Carbon taxes would destroy the delivered fuel business by intentionally making the products too expensive, leaders of state trade associations say.
“It is probably the biggest issue that is going to face the heating oil and propane industries as well as the motor fuels industry, going forward,” said Jamie Py, president, and CEO of the Maine Energy Marketers Association, based in Brunswick, Me.
Calls for a carbon tax have been made repeatedly in the New England states and elsewhere.
The Massachusetts Senate in June approved a carbon fee designed to encourage “low-emissions lifestyles and business practices,” reported The Republican, a newspaper in Massachusetts. If the bill passes the House and becomes law, it would require the governor’s office to develop carbon pricing for the transportation sector by the end of 2020, for commercial buildings and industrial processes by 2021 and for residential buildings by the end of 2022, according to The Republican.
In Rhode Island last year, the General Assembly passed, and the governor signed, a bill authorizing a study to examine a statewide carbon-pricing program. The study was supposed to be led by the state Office of Energy Resources (OER), but there was no funding, reported ecoRI News, a newsletter published by ecoRI, a non-profit environmental watchdog group. Carol Grant, OER commissioner, said her office is hoping to get funding soon, ecoRI News reported in June, noting that the cost of the study is between $150,000 and $250,000.
In Connecticut a bill introduced early this year would add a tax of 17 to 39 cents per gallon to heating oil in its first five years, according to StoptheCarbonTax.weebly.com, a website maintained by the Connecticut Energy Marketers Association. Some 25 members of the association testified against the bill and it eventually “died in committee,” said Chris Herb, president of CEMA, based in Cromwell, Conn. But the legislator who introduced the bill said he planned to re-introduce it, Herb said.
Herb called the proposed carbon tax “punishing.” If enacted, fuel prices would go up, and those who could afford to would probably buy electric vehicles to avoid higher fuel taxes, Herb said. “But if you’re a single mom, working poor, and just trying to get back and forth to work, you don’t have the money to go out and buy an electric vehicle to avoid higher taxes.”
At the Northern New England Energy Conference at Mill Falls at the Lake, Meredith, N.H., June 24-26, Py, Robert J. Sculley, executive director of the Energy Marketers Association of New Hampshire, and Matt Cota, executive director of the Vermont Fuel Dealers Association, gave presentations on the calls for carbon taxes in their respective states.
Maine’s state constitution would limit the scope of a carbon tax, Py said. “Legally, our motor fuels tax is constitutionally protected to go to highways,” Py said. But proponents could impose a carbon tax on heating oil and propane and natural gas, he noted.
In Maine, proposals for a carbon tax arise in the context of electrification as a goal for the state, Py said. “The carbon tax is simply a way of increasing the price of heating oil and gasoline and diesel fuel to be uncompetitive relative to the alternative which is going electric,” Py said. Every year bills are introduced to promote electric heat pumps, he said. “Maine has a faction that would love to eliminate heating oil.”
Some advocates for a carbon tax regard it as a parallel to the Regional Greenhouse Gas Initiative, or RGGI, a cap-and-trade agreement designed to curtail power plant emissions, Py noted. “That’s already in place in New England and that’s essentially a carbon tax for electric generators—to drive the electric generators to use renewables.”
Vermont has debated about eight different carbon tax proposals over the past four years, Cota of the Vermont association, headquartered in Berlin, Vt., said in an interview. The proposals ranged from “legislative initiatives drafted by lawmakers in Montpelier and various studies and press conferences and ad campaigns trying to promote a carbon tax,” Cota said.
A $120,000 six-month study of “decarbonization pricing policies” was included the state’s budget, which was approved on July 1, Cota said. “That is somewhat of a concession that the lawmakers made to those advocates who wanted carbon pricing,” Cota said. Such pricing policies are designed to increase the price of heating oil, diesel fuel, gasoline, propane, and kerosene “with the explicit [goal] of discouraging consumption,” Cota said. The proposals called for increased per-gallon prices that started as low as 10 cents and went as high as one dollar. Cota said the most recent proposal would have increased the cost of fuels by about 40 cents a gallon, raising an estimated $200 million to $240 million, which then would have been given to the utility to discount electric prices.
“There is a popular theory among environmentalists in Vermont and elsewhere that the best way to reduce the amount of carbon in the atmosphere is to electrify both the transportation and the thermal sectors,” Cota said.
The Vermont fuel dealers and other opponents were able to defeat the latest proposal “for the simple reason that the math just didn’t work,” Cota said. Annually, Vermont uses 100 million gallons of heating oil, 100 million gallons of propane, 300 million gallons of gasoline and 100 million gallons of diesel fuel, Cota said. “Take 600 million gallons of petroleum products out of the equation [and] you’re going to have a significant surge in electricity consumption,” Cota noted. How that would affect electricity prices “wasn’t well thought out.”
Cota added, “The simple reason that people drive older cars is not because they love older cars. It’s because they can’t afford to buy a new car. The idea of raising the cost of gasoline for people who have to drive thirty, forty, fifty miles to get to a job—the idea that this sort of economic social engineering is going to make any difference in global warming is absurd. Raising the cost of energy in a cold rural state like Vermont will only maximize the pain on those living on the margins in the rural areas.” Three-quarters of the population of Vermont resides outside of Chittenden County, the most populous county, which includes Burlington, where public transportation is easy to come by, Cota said. “It’s absurd, it’s elitist—it’s offensive,” he said. Cota isn’t comforted that the proposals to date have been defeated.
“They’ll be back in January,” he said of supporters of a carbon tax. As those supporters go “door to door trying to elect candidates that support a carbon tax,” Cota said, “We’re going door to door. We’re asking our members to contribute to a fund to help elect candidates that don’t support a carbon tax.”
A bill that would have created a study committee to look at the potential impact of a carbon tax on fossil fuels in New Hampshire was defeated this year. Nevertheless, Sculley said, “I believe it’s the proponents’ desire to drive the cost of heating oil so high by placing a tax on it that it causes our customers to look at alternative heating sources. It’s extremely harmful to this industry, and to its customers and to the people who can afford a carbon tax the least.”
State legislators from nine states, members of the National Caucus of Environmental Legislators, announced the formation in January of the Carbon Costs Coalition, focused on “reducing carbon emissions, ensuring equity in policy proposals, developing market-based solutions, creating resilient local and regional economies, and improving public health.”
Coalition members include lawmakers from Connecticut, Maryland, Massachusetts, New Hampshire, New York, Oregon, Rhode Island, Vermont, and Washington. The coalition said, “By coordinating efforts, these legislators are leading a state-based movement to take action on climate.”— Stephen Bennett
A version of this article was published in the August 2018 issue of Fuel Oil News with the headline, “Fighting Against Calls for a Carbon Tax,” beginning on page 20.
Photo courtesy of Mill Falls at the Lake.