Vermont Comprehensive Energy Plan, pub 1/91 EXECUTIVE SUMMARY On October 23, 1989, Governor Madeleine Kunin signed Executive Order 79 calling for a comprehensive review of all forms of energy used in the State and the development of a plan to modify that energy usage in order to achieve specific goals relating to environmental quality, affordability and renewability. The Comprehensive Energy Plan has been worked on for the past 14 months by the Department of Public Service, the Agency of Natural Resources, the Agency of Transportation and many of Vermont's leading authorities on energy usage. The goals laid out in that Order can be exceeded in most cases, and nearly attained in one. Several features mark this planning effort as important and unique. Despite growing recognition of the steep environmental price we pay for present patterns of energy use, only the most fragmentary efforts had been undertaken to adapt or modify energy usage to improve the environment. As work proceeded on the plan, world events again showed how strategically vulnerable this state and nation are as a result of our current pattern of energy usage. This comprehensive planning effort represents the first time that all forms of energy usage -- regulated, unregulated and transportation fuels -- have been considered in a single integrated plan. Perhaps more importantly, it is the intention of this plan to serve as a road map showing how the State and its citizens could control energy usage, rather than having energy usage control its budgets, its environment and its future. With this in mind, specific goals were chosen. The first goal was to reduce global warming gases and acid rain precursors by 15% by the year 2000. The planning process was designed to propose policies which would modify energy usage to attain those goals. The plan set a goal for reduction in per capita non- renewable, primarily fossil fuel energy use of 20 percent by the year 2000. This reduction is, of course, complementary to the environmental goals, but also pushes the state towards increased reliance on renewable, sustainable energy resources. Finally, the executive order charged the plan to maintain the affordability of energy so that environmental goals would not come in conflict with basic economic goals. Based upon the work of the past fourteen months, in which more than 200 people participated actively in the discussion and development of policy options, I can report that it is possible to modify and adapt the energy usage of the state in a manner that essentially achieves all the goals outlined in Executive Order 79. In summary, the Comprehensive Energy Plan shows that: - Greenhouse gases can be reduced by 12 percent; - The acid rain precursors NOX2 and SO2, can be reduced by 18 percent; - The use of non-renewable energy forms per capita can be reduced by 27 percent; and - The affordability of energy is maintained as a result of these policy changes by reducing residential energy expenditures from 6.0% of income in 1990 to 4.6% in 2000. This plan constitutes a suggested direction, not a mandate. Ultimate adoption of all or some of the measures awaits public acceptance, legislation, and in some cases, federal actions. Much public debate and considerable work will be required to pave the way for adoption of these and other related policies, but it is a significant accomplishment of this plan to show that the goals outlined are indeed attainable, that they are attainable without massive disruption of our economy or cost to citizens, and that, indeed, they have many positive economic effects. The plan covered regulated energy use, unregulated energy use, and transportation fuels. Analysis showed that transportation fuel use was likely to increase the most rapidly over the next twenty years and provide a larger share of harmful pollutants. To compound problems, this type of energy use has traditionally been of little concern to energy policy makers. As a result of intensive discussions with many of those most vitally concerned about transportation policies in the state, four major ways in which energy use and transportation could be modified were identified. First, the plan proposes an aggressive series of rebates and fees to encourage the purchase of efficient vehicles. Second, it is recognized that federal efforts to require increases in the average efficiency of corporate fleets of cars sold in this country have to increase. The model considers the effects of an increase from approximately 28 miles per gallon to 40 miles per gallon in 2000 for automobiles and a similar increase for light trucks. The plan shows the effects of a substantial switch from purely fossil- based transportation fuels to alternative transportation fuels, in particular, methanol or ethanol from biomass and fossil fuel sources, compressed natural gas, and others. Finally, the plan recommends a number of measures to improve Vermont's ridesharing and public transportation system. Natural gas from pipelines and electricity are important energy sources for the state that have long been regulated. Again, after focus group discussions with many of the people in the state most expert in the production and utilization of these fuels, the plan proposes to modify the use of these energy forms by expanding the use of natural gas service, implementing extremely aggressive efficiency and conservation programs for both electricity and natural gas, and meeting additional generation requirements to the extent possible with biomass fuels or very efficient natural gas generation. Finally, the plan proposes several initiatives affecting the major unregulated heating fuels. Again, after a number of meetings with people most expert in this area, the plan calls for expanded use of wood fuels in commercial and residential applications. In addition, the plan proposes an integrated policy of taxation and dedicated investments that tries to bring to the unregulated fuels the kinds of efficiency investments that we are increasingly coming to expect from regulated fuels. From an energy and environmental perspective, the plan finds linking taxes and investment programs by fuels to be very desirable. For example, taxes are proposed in order to adjust the market price of unregulated fuels to begin to reflect external environmental consequences of fuel use in addition to direct market costs. Whenever such a tax is proposed, the plan also considers that the revenues collected will be dedicated and channeled to investments intended to reduce the use of that particular fuel in the most cost-effective manner. This link, between tax revenues and investment policies, produced large modifications in the overall level of energy use while simultaneously preserving or improving the affordability of the fuel in question for individual consumers and businesses. Although not directly cited as a major goal of the plan, the policies proposed have the effect of reducing oil use in the year 2000 slightly from present levels and by 23 percent from the Base Case projection. This plan shows there are things individual Vermonters, the state and the nation can do to preserve our environment, improve our economy, and reduce our vulnerability to and dependence upon imported fossil fuels.