Connecticut and now Massachusetts have indicated that they will not enter into the Transportation and Climate Initiative due to the high prices on transportation fuels. The Transportation and Climate Initiative (TCI) is essentially a cap and trade policy that would cap carbon dioxide emissions from vehicles by increasing their fuel prices. The Regional Greenhouse Gas Initiative (RGGI), an agreement of mostly Northeastern states that caps the carbon dioxide emissions from power plants, developed the TCI to further reduce the greenhouse gas emissions emanating from their states. In New England, transportation is responsible for over 40 percent of greenhouse gas emissions. However, President Biden’s anti oil and gas policies has beat them to it by increasing the price of gasoline by about a $1.00 per gallon since his inauguration – prices not seen since 2014. As a result, the governors of these two states are reluctant to increase those prices further and risk political backlash.
TCI Explained
TCI is a regional cap-and-invest program that is expected to reduce vehicle carbon dioxide emissions by 26 percent by 2032. Participating governments expect to generate about $3 billion over 10 years from motorists. The proceeds are to be invested in “green” transportation and infrastructure. A minimum of 35 percent of TCI proceeds are to be directed to “overburdened and underserved” communities, but the agreement is vague on how the funds would ultimately get distributed. The TCI would cap carbon dioxide emissions by taxing fuel companies that exceed emissions limits by forcing them to buy permits. The so-called cap-and-invest program is a regressive tax on gasoline and diesel fuel. The tax would be passed down to motorists at the pump—adding, according to Governor Baker’s Administration in Massachusetts about 5 to 9 cents per gallon of gasoline by 2023. The initiative could generate over $1.8 billion in Massachusetts by 2032, according to Baker.
TCI would require large gasoline and diesel fuel suppliers to purchase permits or “allowances” for the transportation fuels they sell in the region. The number of emission allowances would be set to decline each year, generating billions for states to invest in “green” transportation such as public transportation; zero-emission buses, cars, and trucks; electric vehicle charging stations; high speed wireless internet in rural and low-income areas to allow for teleworking; road and bridge repairs; and bike lanes and sidewalks. If fuel companies passed the cost of the allowances onto consumers as expected, the price of gasoline in the region could increase by 5 to 17 cents per gallon—the high end being greater than Governor Baker’s forecast.
The regional partnership initially sought to cap carbon dioxide emissions in 13 jurisdictions from Maine to Virginia, but many state legislatures have been reluctant to raise taxes as they emerge from the coronavirus pandemic. Connecticut Governor Ned Lamont tried but failed to convince state lawmakers to approve the deal during June budget discussions when the state’s gasoline prices were lower. Connecticut’s gas prices are now approaching a seven-year high. Connecticut was one of three states to sign up for the TCI, which could start as early as 2023. Rhode Island, Massachusetts and Washington, D.C., also agreed to the agreement. The state legislatures of Connecticut and Rhode Island would have to approve their governors’ decisions before the states can officially join. The governors of other New England states—New Hampshire, Maine and Vermont—had expressed skepticism about the program, due in part over fears that it amounts to a gasoline tax or a tax on carbon dioxide. It is essentially both.
Massachusetts Gasoline Prices and Other Policies to Reduce Transportation Emissions
Gasoline prices in Massachusetts—at $3.40 per gallon—have climbed 24 cents in one month, according to a recent report by AAA Northeast. Drivers are paying $1.33 more for gas now than they were in November 2020, when a gallon cost $2.07. One Boston station was selling gas for $4.39 per gallon. Massachusetts’ average gas price is 2 cents lower than the national average.
Massachusetts set a goal of 100 percent zero-emission passenger vehicle sales by 2035, joining 14 other states who are pushing for 30 percent electric vehicle sales for commercial trucks and buses by 2030 and 100 percent by 2050. Massachusetts will spend $65 million on electric vehicle charging stations. Baker also signed an executive order setting a target of 100 percent zero emission vehicles in state fleets by 2040.
Biden’s new federal infrastructure funding package will provide Massachusetts with $10 billion or so, and along with the American Rescue Plan expenditures and tax revenue surpluses generated by Massachusetts’ economic recovery from COVID, the state will be able to upgrade its roads, bridges and public transportation systems and make investments to reduce transportation emissions without the TCI.
Conclusion
Capping transportation vehicle carbon dioxide emissions and adding to gasoline and diesel fuel prices is politically damaging when transportation fuel prices are at a 7 year high. Governors in New England are coming to that realization as their legislatures are being cautious about furthering those increases. President Biden’s anti oil and gas policies have already increased those prices since he has become President, increasing gasoline prices by about a $1.00 per gallon since inauguration day. Americans need to be wise to these policies that are causing inflation increases and making more Americans enter into fuel poverty.
