POLICY IN VERMONT Regional Economic Models, Inc. (REMI) what does - - PowerPoint PPT Presentation

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A CARBON PRICE POLICY IN VERMONT

Regional Economic Models, Inc. (REMI)

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Study Author

• Senior Economic Associate
• (202) 716-1397
• <scott.nystrom@remi.com>

Scott Nystrom, M.A.

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About REMI

Regional Modeling

• Founded as an offshoot of research performed at the University of

Massachusetts-Amherst in the late 1970s

• Software, data, consulting services, and issue expertise involving

regional economic and demographic analysis

Clients and Research

• Public sector: 47/50 states, federal agencies, regional authorities,

cities, universities, international groups

• Private sector: consultants, “Big 4” accounting firms, Fortune 500

companies, trade associations (AGA, NEA, NFIB, etc.)

• Recent projects on immigration reform and Medicaid expansion

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Client Base

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Carbon Pricing

 Fee paid in Vermont

for emitting carbon dioxide into the air

 Covers liquid and

gaseous fuels

 Not electricity (already

covered by RGGI)

 Revenue recycled

 Similar to program in

British Columbia

$0 $25 $50 $75 $100 $125 $150 $175 2016 2020 2024 2028 2032 2036 2040 Carbon tax rate (2014 dollars per metric ton of carbon dioxie) LOW MEDIUM HIGH

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Revenue Recycling

39% 6% 23% 22% 2% 2% 2% 1% 2% 1%

Individual Rebate Credits Low-Income Supplement Corporate Income Tax Cuts Employment-Based Rebate C&I Heating and Process Vehicle Electrification Vehicle Hybridization Solar Tax Credits Market Rate Weatherization Low-Income Weatherization

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CTAM Model

 Carbon Tax (or Price)

Analysis Model

 Keibun Mori

 Open-sourced

 Public data only from

the U.S. DOE

 Previous applications:

 Massachusetts  Washington  King County, WA  California  Federal (9-regions)

Price on carbon emissions Changes end-use energy prices Reduces demand for energy Change from AEO reference case Tax revenues = price*emissions

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REMI PI+

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Integrated System

CTAM Model

• Energy costs for petroleum-

derived products, natural gas, and electricity

• Residential, commercial, and

industrial sectors

PI+ Model

• Variables for energy-related

costs of living and doing business in Vermont

• Revenue recycling measures
• GDP and population growth

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REMI PI+

Economics and Demographics

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Total Employment

500 1,000 1,500 2,000 2,500 3,000 3,500 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Jobs (over/under baseline) LOW MEDIUM HIGH

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Gross State Product

$0 $20 $40 $60 $80 $100 $120 $140 $160 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions of 2014 dollars LOW MEDIUM HIGH

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GSP by Industry

• $30
• $20
• $10

$0 $10 $20 $30

Transportation and Warehousing Utilities State and Local Government Retail Trade Mining Wholesale Trade Educational Services Administrative and Waste Management Services Forestry, Fishing, and Related Activities Management of Companies and Enterprises Accommodation and Food Services Arts, Entertainment, and Recreation Information Finance and Insurance Real Estate and Rental and Leasing Professional, Scientific, and Technical Services Health Care and Social Assistance Manufacturing Other Services, except Public Administration Construction

Millions of 2014 dollars (annual average)

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Jobs by Industry

• 200 -100

100 200 300 400 500 600

Transportation and Warehousing State and Local Government Utilities Mining Management of Companies and Enterprises Retail Trade Wholesale Trade Information Forestry, Fishing, and Related Activities Real Estate and Rental and Leasing Educational Services Finance and Insurance Administrative and Waste Management Services Professional, Scientific, and Technical Services Manufacturing Arts, Entertainment, and Recreation Accommodation and Food Services Health Care and Social Assistance Other Services, except Public Administration Construction

Jobs (annual average from baseline)

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Vermont Jobs (2013)

Health Care and Social Assistance Retail Trade State and Local Government Manufacturing Accommodation and Food Services Construction Professional, Scientific, and Technical Services Other Services, except Public Administration Administrative and Waste Management Services Educational Services Finance and Insurance Real Estate and Rental and Leasing Arts, Entertainment, and Recreation Wholesale Trade Transportation and Warehousing Farm Federal Civilian Information Federal Military Forestry, Fishing, and Related Activities Management of Companies and Enterprises Utilities Mining

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Real Personal Income

$0 $50 $100 $150 $200 $250 $300 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions of 2014 dollars LOW MEDIUM HIGH

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Cost of Living Index

0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45% 0.50% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Change from baseline LOW MEDIUM HIGH

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Income by Quintile

• 0.2%

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Change from baseline Lowest 20% Low-Middle 20% Middle 20% High-Middle 20% Highest 20%

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Population

1,000 2,000 3,000 4,000 5,000 6,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 People (over/under baseline) LOW MEDIUM HIGH

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Vermont CTAM (“VACTAM”)

Fiscal and Emissions

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Carbon Revenues

$0 $100 $200 $300 $400 $500 $600 $700 $800 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions of 2014 dollars LOW MEDIUM HIGH

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Carbon Emissions

1 2 3 4 5 6 7 8 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions of metric tons LOW MEDIUM HIGH BASELINE

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Cumulative Savings

• 40
• 35
• 30
• 25
• 20
• 15
• 10
• 5

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions of metric tons LOW MEDIUM HIGH

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Source of Savings

• 3
• 2.5
• 2
• 1.5
• 1
• 0.5

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions of metric tons Price Response to Carbon Tax Energy Investment Programs

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Main Takeaways

• 1,500 to 3,000 additional jobs
• Additional GSP and real personal income

Economic

• $500 million to $700 million per year
• Declines with emissions in long-term

Fiscal

• Falls up to 40% from the baseline
• Split between price and efficiencies

Emissions

• 2,000 to 4,000 more Vermonters
• Responding to stronger labor market

Demographic

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