A state energy study is designed to foster debate about how the state can achieve its renewable energy goals, officials say.
The Department of Public Service’s draft Total Energy Study (TES) recommends several policy options that could move the state closer to its comprehensive goal to meet 90 percent of Vermont’s overall energy needs from renewable sources by 2050.
The draft discusses several contentious policies, such as a carbon tax and the creation of a statewide renewable energy credit market. These scenarios would reform the state’s energy economy – currently guided by utility regulation, tax policies, incentives and environmental regulation – to close the gap between the current renewable energy reality and the state’s long-term goals.
“We are trying to explore a full range of scenarios to help inform what getting to 90 percent renewable by 2050 looks like,” Department of Public Service Commissioner Chris Recchia said. “They are scenarios. They are not endorsements of a particular path.”
The report outlines three key energy market policy changes: a tax on carbon, a statewide renewable energy credit trading system and regional collaboration. The report also details energy sector-specific policies rather than statewide energy regulations.
Public comment on the draft extends until Jan. 22, after which the state will begin modeling the scenarios to test the economic viability and resulting carbon emission projections before a new report is released, Recchia said.
Rep. Tony Klein, D-East Montpelier, chairs the House Natural Resources and Energy Committee. He said only the details of the report will be discussed this session. He advised caution in moving forward with any sweeping changes in policy.
“We are going to have the department in quite early in the session to talk to us about the total energy report in detail,” he said.
The DPS study was required by Act 89, which aims to reduce energy costs and greenhouse gas emissions and applies to all energy sectors, including electricity consumption, thermal energy and transportation.
The most prominent scenario in the report is a tax on carbon. Revenue from the tax would be applied toward renewable energy and emission-reduction goals, the TES states.
Klein said the state has one chance to pass a complicated carbon tax. Therefore, he said the policy should be thoroughly vetted before legislation is applied.
“You don’t want to do that because you get to do this once,” he said. “I think it’s probably a viable solution, but it’s going to take a lot of education.”
Total Renewable Energy and Efficiency Standard
TREES is an adaptation of an existing energy market policy using Renewable Energy Certificates (RECs). “TREE credits,” would be nearly identical to RECs, except they would incorporate energy efficiency as well.
Under the existing Sustainably Priced Energy Enterprise Development (SPEED) program, Vermont utilities can sell credits to other carbon emitting facilities outside of the state seeking to enhance their renewable energy portfolio.
This SPEED program, however, has been criticized for allowing Vermont to increase renewable energy in its own portfolio while selling credits to other states that then burn an equivalent amount of fossil fuel. Vermont is the only state that allows its wind and solar power producers to sell their RECs and at the same time apply them toward meeting the state’s own renewable energy requirements.
The report highlights the value of a New England regional policy focus. Working with other states would allow the Vermont to take advantage of economies of scale to develop new renewable energy and efficiency technologies, the report states.
Gov. Peter Shumlin, who is a member of the White House Task Force on Climate Preparedness and Resiliency, has echoed this notion by saying Vermont cannot solve climate change issues alone.
He recently applauded regional partnerships as a way to acquire the necessary might to address climate change.
One example is the Northeast’s Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade “market” among nine Northeastern states designed to cap regional greenhouse gas emissions and encourage states to invest in renewable energy and efficiency projects.
In the program, all participating states receive a “carbon allowance” that they can trade on the market in exchange for carbon emissions or money for whatever purpose. Vermont, which sells its allowances in exchange for cash, uses nearly all the money to fund thermal efficiency projects through Efficiency Vermont, the state’s energy efficiency utility.
Buyers in the compact must purchase one allowance for each ton of carbon emissions they produce. But Vermont’s allowance was over-budgeted due to the anticipation that Vermont Yankee would be replaced with a carbon emitting energy generation plant. As a result, the state has been selling its allowances back into the market and has raked in about $12 million for thermal efficiency programs.
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