Green Mountain Times

Vermont is once again considering the introduction of new energy taxes through a "Cap-And-Invest" program (CAI) and a Low-Carbon Fuel Standard (LCFS). These measures are being explored as part of efforts to meet greenhouse gas emissions reduction targets set by the 2020 Global Warming Solutions Act.

A report commissioned by the Agency of Natural Resources (ANR) and Agency of Transportation (AOT) earlier this year outlined options for adopting CAI and LCFS. The agencies were tasked by Vermont lawmakers to study these programs to comply with the state's emissions reduction mandates.

The Global Warming Solutions Act mandates an 80% reduction in statewide greenhouse gas emissions compared to 1990 levels by 2050. It empowers a Climate Council to propose strategies to achieve these targets, requiring ANR to adopt rules that implement the plan.

NFIB Vermont members have expressed strong opposition to these initiatives. According to NFIB, "89% oppose adopting a Low Carbon Fuel Standard," "92% oppose new taxes and fees on transportation," and "98% oppose carbon pricing schemes."

The report highlights that climate change is a global issue, noting that Vermont contributes just 0.016% of global CO2 equivalent emissions.

Cap-and-Invest limits greenhouse gas emissions across economic sectors, similar in purpose to a carbon tax. Governments sell emissions allowances, using proceeds for energy efficiency programs and other mitigation projects. Businesses can trade excess allowances in a market if they reduce their emissions below allocated limits.

The ANR-AOT report references the Western Climate Initiative (WCI) and New York Climate Initiative (NYCI) as models for CAI. In 2024, WCI increased gasoline costs by $0.26 per gallon and diesel by $0.31 per gallon. The report suggests CAI could raise fuel prices significantly but notes implementation challenges for Vermont alone.

Without CAI or additional action funded by new taxes, Vermont may not meet its 2030 mandate until 2036.

Low-Carbon Fuel Standard targets emissions related to transportation fuels' carbon intensity. As of 2025, only California, Oregon, and Washington have adopted LCFS. California's LCFS began in 2011; recent estimates suggest it could increase gasoline prices significantly over time.

LCFS programs subsidize alternative fuels and electric vehicles but face criticism for benefiting households that would purchase EVs without credits.

Treasurer Mike Pieciak advised against joining WCI due to affordability concerns but recommended further study on NYCI membership potential impacts on low-income residents and revenue leakage from cross-border fuel purchases.

The Vermont Climate Council will debate these policies in mid-March before potentially adding them to the state's Climate Action Plan. Any proposal will likely encounter resistance from Governor Phil Scott.