TCI Regional Policy Design Stakeholder Submissions

I am appalled at the extremely regressive taxation bill being considered to replenish state coffers-- known as a carbon tax initiative. An across the board, regressive tax on such an essential and democratized commodity such as gasoline is a cruel punishment to inflict on Massachusetts motorists. Utilizing the climate change debate to pad patronage hiring and close budget gaps is truly an outrage. The fact that all of the states in the northeast are considering this as a monopolistic venture to prevent border competition is even more horrific. Thank you for the consideration.

I am retired now, but even though I do not need daily transportation to work, I still need to get around. But there are few, if any, alternatives to a car where I live, in Cecil County, MD. And when I was working (living in southern Baltimore County and working in central Howard County) there was no rapid transit available. The only way to get to work was to travel I-95, along with thousands of other vehicles. For the sake of our children and grandchildren, we can no longer afford to have massive amounts of cars on the road, many or most with one occupant. Our lungs cannot afford it, and our planet cannot afford it. We know how to do better, so there is no excuse to not do better.

I wish to give my strong support to your effort to limit carbon dioxide (and other greenhouse gas) producing forms of transportation. This must be done as quickly as possible as we are now facing our final chance to put any kind of brake on a complete climate failure. I strongly support both intracity and intercity forms of public transportation that would accomodate this. This means public subsidy for these types of transit and a long overdue decrease in the subsidies provided for highway and bridge construction and maintenance. Certainly electric light rail and intercity rail would qualify for this subsidy but also the replacement of fossil fuel powered buses with electric buses should also qualify. Perhaps even more stimulating to this transition would be the replacement of rider fares with free ridership funded by all levels of government through the same mechanisms that have funded the highway industry for decades. Free ridership not only would stimulate increased use of public forms of transport but would also produce an economic equality benefit.
We know this would come at a considerable cost but if the cost of a complete breakdown in the climate as we know it is factored, these subsidies will save far more than just dollars.

Extorting MORE money from WE THE PEOPLE under the guise of cap & trade is another folly disguised as contributing to "fixing" climate! Climate cannot be fixed, it CHANGES. The US is THE cleanest country. You tell me what benefit this stupid tax will have to carbon emissions. Probably .00001% in the scheme of things, so rather punish people who need to work just so Gina's PR team can say she did something? Don't forget, RI average income...WE ARE NOT A RICH STATE. Rhode Islanders are already punished enough.

see same attached as a PDF, with graphics

HOW TO SIMULTANEOUSLY REACH EMISSION TARGETS
AND ADVANCE EQUITY IN THE
TRANSPORTATION & CLIMATE INITIATIVE

Marc Breslow, Ph.D., Policy and Research Director
Jonah Kurman-Faber, Research Associate

SUMMARY
STRICT CAP LEVELS: Most TCI states have adopted goals to achieve an 80 percent reduction in emissions by 2050, compared to 1990 levels. The cap levels for 2030 and beyond must be sufficient to reach this goal, which means at least a 40 percent reduction in transportation emissions by 2030.

UNSUPPRESSED ALLOWANCE PRICES: Allowance prices must be allowed to reach whatever levels are necessary to achieve this reduction, except under extraordinary circumstances. To suppress the allowance price, either through an oversupply of allowances or an unreasonably low-price ceiling, is to threaten the environmental integrity of the program.

PROTECT VULNERABLE POPULATIONS: In order to justify price containment mechanisms that are sufficiently high that they do not allow the cap to be violated, TCI states should concentrate on returning revenue to low and moderate-income households, as well as environmental justice (EJ) communities, in order to ameliorate the impacts of the program on their cost of living. This can be done by (1) targeting investments to address the needs of their communities for low-carbon transportation and to reduce health impacts from fossil-fuel transport, and (2) returning a portion of the money to them through rebates and tax cuts.

HIGHER ALLOWANCE PRICES WILL CAUSE EMISSIONS TO DROP: Higher allowance prices will by themselves, apart from the impact of investments, cause emissions to drop, over ten years or more.

