro/Con•PRO•Broad influence- consumers, transport.•Low transaction costs•Ease of administration•Produces recyclable revenue•CON•Emissions reductions not predictable•Vulnerable pricing due to inflation/ price shocks•Not targeted to reduce all GHG’s.•RegressiveCarbon Tax Proposal•$100 per ton tax on carbon content of fuels.•Applied at point where fuels enter Vermont economy.•Revenues recycled back to taxpayers (individual and commercial).•Comparable tax on nuclear and large hydro (market competitiveness).Revenue Estimates$100/ton + tax on hydro/nukesMinus existing energy taxesTotal 364,500,000 248,400,000Residential 112,400,000 76,600,000Commercial 71,500,000 48,800,000Industrial 53,000,000 36,100,000Transportation 127,500,000 86,900,000Price Effects on Fuels2004 EstimateGasoline ($ per gallon) .29 - .19 = .10 net increaseElectricity (cents / kWh) .01 (less existing)Natural gas (cents/ therm)17.2 (less existing)Fuel Oil ($ per gallon) .34 (less existing)Coal ($ per ton) 76 (less existing)Energy Savings and CO2 ReductionsEnergy Use (TBTU) 125.56Energy Saved (TBTU) 4.98GHG Emissions (CO2 equiv. tons)9,702,000GHG Emissions Reduced (CO2 equiv. tons)386,0002004 Energy Tax Revenues (Existing)•2004 Total energy revenue: $259,269,147Energy Tax Revenues (Including Carbon Tax)•2004 Revised Energy Revenue: $521,540,000 2004 revised energy taxescarbon tax42.0%Nuclear and large hydro tax28.8%Total Motor Vehicle Purchase and use tax16.8%Motor vehicle registration fees10.6%Diesel Tax0.3%Total gasoline taxes1.4%Energy Tax Revenues (Including Carbon Tax)Vermont 2004 Energy Taxes$0$100,000,000$200,000,000$300,000,000$400,000,000$500,000,0002004 2004 finalrevisionNuclear and large hydro taxcarbon taxMotor vehicle registration feesTotal Motor Vehicle Purchase and use taxTotal gasoline taxesDiesel TaxEstimated Revenue from Sales Tax on CommercialEnergy useUtilities GrossReceipts TaxElectric Energy TaxFuel GrossReceipts TaxTrading Carbon Offsets •Emerging markets for emissions/ sequestration trading:–Kyoto Signatory nations–EU cap and trade system (2005)–Chicago Climate Exchange–Northeastern States cap and trade system (2005)•Allows for trading CO2 emissions with carbon sequestering “sinks.”•“the biggest commodities market in the world.” -R. Sandor (Northwestern Univ. / CCX)Carbon Trading Potential for VT Agricultural/Forest Land•States (NE,AK) have begun quantifying sequestration potential of land.•VT forests hold a carbon stock of 492.6 MMTC (1997).•Carbon tax revenues can be used to quantify capacity/pool land holdings/define compliance mechanisms for trading.•US farmers can sequester 200 MMTC annually / add $4-6 billion gross income (10% increase in average net farm
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