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

A CARBON PRICE POLICY IN VERMONT Regional Economic Models, Inc. (REMI) what does REMI say? sm what does REMI say? sm

Study Author Scott Nystrom, M.A. • Senior Economic Associate • (202) 716-1397 • <scott.nystrom@remi.com> what does REMI say? sm

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 what does REMI say? sm

Client Base what does REMI say? sm

Carbon Pricing $175  Fee paid in Vermont Carbon tax rate (2014 dollars per metric ton of carbon dioxie) for emitting carbon $150 dioxide into the air $125 $100  Covers liquid and gaseous fuels $75  Not electricity (already $50 covered by RGGI) $25  Revenue recycled $0 2016 2020 2024 2028 2032 2036 2040  Similar to program in British Columbia LOW MEDIUM HIGH what does REMI say? sm

Revenue Recycling 2% 2% 1% 2% 1% 2% Individual Rebate Credits Low-Income Supplement Corporate Income Tax Cuts 39% Employment-Based Rebate 22% C&I Heating and Process Vehicle Electrification Vehicle Hybridization Solar Tax Credits Market Rate Weatherization 6% 23% Low-Income Weatherization what does REMI say? sm

CTAM Model  C arbon T ax (or Price) Price on carbon A nalysis M odel emissions  Keibun Mori Changes end-use  Open-sourced energy prices  Public data only from the U.S. DOE Reduces demand for energy  Previous applications:  Massachusetts Change from AEO  Washington reference case  King County, WA  California Tax revenues =  Federal (9-regions) price*emissions what does REMI say? sm

REMI PI + what does REMI say? sm

Integrated System PI + Model CTAM Model • Energy costs for petroleum- • Variables for energy-related derived products, natural costs of living and doing gas, and electricity business in Vermont • Residential, commercial, and • Revenue recycling measures industrial sectors • GDP and population growth what does REMI say? sm

Economics and Demographics REMI PI + what does REMI say? sm

what does REMI say? sm Total Employment Jobs (over/under baseline) 1,000 1,500 2,000 2,500 3,000 3,500 500 0 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 HIGH MEDIUM LOW

what does REMI say? sm Gross State Product Millions of 2014 dollars $100 $120 $140 $160 $20 $40 $60 $80 $0 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 HIGH MEDIUM LOW

GSP by Industry Construction Other Services, except Public Administration Manufacturing Health Care and Social Assistance Professional, Scientific, and Technical Services Real Estate and Rental and Leasing Finance and Insurance Information Arts, Entertainment, and Recreation Accommodation and Food Services Management of Companies and Enterprises Forestry, Fishing, and Related Activities Administrative and Waste Management Services Educational Services Wholesale Trade Mining Retail Trade State and Local Government Utilities Transportation and Warehousing -$30 -$20 -$10 $0 $10 $20 $30 Millions of 2014 dollars (annual average) what does REMI say? sm

Jobs by Industry Construction Other Services, except Public Administration Health Care and Social Assistance Accommodation and Food Services Arts, Entertainment, and Recreation Manufacturing Professional, Scientific, and Technical Services Administrative and Waste Management Services Finance and Insurance Educational Services Real Estate and Rental and Leasing Forestry, Fishing, and Related Activities Information Wholesale Trade Retail Trade Management of Companies and Enterprises Mining Utilities State and Local Government Transportation and Warehousing -200 -100 0 100 200 300 400 500 600 Jobs (annual average from baseline) what does REMI say? sm

Vermont Jobs (2013) Federal Civilian Federal Military Forestry, Fishing, and Management of Utilities Mining Related Activities Companies and Transportation and Information Enterprises Warehousing Farm Wholesale Arts, Entertainment, and Trade Health Care and Recreation Social Assistance Real Estate and Rental and Leasing Finance and Insurance Retail Trade Educational Services State and Local Administrative and Waste Government Management Services Other Services, except Public Administration Professional, Scientific, Manufacturing and Technical Services Construction Accommodation and Food Services what does REMI say? sm

what does REMI say? sm Real Personal Income Millions of 2014 dollars $100 $150 $200 $250 $300 $50 $0 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 HIGH MEDIUM LOW

what does REMI say? sm Cost of Living Index Change from baseline 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 HIGH MEDIUM LOW

Income by Quintile 1.2% 1.0% Change from baseline 0.8% Lowest 20% 0.6% Low-Middle 20% Middle 20% 0.4% High-Middle 20% 0.2% Highest 20% 0.0% -0.2% 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 what does REMI say? sm

what does REMI say? sm Population People (over/under baseline) 1,000 2,000 3,000 4,000 5,000 6,000 0 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 HIGH MEDIUM LOW

Fiscal and Emissions Vermont CTAM (“VACTAM”) what does REMI say? sm

what does REMI say? sm Carbon Revenues Millions of 2014 dollars $100 $200 $300 $400 $500 $600 $700 $800 $0 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 HIGH MEDIUM LOW

what does REMI say? sm Carbon Emissions Millions of metric tons 0 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 BASELINE HIGH MEDIUM LOW

what does REMI say? sm Cumulative Savings Millions of metric tons -40 -35 -30 -25 -20 -15 -10 -5 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 HIGH MEDIUM LOW

what does REMI say? sm Source of Savings Millions of metric tons -2.5 -1.5 -0.5 -3 -2 -1 0 2016 Price Response to Carbon Tax 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Energy Investment Programs 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Main Takeaways • 1,500 to 3,000 additional jobs Economic • Additional GSP and real personal income • $500 million to $700 million per year Fiscal • Declines with emissions in long-term • Falls up to 40% from the baseline Emissions • Split between price and efficiencies • 2,000 to 4,000 more Vermonters Demographic • Responding to stronger labor market what does REMI say? sm

Regional Economic Models, Inc. 1717 K Street NW Suite 900 Washington, DC 20006 (202) 716-1397 what does REMI say? sm