TCI Regional Policy Design Stakeholder Submissions

The Transportation and Climate Initiative (TCI) seeks input from stakeholders regarding specific considerations that ought to be factored into the Model Rule and starting level for a regional cap, compliance structure, and stability mechanisms. As a Master of Public Health student in the Environmental Health Department at Boston University School of Public Health, I offer my comments and recommendations based on my understanding of Environmental Health, Environmental Justice communities, and Environmental Policy.

The TCI aims to implement a program with four main objectives: reduce greenhouse gas emissions, improve air quality and public health, enhance transportation options, and alleviate the burden environmental justice communities bear in regards to poor air quality and limited mobility. TCI states that transportation contributes to 40% of GHG emissions in the Northeast and Mid-Atlantic region; the proposed MOU is therefore appropriate to address issue of GHG emissions from the transportation sector, not only in an attempt to mitigate climate change but also to improve public health by reducing harmful co-pollutants like SO2 and NOx and increasing mobility in congested, urbanized areas. (See attachment for references)

STABILITY MECHANISMS
TCI seeks input on which factors it should consider when designing stability mechanisms for managing uncertainties in future emissions and allowance prices. The rate of reduction in emissions is critical to ensuring the sustainability of revenue needed for investment. Successful reduction from the fuel sector, and consequently fewer allowances being purchased, may cause a decline in generated revenue. The Model Rule must control the rate of reductions in order to sustain reliable revenue from fuel suppliers to invest in clean transportation alternatives. A dynamic allowance structure would provide additional stability in response to uncertainty in future emissions.
The Memorandum of Understanding (MOU) provides strategies to respond to unpredictable changes in market costs and demand in section “G. Stability Mechanisms”.

Suppliers trying to maximize profits will purchase allowances, bringing in more revenue for alternative transportation initiatives. As alternative transportation options become available, consumer demand for fuel drops. To maintain pressure on suppliers to continue reducing emissions, the cap will continue to drop over time. However, if this drop occurs too quickly, suppliers will not be inclined to buy allowances and revenues will fall. In addition to the CCR and ECR mechanisms proposed, TCI should implement a minimum cost for allowances that increases annually. This dynamic floor cost would compensate for expected long-term trends in lower demand for fuel. It also de-incentivizes industries to buy allowances, thus reducing emissions further, yet still maintains a revenue margin that allows TCI to reach its objectives. The Climate Law and Policy Project make similar recommendations in their comment under the “Accelerating Reductions” section. (See attachment for reference)

Predicting market trends and consumer behavior requires accurate models. These models can be very good, but are seldom completely accurate. To ensure the success of a TCI program, the Signatory Jurisdiction should consider additional strategies to maintain a controlled reduction rate.

COMPLIANCE
TCI also seeks input on how the compliance period should be structured to provide needed flexibility, while ensuring environmental integrity. As discussed above, the time period for compliance is closely interconnected to market dynamics. I suggest that the period ought to be stringent enough so the emissions are enforced in a reasonable time frame, though not so stringent to compromise the economy and solvency of suppliers. Too stringent and narrow of a compliance period may accelerate reductions and lead to a rapid drop in demand, which could destabilize the revenue structure needed for TCI to be successful. Allowing for offsets and allowance purchase should be permitted, but limited. The role of allowances and offsets should be primarily to control the rate of reduction, and encourage reduction rates to reflect those of development and utilization of alternative transportation measures.

I support the implementation of TCI. The initiative has four equally important objectives, three of which exist independent of the politics surrounding climate change. TCI not only reduces GHG, but also improves air quality and public health, reduces congestion and improves mobility in urban areas, and rightfully address environmental pollution issues that disproportionately burden Environmental Justice communities. All jurisdictions should support and participate in the Transportation Climate Initiative to protect individuals’ rights to a clean environment, ensure effective transportation for all, and promote health that is not burdened by the consumption behaviors of the “haves” against the “have nots”.

Respectfully,
Emily Hammel
Jamaica Plain, MA 02130
MPH Student, Boston University School of Public Health

I have attached joint comments on the Transportation and Climate Initiative Draft MOU from U.S. PIRG, Environment America, and their state affiliates in the Northeast/Mid-Atlantic region.

