Carbon Impact Fee

What is Burlington's Thermal Energy Ordinance / Carbon Pollution Impact Fee?

Burlington Ballot Question 2 asks voters to allow the City to impose a fee on new buildings and large, existing commercial and industrial buildings that install fossil fuel rather than renewable heating for the stated purpose of reducing greenhouse gas emissions. The question does not inform voters that the City considers renewable heating to include systems fueled by wood, including wood burned in the McNeil plant which the City proposes to retrofit at great expense to supply steam heat to the University of Vermont Medical Center, the UVM campus and the Intervale Center ("district energy"). The question also does not inform voters that the City considers renewable heating systems to include systems fueled by “renewable” gas and biodiesel. Because all three of  these “renewable” fuel sources would not be subject to the fee, imposing a fee on fossil fuel heating systems would incentivize them.  Incentivizing these types of carbon-intensive, polluting “renewable” fuel sources would increase greenhouse gas emissions, adversely impact public health, and impair forest biodiversity.

Proponents of this question will tell you that this project has nothing to do with the McNeil Generating Station, but the carbon impact fee as written represents  a last ditch effort to make the proposed district energy project economically viable after repeated attempts to advance the project have been rejected due to a lack of financial viability. Burning wood emits more carbon dioxide per unit of energy produced than burning fossil fuels, emits other air pollutants harmful to human health, and causes destruction and impairment of the biodiversity of our forests. The McNeil plant is the largest stationary source of greenhouse gas and other harmful air pollutants in Vermont.  Rather than propping-up the plant by investing 45 million dollars in the district energy project (cost estimate from Burlington Electric), the City should begin planning for the retirement of the aging, polluting plant.

It is important to understand that the future of the plant is very much up in the air. The state is presently grappling with the emissions associated with using wood biomass to generate electricity and this puts the future of these types of polluting plants in question. Renewable Energy Vermont recently proposed that Vermont phase out McNeil Generating Station’s ability to count towards our renewable energy targets.  If this were to occur, Burlington ratepayers would take an enormous financial hit, a hit that would be compounded if we have recently financed the district energy project.  This is what is called a regulatory risk, and it is hard to underestimate the regulatory risk that McNeil and the Burlington ratepayers are facing right now. This is the worst possible time to invest capital in the future of this plant, and as such we should not be creating further incentives to build the district energy project by exempting it from the Carbon Impact Fee

With respect to other forms of energy that would be incentivized, “renewable” natural gas is a scam. Like natural gas, it is primarily methane.  Its production from gas generated by landfills and anaerobic digesters at farms and wastewater treatment facilities is inefficient and increases greenhouse gas emissions.  Likewise, growing crops for production of biofuels, including biodiesel, has led to destruction of forests and displacement of land used for food production around the world.  Biofuel production and use generates greenhouse gases and other harmful pollutants.

How We Got Here: Net Zero Energy Roadmap

On September 9, 2019, Mayor Miro Weinberger, Burlington Electric Department (BED) General Manager Darren Springer, and others publicly released the City’s Net Zero Energy Roadmap.  The Roadmap announced a goal of reaching Net Zero Energy by 2030.  Net Zero is commonly defined with reference to “greenhouse gases.”  An accepted definition is: “Net zero refers to a state in which the greenhouse gases going into the atmosphere are balanced by removal out of the atmosphere.”  However, rather than define Net Zero with reference to greenhouse gas emissions, the City of Burlington’s Roadmap defines Net Zero with reference to elimination of fossil fuel use.  “The City’s Net Zero Energy by 2030 (NZE by 2030) goal is defined as reducing and eventually eliminating fossil fuel use from the heating and ground transportation sectors.”  Roadmap 1. 

This is a perverse definition of Net Zero.  It allows substitution of non-fossil fuel types of energy for fossil fuel energy to count toward meeting the Net Zero goal regardless of the non-fossil fuel energy’s greenhouse gas emissions.  Substituting non-fossil fuel energy for fossil fuel energy counts toward achieving the Net Zero Energy Goal, even if it results in an increase in greenhouse gas emissions.  This is precisely what happens when heating systems fueled by biomass, biofuels or “renewable” natural gas are substituted for fossil fuel heating systems, which in Burlington are primarily natural gas systems.  When these types of “renewable” energy are substituted for natural gas, greenhouse gas emissions increase- yet the City claims credit toward meeting its Net Zero goal.

The City declared its Net Zero goal to be “the most ambitious climate goal established by any community in the United States to date.”

The Net Zero Energy Road Map announced pursuit of four pathways toward achieving the Net Zero goal, two of which relate to heating of buildings:

Efficient Electric Buildings: Efficient electric buildings, including comprehensive weatherization and electrification of space and water heating, represents the largest opportunity, with the potential to realize 60 percent of total fossil fuel reductions; and

District Energy: Implementing a District Energy system could represent 15 percent of total fossil fuel reductions, and would help meet the space and water heating needs of high-load buildings that otherwise would be more difficult to heat with electric heat pump systems alone.

