Commentary: Vermont’s New Energy Gosplan (January 2014)

By John McClaughry

“The Department of Public Service’s draft Total Energy Plan offers five “pathways” to meeting two really foolish policy goals by 2050 – and following any or all of them will dearly cost every Vermont energy consumer.”

Vermont’s new Gosplan for Energy Control is now well on its way to fruition.John McClaughry

“Gosplan” was the name of the Soviet Union’s State Economic Plan, initiated by Stalin in 1928 and continued until the final collapse of that regime in 1991. Its purpose was to correctly allocate all the economic and natural resources of the Soviet Union according to Marxist-Leninist priorities.

Vermont’s energy Gosplan will be finalized next spring. The draft Department of Public Service’s Total Energy Study released last month proposes to “identify the most promising policy and technology pathways to employ in order to reach Vermont’s energy and greenhouse gas goals.”

Those key legislative goals were set by two statutes. Act 168 of 2006 established the goal of reducing greenhouse gas emissions to 25% of their 1990 level by 2050. Act 89 of 2013 implicitly ratified Gov. Shumlin’s Comprehensive Energy Plan of 2011, which declared that Vermont must “attain 90% of its energy from renewable sources by mid-century.” (We are now at 16%).

DPS has done a very creditable job in producing a 35-page document upon which legislators can make decisions. But because the politicians have already decided to do whatever it takes to radically reduce greenhouse gas e missions and increase renewable energy consumption, the DPS report cannot even hint that the whole exercise is likely to be a costly, intrusive, and unattainable pipe dream.

The Report describes five “pathways” toward achieving the two goals. In examining these pathways, citizens should bear in mind that the State has three major ways of forcing you to do what it decrees. They are Coercion, Confiscation, and Punishment.

That is, the state can order you to act or not act, confiscate your resources and incomes to pay for the State’s spending, and punish you for noncompliance. The Report “pathways” rely upon the State’s powers to coerce and confiscate – and implicitly punish – in order to achieve the two goals.

The Report’s leading proposal is the Total Renewable Energy and Efficiency Standard (TREES). Under it, every energy producer would have to meet a state-specified fraction of renewable sourcing, or else purchase certificates from others who have been “awarded” more than they need.

This corruption-prone cap-and-trade variant brings to mind the Chinese and Indian factories that were awarded European Community Clean Development Mechanism certificates for destroying harmful greenhouse gases. Until last May the factories had produced thousands of tons of unsalable HFC-23 gas, then destroyed it in order to pocket billions of euros from selling the CDM certificates.

A second proposal is “a small economy-wide carbon tax, used to raise revenue applied to programs directed at making it easier for obligated parties to meet their target obligations.” The state would tax the carbon content of fuels to make their prices reflect “the social costs of emission” of carbon dioxide, as determined, of course, by State experts.

The Report postulates that the carbon tax would be “revenue neutral”, but in the next breath it says that the reduction in other taxes and fees might “not quite cancel the net revenue impact, thereby generating net revenue.”

The report is silent as to who would set the carbon tax rates, but given the feckless legislature’s abdication of its constitutional duty to establish tax rates, most likely it will hand the task over to the Public Service Board. The PSB will then set tax rates to raise whatever it thinks the Gosplan bureaucracy needs, as it has since 2006 with the energy efficiency charge on your electric bill.

The report notes that “allocation of limited carbon tax revenue to the correct programs to best address market challenges would require a flexible and informed priority-setting process.” Indeed it will, by Gosplan bureaucrats constantly pressured by industry and environmental “stakeholders” seeking special deals.

There are three more “pathway” variants, but regardless of which combination is chosen by the legislature, there will be one inescapable result. A coterie of skilled administrators, economists and regulators will make decision after decision to impose new taxes and to continually adjust the “complementary programs” inevitably needed to keep their grand scheme from running off the rails. All this will be in pursuit of two arbitrary goals set by politicians too many of whom, alas, have little idea how what they are doing will impact ordinary people.

What’s the right course of action? Scrap the 2006 greenhouse gas goals, disavow Gov. Shumlin “90% renewable by 2050” diktat, forever renounce “taxation by unaccountable strangers”, give up on setting a noble example for the rest of the world, drop the Gosplan idea off at the recycling station, and let free Vermonters make and pay for their own decisions about the energy they produce and consume.

- John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org).

{ 1 comment… read it below or add one }

Peg Garvin January 6, 2014 at 6:09 pm

John, I have been sharing some of your commentaries with friends on the web and Facebook. It is helpful to have your insight voiced . Please keep up the good work. Many of us are listening.

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