MASSACHUSETTTS
Breaking News: MEMA Submits Testimony against Carbon Tax Bills to Legislature
The Massachusetts Energy Marketers Association (MEMA), the trade association representing the statewide home and commercial heating oil industry and producers and distributors of renewable liquid biodiesel/Bioheat, submits its strong opposition to S.1924 An Act Combating Climate Change and H.2810 An Act to Promote Green Infrastructure and Reduce Greenhouse Gas Emissions. If enacted, these legislative proposals would place a tax on fossil fuel energy sources including home heating oil in order to reduce carbon dioxide emissions to mitigate the impact of greenhouse gas emissions in Massachusetts. MEMA opposes these bills for the following reasons:
1. The heating oil industry in Massachusetts is already significantly reducing carbon emissions with clean, renewable biodiesel or Bioheat fuel. This fuel is a blend of ultra-low sulfur heating oil with lab-tested, proven blends of biodiesel of up to 20% (B20) that are made from waste products or byproducts of existing food supply lines including plant-based oils such as soybean oil, canola, used cooking oils and animal fats. Under the Massachusetts Alternative Energy Portfolio Standard, for example, heating oil retailers have cut heating oil use by about 35 million gallons over a two-year period beginning in 2018 by providing customers Bioheat fuel. And recently, the National Oilheat Research Alliance (NORA) – the organization that leads research and development activities for the industry – has committed to moving the industry to B50 (50% blend of biodiesel) by 2030. This will enable the heating oil industry to meet the greenhouse gas emissions reduction goals set in 2015 by the Paris Agreement.
2. As stated in a Boston Globe editorial (enclosed) on April 26, 2019, our association maintains that S.1924 and H.2810 will substantially increase the cost of living for every resident statewide, hurt small business owners and the state’s economy, and provide no proven impact on reducing greenhouse gas emissions.
3. Using reliable carbon coefficients published by the US Energy Information Agency, our association has determined that under S.1924 homeowners using heating oil will pay an additional $487 annually by 2030, and $582 more per year if H.2810 is enacted. Furthermore, these legislative proposals will add an additional $700 to $835 to annual household costs for gasoline.
4. A 2019 study by the Beacon Hill Institute on the impact of carbon tax legislation “found that the average Massachusetts household will see its tax bill increase by $755 in the first year alone. By the fifth year, that annual tax load will increase to $1,263. In addition, Massachusetts would see a loss of 11,090 private sector jobs in its first year, increasing to 18,240 by its fifth.”
The Massachusetts Energy Marketers Association urges your Committee and the entire Massachusetts General Court to reject these legislative proposals and any similar proposals that would tax heating oil.
Respectfully Submitted,
Michael Ferrante | Presiden
1. The heating oil industry in Massachusetts is already significantly reducing carbon emissions with clean, renewable biodiesel or Bioheat fuel. This fuel is a blend of ultra-low sulfur heating oil with lab-tested, proven blends of biodiesel of up to 20% (B20) that are made from waste products or byproducts of existing food supply lines including plant-based oils such as soybean oil, canola, used cooking oils and animal fats. Under the Massachusetts Alternative Energy Portfolio Standard, for example, heating oil retailers have cut heating oil use by about 35 million gallons over a two-year period beginning in 2018 by providing customers Bioheat fuel. And recently, the National Oilheat Research Alliance (NORA) – the organization that leads research and development activities for the industry – has committed to moving the industry to B50 (50% blend of biodiesel) by 2030. This will enable the heating oil industry to meet the greenhouse gas emissions reduction goals set in 2015 by the Paris Agreement.
2. As stated in a Boston Globe editorial (enclosed) on April 26, 2019, our association maintains that S.1924 and H.2810 will substantially increase the cost of living for every resident statewide, hurt small business owners and the state’s economy, and provide no proven impact on reducing greenhouse gas emissions.
3. Using reliable carbon coefficients published by the US Energy Information Agency, our association has determined that under S.1924 homeowners using heating oil will pay an additional $487 annually by 2030, and $582 more per year if H.2810 is enacted. Furthermore, these legislative proposals will add an additional $700 to $835 to annual household costs for gasoline.
4. A 2019 study by the Beacon Hill Institute on the impact of carbon tax legislation “found that the average Massachusetts household will see its tax bill increase by $755 in the first year alone. By the fifth year, that annual tax load will increase to $1,263. In addition, Massachusetts would see a loss of 11,090 private sector jobs in its first year, increasing to 18,240 by its fifth.”
The Massachusetts Energy Marketers Association urges your Committee and the entire Massachusetts General Court to reject these legislative proposals and any similar proposals that would tax heating oil.