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CAP LEVEL MUST BE SET AT A 40% REDUCTION OR MORE BY 2030
Our coalition, the Massachusetts Campaign for a Clean Energy Future, has two basic principles for an acceptable carbon pricing policy:
• Achieve, in combination with other policies, the state’s GHG reduction mandates;
• Ensure that the vast majority of low-income, and most moderate-income, people come out ahead or even from the combination of carbon pollution charges and use of the resulting revenues for rebates/tax cuts and reinvestment.
Massachusetts, as with most of the states that are part of the TCI, has a legally-mandated target to reduce emissions by at least 80 percent by 2050. To keep on track to get to 80 percent these states must reduce emissions by 40 to 45 percent by 2030.

Figure 1: Massachusetts Percent Emission Cuts from 1990


As the leading source of greenhouse gas emissions, transportation must get on the same track as electricity, building, and industrial fuels and cut emissions by at least 40 percent by 2030, and by about two-thirds by 2040.

Thus, Climate XChange proposes that the TCI adopt a cap of at least a 40 percent reduction in transportation emissions for 2030, compared to 1990 levels. Since TCI is only expected to cover ground transport, other sectors such as air travel must be addressed with complementary policies.

Given the state of the global warming crisis worldwide, any reduction of less than 40 percent as a target, and as the level to which the TCI emissions cap is set, is simply unacceptable.

ALLOWANCE PRICES MUST REFLECT WHATEVER PRICE IS NECESSARY TO STAY UNDER THE CAP TRAJECTORY
The objection to a tight cap level is that it could lead to higher than acceptable allowance prices. Typically, cap-and-trade systems have suppressed allowance prices by setting the initial cap excessively high and allowing polluters to bank excess allowances for future years. Alternatively, program designers can choose to suppress costs by setting a cost containment reserve and/or price ceiling very low. Both decisions could compromise the program’s ability to achieve a 40 percent reduction by 2030.

Rather than threaten the integrity of the program, governments can spend their revenue in such a way that the allowance price can rise as high as needed, while holding vulnerable populations harmless. There are two ways to do this:

1. Invest the money in appropriate ways for both individual households and communities – via public transit, incentives for electric vehicles, charging stations, etc. California has established strong equity requirements in their investment program, and estimates that 57 percent of projects are benefiting disadvantaged communities. Whether this spending will fully counteract the impact of rising prices for fuels, address existing burdens from fossil-fuel based transportation, and address cross-sectional issues such as public health and improvement of mass transit is yet to be seen. Our organization is currently conducting a study on California’s equity requirements and spending programs. TCI must fully investigate to what degree investment spending can cover the increased costs of the program, rectify prior burdens of disadvantaged households, and improve equity for such communities.

2. To the degree that spending money on investments is not sufficient, for either low/moderate income or EJ families, the TCI states must return the money to households, with a higher proportion going to vulnerable populations, presumably via rebates, tax credits, or other methods. In California, about 35 percent of its total cap-and-trade allowance value is being returned to households (via equal rebates per household on electric and natural gas bills) and small businesses, while 15 percent is directly allocated to particular industries. About 36 percent of the total revenue goes to transportation investments and 9 percent to other climate-related investments. See Figure 2 below:

Figure 2: California’s Use of Allowance Value from Cap-and-Trade I


From: Regional Cap and Trade: Lessons from the Regional Greenhouse Gas Initiative and Western Climate Initiative, Jonah Kurman-Faber and Marc Breslow, Climate XChange, 2018

Given that TCI will only cover transportation, it would be appropriate to use a substantial portion of the revenues for rebates/tax cuts for low and moderate income households, and possibly for higher-income households – to the extent that their costs cannot be effectively covered by investments in their communities.

Such rebates/tax cuts would effectively negate the argument against higher allowance prices. A variety of studies have shown how this can be done at the state and federal level, including our own studies for Massachusetts and Maryland. See Figure 3 below, which shows the impacts on the bottom 20 percent of households from House Bill 1726 in Massachusetts, based solely on rebates.