Please find the attached letter from 21 participating organizations of the MA TCI Table. The letter includes recommendations from health, business, environmental, transportation, justice, academic, and planning organizations to ensure that the TCI program is both environmentally ambitious and equitable.

Thank you for your work to advance a clean, modern transportation system that works for all.

Attached please find Joint Comments from the Northeast Clean Energy Council, the Alliance for Clean Energy New York, and Renewable Energy Vermont

Dear Governors of the Northeast and Mid-Atlantic States,

I am writing on behalf of the Greater Boston Chamber of Commerce regarding the Draft Memorandum of Understanding of the Transportation and Climate Initiative (TCI). The Chamber shares TCI’s goal of reducing greenhouse gas emissions in the transportation sector and supports the broad framework that has been proposed. Accordingly, our comments are intended to inform the development of the final TCI program design. The Chamber urges you to develop TCI so the region sees emissions reductions that are substantially lower than business-as-usual (BAU) projections, to include a secondary market for emissions allowance trading, and so that the program design does not include perverse incentives to maintain high emissions in order to preserve a revenue source.

Projected Emissions Reductions
To rationalize the development of TCI, it is imperative that the benefit of creating a new regional market on transportation emissions is significant enough to justify the cost, both real and administrative. The final TCI program design should result in emissions reductions that are substantially lower than BAU projections. The 2019 TCI modeling and sensitivity analysis project emissions reductions of 6% to 19% under a BAU scenario between 2022 and 2032. Meanwhile, the three proposed caps for the TCI program would result in emissions reductions for that time span of 20%, 22%, or 25%, including the anticipated BAU reductions. As structured, the program would result in a potentially minor reduction in emissions that may not make the cost increase seem worthwhile.

Secondary Market
The draft MOU briefly describes the monitoring of the proposed carbon market and the administration of allowance auctions; however, no reference is made to a secondary market for emission allowance trading outside of the auctions. Other market-based cap-and-invest programs, including the Regional Greenhouse Gas Initiative (RGGI), allow for trading of emissions allowances on a secondary market. The Chamber strongly urges the TCI framers to include a set of provisions in the final MOU and the model rule for a secondary market permitting the sale of emissions allowances among regulated entities and third parties.

Including a secondary market in the TCI program is important for multiple reasons. First, a secondary market increases program flexibility by allowing regulated entities to purchase additional allowances to meet program obligations or to sell excess allowances. In addition, a secondary market provides the ability to sell or obtain allowances in between auctions, ensuring that allowances are liquid, and the carbon market remains stable. Finally, a secondary market will promote innovation among regulated entities by incentivizing firms to increase efficiency or upgrade technology in order to reduce emissions. Doing so will allow them to sell and profit from the unused allowances they purchased at auction.

Program Integrity
TCI is dependent on a declining cap for transportation emissions and the associated allowances that are auctioned to regulated entities. Because states’ allowance proceeds derive from these auctions, it is important that the final MOU and model rule account for the perverse incentive to maintain high emissions to sustain a revenue source. TCI proceeds can result in substantial and beneficial public investment but should not viewed as a permanent or increasing source of revenue.

Thank you for your consideration. We urge you to continue working collectively as a regional coalition and look forward to assisting you as you develop the final iteration of TCI. Please do not hesitate to contact me if you have any questions.

Sincerely,


James E. Rooney
President and CEO

To Whom It May Concern:

Attached please find comments of support for TCI from the undersigned businesses, universities, health systems, institutions, and large employers.

Please see the attached comments of the National Consumer Law Center on behalf of our low-income clients, Pennsylvania Utility Law Project on behalf of our low-income clients, Public Citizen and the Public Utility Law Project of New York, advocating for the further inclusion of equity in the TCI MOU and program design.

Governor Charlie Baker
Office of the Governor
24 Beacon Street Room 280
Boston, MA 02133


Dear Governor Baker:

The Massachusetts Campaign for a Clean Energy Future is a coalition of environmental, public health, labor, and civic organizations working to establish equitable carbon pricing policy for Massachusetts.