Respectfully Submitted,
Michael Ferrante | Presiden
Boston Globe Op-Ed against carbon taxes
Boston Globe Opinion-Editorial: Published on April 27, 2019
NO ON CARBON TAX LEGISLATION
Michael Ferrante
President, Massachusetts Energy Marketers Association, based in Burlington; Essex resident
Authors, cosponsors and supporters of legislative proposals on Beacon Hill to establish a carbon tax on fossil fuels maintain the tax is the remedy for combating climate change, but any such tax will substantially increase the cost of living for every resident in Massachusetts, hurt small business owners, damage the state’s economy, and provide no proven impact on reducing greenhouse gas emissions.
The two key proposals before the Legislature – Senate 1924 and House 2810 – would levy a tax on most energy resources in Massachusetts - including home heating oil, propane, natural gas, gasoline, and diesel fuel to discourage fossil use resulting in reduced carbon dioxide. H-2810 exempts electricity but = it’s unclear to us whether the already sky-high electric rates in Massachusetts would be impacted by a carbon tax under Senate 1924.
Using carbon dioxide emissions coefficients published by the US Energy Information Agency, my organization calculates that homeowners using heating oil statewide would pay an additional $487 annually by 2030 under Senate 1924, and $582 more per year if House 2810 becomes law. Furthermore, we estimate that carbon taxes will add an additional $700 to $835 to annual household costs for gasoline in the state.
Addressing climate change and the requirements mandated by the state Global Warming Solutions Act of 2008 are laudable goals that our industry supports. But there are more sensible pathways to achieving these goals without burdening residents with additional taxes on the necessities of life. Let’s focus on improved energy efficiency in homes and businesses to further reduce the volume of heating oil, natural gas, and propane currently being used; producing more electricity through renewable sources; and continuing to expand the use of clean, renewable biodiesel blended with heating oil.
In recent months a fuel tax increase in France - effectively a carbon tax - caused petroleum prices to spike and gave rise to nationwide protests and the creation of the international “yellow vest movement.” And carbon tax legislation has yet to win approval in any other state in the nation.
Lawmakers on Beacon Hill should be mindful of these developments and reject draconian carbon tax proposals.
NO ON CARBON TAX LEGISLATION
Michael Ferrante
President, Massachusetts Energy Marketers Association, based in Burlington; Essex resident
Authors, cosponsors and supporters of legislative proposals on Beacon Hill to establish a carbon tax on fossil fuels maintain the tax is the remedy for combating climate change, but any such tax will substantially increase the cost of living for every resident in Massachusetts, hurt small business owners, damage the state’s economy, and provide no proven impact on reducing greenhouse gas emissions.
The two key proposals before the Legislature – Senate 1924 and House 2810 – would levy a tax on most energy resources in Massachusetts - including home heating oil, propane, natural gas, gasoline, and diesel fuel to discourage fossil use resulting in reduced carbon dioxide. H-2810 exempts electricity but = it’s unclear to us whether the already sky-high electric rates in Massachusetts would be impacted by a carbon tax under Senate 1924.
Using carbon dioxide emissions coefficients published by the US Energy Information Agency, my organization calculates that homeowners using heating oil statewide would pay an additional $487 annually by 2030 under Senate 1924, and $582 more per year if House 2810 becomes law. Furthermore, we estimate that carbon taxes will add an additional $700 to $835 to annual household costs for gasoline in the state.
Addressing climate change and the requirements mandated by the state Global Warming Solutions Act of 2008 are laudable goals that our industry supports. But there are more sensible pathways to achieving these goals without burdening residents with additional taxes on the necessities of life. Let’s focus on improved energy efficiency in homes and businesses to further reduce the volume of heating oil, natural gas, and propane currently being used; producing more electricity through renewable sources; and continuing to expand the use of clean, renewable biodiesel blended with heating oil.
In recent months a fuel tax increase in France - effectively a carbon tax - caused petroleum prices to spike and gave rise to nationwide protests and the creation of the international “yellow vest movement.” And carbon tax legislation has yet to win approval in any other state in the nation.
Lawmakers on Beacon Hill should be mindful of these developments and reject draconian carbon tax proposals.