Figure 3: Impacts on the bottom 20 percent of households from House Bill 1726 in Massachusetts, based solely on rebates

HIGHER ALLOWANCE PRICES WILL CUT EMISSIONS FURTHER
We understand that the primary purpose of TCI is to provide incentive money for clean transportation. But of course, as with all cap-and-trade systems, raising prices is expected to cut demand for fuel. Georgetown’s 2015 study, even with low allowance prices, estimated small cuts as higher prices induce drivers to buy more fuel-efficient cars, to switch to electric vehicles, and to drive less. With higher allowance prices the reductions in emissions will be greater.

Our own studies, and those done for other states, such as the Maryland Commission on Climate Change’s (MCCC), have estimated these changes. It is important to remember, that just as with mass transit investment, it takes a number of years for these impacts to show up, as they primarily influence the demand for new vehicles. Since it takes up to 15 years for vehicles to be discarded, it will take a long time for the impacts of higher prices to fully come into effect.

The study done for the MCCC, by Energy+Environmental Economics, estimated that higher carbon prices would cause a 9 percent reduction in energy consumption by 2030 and 35 percent by 2050.
CONCLUSIONS
To summarize, we conclude that:

STRICT CAP LEVELS: The cap levels for 2030 and beyond must be sufficient to reach the 80 percent or greater reductions in overall emissions that most TCI states have adopted; and this means a cap level for 2030 that is at least 40 percent below the 1990 level.

UNSUPPRESSED ALLOWANCE PRICES: Cost containment mechanisms must allow allowance prices to reach whatever levels are necessary to achieve the caps, except in extraordinary circumstances. With high allowance prices, a portion of the revenue should be returned to vulnerable customers to counteract the increase without violating the environmental integrity of the program.

PROTECT VULNERABLE POPULATIONS: In order to justify a strict cap and price containment mechanisms that are sufficiently high that they do not allow the cap to be violated, TCI states should concentrate on returning revenue to low and moderate-income households, as well as environmental justice communities, in order to ameliorate the impacts of the program on their cost of living and to reduce health impacts from fossil-fuel transport. This can be done by (1) targeting investments to address the needs of their communities and (2) returning a portion of the money to them through rebates and/or tax cuts.

HIGHER ALLOWANCE PRICES WILL CAUSE EMISSIONS TO DROP: Higher allowance prices will by themselves, apart from the impact of investments, cause emissions to drop, over ten years or more.

Massachusetts Campaign for a Clean Energy Future

December 3, 2019

Response to Transportation and Climate Initiative
Framework for a Draft Regional Policy Proposal

Dear state government TCI officials:

This statement responds to your call for comments on the “Framework for a Draft Regional Policy Proposal.” We greatly appreciate your openness to public input on the proposal, and the depth of discussion in your draft.

We represent the Massachusetts Campaign for a Clean Energy Future (MCCEF), which is a coalition of organizations advocating for an economy-wide carbon pricing policy in the state. As such, we support the development of a robust and equitable cap-and-invest program for the transportation sector through TCI, but also recognize that TCI and RGGI only get us two-thirds of the way toward an economy-wide system, and urge states to extend carbon pricing to the heating fuels sector. Only by implementing carbon-reduction strategies throughout all the major fossil fuel-consuming sectors can the states achieve their goals to reduce emissions by 80 percent by 2050 -- or the more ambitious goals now being implemented in many states, such as 100 percent clean energy. Given the severity of the climate crisis, we cannot wait to take action to reduce carbon emissions from all sectors.

We support the points put forward by the Our Transportation Future (OTF) coalition, and some of our groups are members of that coalition. We will add here only points that are additional to OTF’s, or that we need to additionally emphasize.

