Last year, Vermont lawmakers enacted Act 122, a law aimed at establishing a “Climate Superfund” to tax companies that extracted or refined over a billion metric tons of fossil fuels between 1995 and 2024. The fund is intended to support climate adaptation projects addressing impacts attributed to fossil fuel companies.
The Vermont Agency of Natural Resources (ANR) is responsible for determining the greenhouse gas emissions from each company subject to the tax. The Vermont Treasurer must report on the total cost of emission-related damage in the state. Advocates believe the law is essential for funding climate resiliency projects like flood mitigation, arguing that fossil fuel companies should be accountable for disaster-related damages.
Governor Scott allowed the law to pass without his signature, expressing doubts about its feasibility. New York has implemented a similar law. However, challenges have arisen due to complexities in attributing greenhouse gas emissions and related damages to specific companies.
The Treasurer’s Office and ANR requested an additional $1.5 million earlier this year for expert assistance in assessments and legal defense, on top of $600,000 already appropriated last year. They also proposed extending the assessment deadline to 2027.
Legal challenges emerged as predicted. In December 2024, the U.S. Chamber of Commerce and American Petroleum Institute filed a lawsuit claiming that Vermont’s Climate Superfund violates federal laws by targeting out-of-state companies and being preempted by the Clean Air Act. Attorney generals from 24 states joined this lawsuit in May, with the U.S. Department of Justice filing another challenge against Vermont’s law.
Vermont taxpayers are now tasked with financing the defense of a law criticized as unworkable before its legislative passage, potentially costing millions over several years.
Critics argue that like other state climate policies such as Clean Heat Tax and Carbon Cap & Trade, the Climate Superfund lacks detailed groundwork necessary for implementation while failing to assess costs and risks adequately.
Despite these criticisms, advocates highlight mandates from the Vermont Global Warming Solutions Act as justification for continued legislative action on emissions reductions.
Julie Moore, ANR Secretary, recently testified about Vermont’s expenditure of $500 million in state and federal funds this year on climate projects and over $1 billion in five years. This includes substantial investments in electric vehicle subsidies and weatherization projects aimed at reducing heating fuel consumption.
As federal funds diminish, state taxpayers may bear more financial responsibility for climate initiatives. Concerns arise regarding potential new taxes under programs like Cap & Trade due to their impact on energy costs and fiscal health within Vermont.
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