District Energy refers to retrofitting the McNeil Generating Station, which primarily burns wood, in order to collect steam and sending the steam by pipe to certain users for heating. A number of iterations of the District Energy Plan have been pursued over the years and have proven economically unviable.  The City’s current District Energy Plan is to provide steam heat to the University of Vermont Medical Center, the UVM campus and the Intervale. The District Energy Plan is a pillar of the Roadmap even though wood burned in the McNeil Generating Station emits more greenhouse gases per unit of energy produced than burning gas or any other fossil fuel, including coal, and pursuing the District Energy Plan will increase greenhouse gas emissions.

The Roadmap also sanctions limited use of “renewable” natural gas.  “Renewable natural gas could be used to offset a small proportion of natural gas use in buildings where heat pumps cannot supply the heating needs for the entire building. However, supply will be limited, and the price could be high so this strategy should be deployed sparingly.”  Roadmap 17.

The Roadmap contains a brief reference sanctioning biomass heating systems, which include wood and pellet stoves.  “While biomass heating systems were not modeled, biomass could also provide a clean and efficient heating solution for some homes and businesses.”

The Roadmap does not discuss liquid biofuels.

The Charter Change Amendment

On March 2, 2021, Burlington voters approved a proposed change to the City’s charter that would allow the City to regulate thermal energy systems in residential buildings, including assessing and levying a carbon impact fee or alternative compliance payment, for the purpose of reducing greenhouse gas emissions.  Voters also approved an advisory ballot question focused on providing equity in the development of such policies.  The charter change was required to be approved by the Vermont legislature.  In approving the charter change, the legislature required that any carbon impact or alternative compliance payment that the City desired to impose be approved by voters.

The Primary Residential Heating System Ordinance

On June 28, 2021, the City council approved an ordinance, later signed by the Mayor, that requires a “primary renewable heating system” in new construction. Chapter 8, Article V, Section 8-78.  The ordinance defines “renewable primary heating system,” as including systems powered by electricity, wood pellets or wood chips, renewable gas, biodiesel, and renewable district heating (ie. from the McNeil district energy project).  Section 8-77.

This policy is unfortunately part of a disturbing trend in Vermont climate policies. The false dichotomy between fossil fuels and renewable energy that is created by this policy is now present in the Carbon Impact Fee ballot question, in South Burlington city policy, and in the language of the Affordable Heat Act (AHA) that is moving through the Vermont legislature.  The incentive to transition to carbon intensive and polluting fuels like wood, biofuels and renewable natural gas is appearing in so many places that we are deeply concerned about the direction we are heading as a state. If these incentives appear in climate policy across the state, that will start to drive changes in markets and behavior. In fact, the economic analysis being used to argue for the passage of the AHA assumes that the incentives created by the AHA will drive shifts to biofuels, renewable natural gas and biomass. While we understand the urgency to act quickly to reduce our emissions, it is important that we are thoughtful in our choices of climate policy so we do not incentivize shifts to fuel sources that do not facilitate emission reductions. Please also see the Science section of our website for other negative impacts of these so-called renewable fuel sources, including impacts to human health and global biodiversity. 

The Carbon Impact Fee and The Definition of Renewable

Reports prepared by Burlington Electric and Minutes of the Board of Electric Commissioners make clear that the intent is to exempt from the fee any “renewable” system as defined in the primary heating system ordinance in Chapter 8, Article V.  This includes electricity, as well as wood pellets or wood chips, renewable gas, biodiesel, and McNeil district heating.  The Report makes clear that the fee is designed as an alternative compliance payment. Buildings subject to the fee, which do not comply with the ordinance requiring a primary heating system that is within the definition of renewable can comply with the law by paying the fee.  This incentivizes installation of systems within the City’s definition of renewable.

Hard to Fix

Unfortunately, because the charter change legislation requires that voters approve any fee, the City could not fix the proposed fee at the ordinance stage by having it apply not only to fossil fuel heating systems, but also to “renewable” systems that are carbon intensive, including systems fueled by wood, the proposed McNeil district heat system, “renewable” natural gas and biofuels. This is because the legislation approving the charter change requires that any fee be approved by voters.  So any change to the types of systems subject to the fee would need to go back out to voters.  Our concern is that if Question 2 is approved by voters, there may be resistance to putting a new carbon impact fee related question back before Voters in order to fix the terrible incentives that were intentionally created by the language in this question. If our goal is to pass a carbon impact fee that includes a tax on all carbon intensive fuels sources (including wood, biofuels and renewable natural gas), the most effective means of achieving this is to Vote No on Question 2. This will provide an incentive on the part of the City of Burlington and Burlington Electric to design a carbon impact fee that does not incentivize these problematic sources of energy. We can take a year to discuss how to improve the carbon impact fee and then pass it next year. 

Next Steps

We encourage voters to vote no on Question 2. 

If the measure is defeated, we have a year to rework the language in the carbon impact fee and the primary heating system ordinance to address our concerns about the carbon intensive and polluting fuels incentivized by the present proposal and to refine the proposed uses of the associated revenues.

If Question 2 passes, the City must enact an ordinance to put the fee into law. Passage of Question 2 would authorize but would not require the City to impose a carbon impact fee.  If the voters approve Question 2, we can campaign to defeat any ordinance to impose the Carbon Impact Fee until the City agrees to bring the question back before voters to put a carbon impact fee on carbon intensive renewable energy sources.