Attached along with this statement we are attaching our Statement of Principles, which gives our criteria for a carbon pricing policy that is sufficiently strong to move our economy toward zero emissions. Our two basic principles state that carbon pricing must:
Achieve, in combination with other policies, the state’s GHG reduction mandates;
Ensure that the vast majority of low-income, and most moderate-income, people come out ahead or even from the combination of carbon pollution charges and use of the resulting revenues for rebates/tax cuts and reinvestment.
Beyond those two principles, below are our comments specific to the plan for TCI:

Cap levels - the cap must be set, initially and in future years, so that it will achieve in the transportation sector the reduction in emissions called for by the Massachusetts Global Warming Solutions Act and by similar acts in other states, which is at least 80 percent by 2050. Given that the transportation sector constitutes the largest portion of our emissions, we believe that this requires a 40 to 45 percent reduction below 1990 levels by 2030. As calculated by OTF, this would require beginning with a cap level of 250 MMT in 2022 and declining by 40 percent to just over 150 MMT by 2032.

Recent scientific evidence indicates that greater reductions are needed, and we would urge the TCI states to set the caps according to this evidence. We would further urge the states not to set the cap levels higher in order to prevent allowance prices from rising above a predetermined level. While such prices may cause motor fuel prices to rise significantly, the depth of the climate crisis means that we cannot avoid such price rises - which can be mitigated through use of the proceeds.

Use of the proceeds - We understand that use of the proceeds will be up to the individual state governments, but we believe that TCI should set standards for their use, just as was done under RGGI. Most carbon revenues should be allocated to investments that reduce GHG emissions, while also meeting essential public needs and creating jobs. This includes projects that support low-carbon transportation, including public transit and electric vehicles, and resilience to climate change impacts. The burdens of higher fuel prices can be mitigated by using the proceeds from allowances in ways that reduce transportation costs for environmental justice communities, low-income populations, and other vulnerable groups. In addition to investment spending, proceeds returned as cash benefits to low and moderate income consumers may be necessary to ensure that low- and moderate-income populations benefit from the program.

Just Transition - We believe that a Just Transition to a clean energy future requires addressing the possible losses that will occur to workers who lose jobs and to communities that face losses to their economies and tax revenues due to shrinkage of fossil fuel industries. We therefore support the provision of transition benefits and training for workers and communities who are affected. We also urge that all employment provided with carbon pricing revenue be at union-scale wage levels.

Integrity of the cap - The various design aspects of the program should be
transparently constructed and limited in order to ensure the program’s effectiveness. In particular, measures taken to moderate the costs of the program, such as offsets, price ceilings, and banking must only allow the cap to be exceeded in extreme circumstances and for limited time periods.
Baseline emissions must be transparently calculated and the initial cap must be stringent enough to avoid a future surplus of “banked” allowances.
If offsets are allowed they must meet the requirements currently used by the Regional Greenhouse Gas Initiative, including that offset projects should take place only within the regulated territory covered by TCI.
If a Cost Containment Reserve (CCR) is included, the trigger price must be set sufficiently high so that additional allowances are only made available under exceptional circumstances. If CCR allowances are purchased, the cap should further be reduced over the following five years by a quantity equal to or greater than the amount of CCR allowances purchased.
A price floor must be included that ensures stability of revenues and allowance prices in the range anticipated in the policy design.

Thank you for allowing us to provide our comments concerning the design of TCI. We look forward to further discussions on how best to reduce transportation sector emissions and to improve the functioning of the region’s transportation systems.

Yours truly,

Mary Ann Ashton, Co-President, League of Women Voters of Massachusetts
Marc Breslow, Policy and Research Director, Climate XChange
Nancy Goodman, Vice President for Policy, Environmental League of Massachusetts
Kristin Kelleher, Programs Director, Climate Action Business Association
Cindy Luppi, New England Director, Clean Water Action
Bill Ravanesi, Senior Director, Green Building & Energy Program, Health Care Without Harm
Jordan Stutt, Carbon Programs Director, Acadia Center

I highly support this initiative and strongly believe that if we do not swiftly make policy changes and put initiatives like this into action, we are facing crisis of epic proportions. Lets do this for the generations to come.

This is nothing but a across the board price increases gasoline prices effect everything from the price of tomatoes on up. Communities that are further from the city will pay more because they will commute to work by car there is no reliable public transportation from many towns into Boston, and let’s try something crazy like the people that ride the T pay for the improvements