We support the potential of a well-structured regional Transportation Climate Initiative and want to ensure that the Commonwealth develops carbon reduction plans that are both effective and centered around equitable protections and investments. To that end, the organizations listed below, all of whom are members of Massachusetts Campaign for a Clean Energy Future, support the statement of principles developed and submitted by the Massachusetts TCI Table.

Please note that the nine organizations that are signatories to this letter represent thousands of engaged Massachusetts residents from Cape Cod to Western Massachusetts.
Environmental Ambition
We commend Governor Baker and members of the Baker-Polito administration for their regional leadership on TCI. As the participating jurisdictions work to develop a final Memorandum of Understanding (MOU), we encourage Massachusetts to provide continued leadership by encouraging other states to commit to TCI, to invest proceeds in clean transportation efforts, and to minimize negative impacts to low-income drivers while maximizing benefits to communities that lack affordable, reliable, and safe transportation.
The MA TCI Table asks the Baker-Polito administration to ensure that the TCI jurisdictions establish an emissions cap that aligns with Governor Baker’s recently announced commitment to net-zero emissions by 2050 and the Massachusetts Senate’s proposed requirement of a 50 percent emissions reduction by 2030.
Of the three cap levels analyzed by the TCI jurisdictions, the cap that most closely approaches that level of ambition is the cap that declines by 25 percent from 2022 to 2032; that cap level also delivers the greatest health, economic, and job-creation benefits. For those reasons, the undersigned support an emissions cap that declines by at least 25 percent from 2022 to 2032. We also recommend that the Administration conduct modeling of deeper reductions. The cap and other program design elements should be reviewed after the program’s first three years and every three years thereafter to ensure that the program is working as intended to reduce CO2 emissions and other harmful co-pollutants and is improved over time.
Investment of TCI Proceeds
We appreciate the need for each TCI jurisdiction to independently determine how to invest TCI proceeds to best meet the unique needs of their residents, workers, and businesses. However, we also believe that the draft MOU should include principles to ensure that investments deliver pollution reduction, improved air quality, increased sustainable transportation options in an equitable manner. This should include attention to good jobs standards.
The investment of TCI proceeds in Massachusetts should provide greater access to affordable, low-carbon transportation options throughout all geographic regions of the Commonwealth. Investments that benefit environmental justice communities, low-income populations, rural families, low-wage workers, and other populations that have been historically burdened by transportation pollution are necessary. The Commonwealth should prioritize these communities as they have faced disproportionate burdens from transportation pollution and unequal access to mobility options. TCI proceeds must minimize and mitigate cost impacts to low-income households and maximize expanded clean transportation benefits for low-income communities and other transit-dependent populations.
The Commonwealth’s share of proceeds from TCI allowance auctions should be managed transparently, with input from a stakeholder advisory council. Massachusetts should work directly with communities across the Commonwealth to identify investments that will deliver CO2 reductions, improved air quality, resilient infrastructure, and improved sustainable transportation options. TCI-funded investments should be highly visible through clear reporting of investments and investment impacts.
Complementary Policies
In addition to a cap-and-invest framework, complementary policies are needed to achieve the Commonwealth’s climate mandates, economic development, and public health goals. These should include policies such as reduced public transit fares, road pricing, zoning reform, public-private partnerships, improved governance and coordination of the MBTA, RTAs, human service transit, and other state and local agencies. Further, the undersigned agree with the Commission on the Future of Transportation that we need to phase out the sale of internal combustion engine vehicles by or before 2040, and that all MBTA and RTA bus purchases must be electric by 2030.
The following member organizations of the Massachusetts Campaign for a Clean Energy Future look forward to working with you to ensure that Massachusetts participates in an environmentally ambitious and equitable TCI.
Sincerely,
Acadia Center
Cape and Islands Self-Reliance
Clean Water Action
Climate Action Now Western Massachusetts
Elder Climate Action Massachusetts
Greater Boston Interfaith Organization Climate Justice Task Force
Healthlink
League of Women Voters-Massachusetts
Salem Alliance for the Environment