H 2810 An Act to Promote Green Energy Infrastructure and Reduce Carbon Emissions
The Massachusetts legislature will consider several carbon-related legislative proposals this year, but two key bills take center stage. The first is Representative Jennifer Benson's H 2810. This bill sets the carbon tax at $20 per ton of CO2e emissions on fossil fuels, but not electricity (though power plants still must buy natural gas, coal and diesel to power their plants and hence will have increased costs which are shown below). The tax increases $5 every year until year five when it hits $40 per ton. Thereafter it continues to increase $5 per year annually unless carbon emission goals are attained per 21N of the Climate Protection and Green Economy Act. As it is unlikely these goals will ever be attained, this analysis assumes the tax will increase indefinitely and cause irreparable harm to Massachusetts residents and the state’s economy. Once collected, 30% of the tax will be deposited into a "Green Infrastructure Fund" which will spend the money on various things including public transportation, electric vehicles, and green energy infrastructure. The remaining funds will be allocated to households (primarily to low-income), motor fuel and home heating rebates, and to assist businesses that are especially hard hit by the tax. The bill will also impose the tax on leaked methane from natural gas pipelines. And it may include a tax on life-cycle emissions from the production or transport of fuels prior to combustion. This may even negatively impact clean, renewable biodiesel. The effect of the tax is shown in the chart below following the description of the S 1924.
S 1924 An Act to Combat Climate Change
This bill was introduced by Senator Michael Barrett. It starts the tax at $15 per metric ton and increases to $5 per year until it caps at $60 per metric ton. The bill itself is not as detailed as H 2810 and leaves much of the mechanics of running the tax to state regulators. It specifies in general that some undefined portion of the tax collected should be rebated to lower income people, to rural areas, and to economic subsectors disproportionately hit by the tax. From the money left over after rebates, 60% is to be given to the Commonwealth Transportation Fund, 30% to school aid, 5% to an Environmental Health & Justice Fund, and 5% for electric vehicle incentives.
Tax Effects of the Two Bills
To calculate the tax costs, we use CO2e emissions data from the U.S. Energy Information Administration for oil, propane, gasoline and natural gas. Electricity costs are based on the fuel use mix as reported by ISO-New England assuming power plants pay the tax when they purchase fossil fuels even if they're not charged when they combust the fuels. Costs shown are just the carbon tax which is in addition to the cost of the fuel/energy. We assume annual household consumption of 800 gallons of heating oil, 1000 gallons of propane, 1000 ccf of natural gas, 12,000 KWH of electricity, and 656 gallons of gasoline per car.
Bill H 2810
Heating Oil Tax Rate Household Cost Year 1 $0.2240/gall. $179.20/year Year 5 $0.4480/gall. $358.40/year Year 10 $0.7280/gall. $582.40/year Gasoline Tax Rate Cost/Car Year 1 $0.1960/gall. $128.58/year Year 5 $0.3920/gall. $257.15/year Year 10 $0.6370/gall. $417.87/year Propane Tax Rate Household Cost Year 1 $0.1270/gall. $127.00/year Year 5 $0.2540/gall. $254.00/year Year 10 $0.4128/gall. $412.75/year Natural Gas Tax Rate Household Cost Year 1 $0.1171/ccf $117.10/year Year 5 $0.2342/ccf $234.20/year Year 10 $0.3806/ccf $380.58/year Electricity Tax Rate Household Cost Year 1 $0.00209/KWH $25.03/year Year 5 $0.00417/KWH $50.05/year Year 10 $0.00678/KWH $81.34/year Electricity is non-heat without an electric vehicle both of which would boost the electric use. Sample tax cost to a family of 4 with 2 cars in year 10 under H 2810. Average heat cost $458.58 2 Cars $835.74 Electricity $81.34 Total tax $1,375.66 |
Bill S 1924
Heating Oil Tax Rate Household Cost Year 1 $0.1524/gall. $121.90/year Year 5 $0.3556/gall. $3284.44/year Year 10 $0.6095/gall. $487.62/year Gasoline Tax Rate Cost/Car Year 1 $0.1333/gall. $87.47/year Year 5 $0.3111/gall. $204.09/year Year 10 $0.5333/gall. $349.87/year Propane Tax Rate Household Cost Year 1 $0.0864/ccf $86.39/year Year 5 $0.2016/ccf $201.59/year Year 10 $0.3456/ccf $345.58/year Natural Gas Tax Rate Household Cost Year 1 $0.0878/ccf $87.83/year Year 5 $0.2049/ccf $204.93/year Year 10 $0.3513/ccf $351.30/year Electricity Tax Rate Household Cost Year 1 $0.00142/KWH $17.03/year Year 5 $0.00331/KWH $39.73/year Year 10 $0.00568/KWH $68.10/year Electricity is non-heat without an electric vehicle both of which would boost the electric use. Sample tax cost to a family of 4 with 2 cars in year 10 under S 1924. Average heat cost $394.83 2 Cars $699.74 Electricity $68.10 Total tax $1,162.67 |