State treasurer’s office: cap‑and‑invest could fund weatherization and jobs, but not yet viable for Vermont alone

Officials from the state treasurer’s office told the House Energy and Digital Infrastructure Committee on Tuesday that cap‑and‑invest programs can generate predictable revenue for weatherization, electric vehicle infrastructure and other transition investments — but they recommended Vermont not implement a standalone program at this time.

Ashley Doyle, a director in the state treasurer’s office, and Gavin Boyles, deputy treasurer, presented findings from a treasurer’s office report and an underlying technical analysis commissioned by the Agency of Natural Resources. Doyle said cap‑and‑invest — a mechanism that caps emissions from covered fuel sectors and sells allowances to generate revenue — can be a source of funding for equity‑focused programs but also raises the retail price of fuels and could cause near‑term hardships if not designed carefully.

The technical analysis evaluated existing regional options and concluded Vermont is too small to run a standalone market economically and would likely join as a "price taker" in an existing program such as the Western Climate Initiative (WCI). Treasurer’s office staff said current WCI prices translate roughly to about $0.26 per gallon on gasoline and $0.31 per gallon on fuel oil at present, and those allowance prices are projected to rise over time in the modeling the office reviewed.

Boyles said the office’s review raised three broad concerns that argue against immediate adoption: the potential for significant price impacts on households (especially in rural and lower‑income communities), uncertainty about the effectiveness of mechanisms to keep affected households financially harmless in real time, and the risk of cross‑border ‘‘leakage’’ where fuel purchases shift to neighboring states without the charge.

"If you could snap your fingers and make it perfectly equitable in real time, sign us up," Boyles said. "Unfortunately, we didn't see that mechanism in place currently."

Treasurer’s staff said a New York cap‑and‑invest initiative currently under development could present a different entry point because Vermont might be able to join earlier in that program’s rollout and therefore avoid immediate large price shocks. They recommended continued monitoring of New York’s proposal and deeper work to design how Vermont would spend any revenues: which programs would be prioritized, exactly how low‑income households would be protected in real time, and how to measure and mitigate leakage to neighboring states.

The office also flagged possible economic benefits if a program is designed to direct funds to in‑state weatherization, electric infrastructure and other local investments: more energy dollars would remain in the Vermont economy and could create jobs. But the treasurer’s office report emphasizes that those benefits depend on program design, timing, and whether Vermont can coordinate with a larger regional market.

Committee members asked the treasurer’s office for additional details and the office said it would continue to work with ANR and other agencies as regional developments proceed. No formal legislative action was taken at the hearing.