The 12 states that belong to a coalition looking to reduce greenhouse gas emissions from transportation released a plan for a regional “cap and invest” program Tuesday.
The group of Northeast and Mid-Atlantic states, as well as Washington, D.C., are seeking comments on the plan, known as the Transportation and Climate Initiative, through the end of February. Gov. Phil Scott and other state leaders will have to decide whether to sign onto the plan this spring.
TCI would set a regional carbon dioxide emissions cap at current emissions levels that would decline over time to an as of yet undetermined amount.
Regional fuel importers would buy emissions allowances at auction based on how much on-road gasoline and diesel they sell in each state. States would then spend the auction proceeds on pollution reducing measures like public transit, making downtowns more walkable and electric vehicle incentives.
“In the long term, it’s what our communities look like and how they’re organized that … details what sort of transportation services we need,” said Peter Walke, deputy secretary of the Agency of Natural Resources, who is heading Vermont’s TCI team.
While key details like the regional emissions cap are still being ironed out, the group hired modelled the costs and benefits of a 20-25% reduction by 2032. Fuel prices would be expected to go up seven cents by that date from TCI under a 20% reduction scenario, 14 cents under a 22% reduction and 17 cents under a 25% reduction.
Although Vermont has aggressive greenhouse gas emissions goals on the books, emissions have increased in recent years. The state’s most recent data from 2015 show emissions are 16% higher than in 1990. Transportation accounts for 43% of the state’s emissions.
And a new U.N. report said keeping global warming below 1.5 degrees Celsius would require a 55% reduction in emissions by 2030.
The “assumption that we’ve been operating under” for modelling purposes is that all of the costs will be passed on at the pump, said Walke, adding that this did not occur under the Regional Greenhouse Gas Initiative, the power sector cap and invest program. Greenhouse gas emissions in the power sector were reduced by 40% over the past decade in the nine member states.
RGGI was a small part of the market factors influencing power prices and the “same thing could happen in the fuel market” if distributors decide to absorb the costs rather than slightly increasing prices for customers, he said.
And a slight increase in gas prices would be “well within the range of historic variability” for gas prices and, by reducing demand for fossil fuels, could lower regional economic impacts from the volatile oil market, according to the TCI modelling summary.
The TCI modelling also found that a 25% decrease in emissions would lead to an estimated 1,014 fewer air pollution related deaths and a half a percent increase in GDP compared to “business as usual,” or a 19% emissions reduction. The projected GDP increase is based on clean transportation investments ultimately reducing residents’ energy costs, freeing up more money to spend elsewhere, said Walke.
He also noted that the business as usual scenario could be as low as a 6% reduction depending on fuel prices and whether federal vehicle efficiency standards remain in place; earlier this year, the Trump administration announced plans to roll back states’ abilities to set stricter vehicle emissions standards. TCI would ensure “that we get those reductions regardless,” he said.
Democrat leaders in both chambers have made passing legislation for Vermont to join onto TCI a priority for climate legislation next session. And a coalition of Vermont environmental groups characterized the proposal released Tuesday as an “insufficient” but nonetheless “potentially significant step” to reduce Vermont’s emissions.
“This opportunity to invest in solutions that both cut climate pollution and save Vermonters money on transportation is worth pursuing,” said Ben Edgerly Walsh, climate and energy program director for VPIRG, in a prepared statement Tuesday, adding “No single action is going to be sufficient to put us on track to hit Vermont’s climate commitments, but this would clearly be a step in the right direction.”
Matt Cota, president of the Vermont Fuel Dealers Association, said that his organization opposes TCI.
“We sell oil and gas,” he said simply. “This policy has the intent of eliminating the fuel we sell, full stop.”
He added that his organization has been taking part in TCI discussions and has broader concerns about who would actually have to purchase the allowances given the complexities of liquid fuel movement. VFDA members feel raising funds on the sale of diesel is especially unfair for businesses that need to truck goods given the lack of medium and heavy duty electric alternatives available.
“You cannot move milk with gasoline or electric,” Cota said.
The proposal also faces opposition from conservative groups like the Ethan Allen Institute, who characterize TCI as a “poorly conceived, fundamentally regressive” carbon tax.
Walke said that TCI is a “market based mechanism that has multiple ways that regulated entities can comply and it’s not simply about the generation of revenue and so in that way, it’s different” than a carbon tax.
“But there’s obviously a direct impact on consumers from the passing on of those costs,” he said. To address those concerns, Vermont could consider using some of the proceeds for a low income rebate, he added.
“Certainly (that) doesn’t provide us the ability to save them resources in the long run as they transition to more efficient vehicles and electric vehicles,” he said. “But it mitigates the short-term impact and for a community struggling to meet basic needs, that’s a huge factor.”
Key details, such as what the regional emissions cap would be and how many allowances each state will receive, are still being hammered out.
When the final plan comes out this spring, governors from Vermont and other states will need to decide whether to participate. New Hampshire Gov. Chris Sununu has already announced that his state will not be joining TCI.
“I will not force Granite Staters to pay more for their gas just to subsidize other state’s crumbling infrastructure,” he said in a press release Thursday.
Whether Scott will sign Vermont onto the plan remains to be seen. He has previously said that he believes the Green Mountain State needs to have a seat at the TCI negotiating table but that he will not support it if it’s “just a carbon tax.”
His spokesperson Rebecca Kelley said the governor and his team are still reviewing the proposal, so could not provide comment Tuesday beyond what Scott has already said.
