TCI Regional Policy Design Stakeholder Submissions

The cap and investment and other carbon market trading and offset measures are extremely concerning in these proposals. Net zero emissions framework is also problematic. Low income communities and people of color are living in some of the highly trafficked routes where freight and manufacturing storage processing industries have been emitting high levels of toxins for years in the region. Any offset scheme would further concentrate the actual amount of air pollution for environmental justice communities and be detrimental to our lives. Environmental justice groups in CA have attested to this reality after going through their own climate initiatives--the offset market abroad has led to devastating consequences for Indigenous folks in the Amazon getting kicked out of their land for carbon forestry REDD+ credit market while EJ communities in CA living next to major freight corridors, Chevron/Texaco oil refineries, and other polluting industries have seen co-pollutants concentrated while also carbon emissions have gone up. No community benefit from any EJ or equity funds generated through market trading of carbon credits will alleviate the increased health risks from further pollution by these trading schemes. Please take this provisions out and concentrate on real policy strategies that will reduce in every part of this region carbon and other toxic co-pollutants. The emissions cuts have to be absolute and not a switch and bait tactic. Offsets and trading are false solutions with tremendous consequences for human rights violations and endangering our community health while giving us a false sense that we are actually reducing emissions when we're not. Electrifying freight and transport has been done in other regions and along with other initiatives in RGGI to convert our grid into real renewables (not nuclear or clean coal) we can make the emissions targets. Carbon trading will never get us to the emissions reductions while creating more disaster in the process.

Please keep working towards greener transportation and climate controls for Maine's citizens. We need to be the change we wish to see in the world. Creating carbon emission caps on transportation will force us a society to find cleaner methods and solutions for our transportation. Thank you for your efforts and considerations.

Please find attached comments from a group of transportation and environment advocates regarding the Draft Memorandum of Understanding.

I wonder how this could affect rural communities like my own. Perhaps by developing a ride share program that would actually function? (We have had many discussions and a few failures over the years.) People have to drive up to 30-45 minutes just to buy groceries, or even gasoline! And we all drive vehicles that are far too large but can handle the extreme weather and rough road conditions. So much room for improvement!

My company operates in Maryland as well as parts of Delaware, Virginia and Pennsylvania. I am Not in favor of the Transportation Climate Initiative as it sets out a framework that imposes an unfair burden on all vehicle owners and thousands of businesses including my own.There have only been a handful of solicitations for feedback. No one knows the full detail of this proposal. The claims for a positive environmental impact have not been proven. This proposal places the burden of new taxes in a disproportionate way onto the poor and rural communities.

The voters of Massachusetts made it abundantly clear that they reject an increase in the gas tax by a referendum just a few years ago. We pay enough taxes already. You need to use the funds you already have more responsibly and stop taxing everyone.
You can't do this without a vote.

IETA SUBMISSION TO TRANSPORTATION & CLIMATE INITIATIVE (TCI)
The International Emissions Trading Association (IETA) appreciates this opportunity to share input on the Transportation & Climate Initiative (TCI) Draft Memorandum of Understanding (MOU) (the MOU). On behalf of our 130+ multi-sector business membership worldwide, we believe that flexible market instruments – including trading, broad access to natural climate solutions, and cross-border cooperation – must form the backbone to any jurisdiction’s successful climate policy effort. We welcome the TCI’s climate leadership, cooperation, and support for flexible market instruments.

IETA's comments are a result of deep experience and lessons learned across North American and international carbon markets. Our policy and market insights are a testament to the iterative – yet increasingly robust and aligned – nature of carbon pricing system design; an evolutionary process where jurisdictions are not only identifying best practices, but also seeking to embed and operationalize these elements into new or modified program improvements.


OVERVIEW & COMMENTS
IETA’s comments are structured around the sections in the MOU, with detailed comments on: program design elements; applicability; compliance and enforcement; flexibility, allowance allocation and stringency; regional program administration; and additional program design elements.


1. Goals and Schedule
IETA commends TCI’s ambitious objective of releasing a regionally coordinated Model Rule by 31 December 2020, with the intention of commencing the first compliance period as early as 1 January 2022.


2. Model Rule for Establishment of the TCI Program
2A. Affected Fuel.
IETA agrees that the fuels proposed to be covered by TCI’s proposed program, on-road diesel and motor gasoline, are the appropriate ones. In general, IETA and its membership believe the program should cover as much of the fuel in the region as possible while taking account of the renewable components.

2B-C. Regulated Entities & Other Entities.
In order to make the TCI program as efficient as possible, the compliance point should be set such that compliance entities can take full advantage of existing tax and tracking systems. IETA members support the proposal to set the compliance point at the terminal rack, with an alternative for any fuel that moves into the region directly. While there is not a directly comparable pricing and tracking system already in place, the terminal rack is the point from which most of the fuel is distributed in the region; it also upstream of the smallest distributors and allows for a manageable number of entities. IETA recognizes that there are suppliers that import fuel directly into the TCI region and believes that those imports can be incorporated into the program without creating an undue burden on small suppliers.

2D-F. Regional Emissions Cap, Budgets & Scheduled Reductions.
IETA supports a system that sets strong science-based caps on emissions reductions, in line with meeting domestic and international climate targets. IETA generally supports the MOU’s approach to setting the regional emissions cap, and we strongly support a regional base annual emissions cap that declines over time in a transparent and predictable manner to allow for medium and long-term planning by facilities and stakeholders. IETA supports the apportionment of the regional base annual CO2 emissions budget to the participating jurisdictions annual budgets, along with the revision of budgets as jurisdictions enter into or withdraw from the program.

2G. Stability Mechanisms.
IETA strongly supports the potential inclusion of a Cost Containment Reserve (CCR) and Emissions Containment Reserve (ECR) in the TCI program. We look forward to more details as the program continues to develop and encourage TCI to look to other regions for examples of successful CCR and ECR mechanisms.
We are encouraged by the framework’s consideration of price-based flexibility mechanisms, including linking as a mechanism to add flexibility and contain costs. Moving forward, the TCI must look beyond its borders to ensure that the rules and systems are complementary and readily adaptable to the world’s quickly changing carbon landscapes. We urge officials to closely track developments that may affect both regional or global “stringency” acceptance of TCI’s approach to carbon rules, pricing and trade. Now is an ideal time for the TCI to be aware of, and account for, any challenges that could emerge down the line. IETA is well-positioned to support this information exchange with TCI and state officials on carbon policy and trade developments and outlooks. We welcome the opportunity to help ensure that the TCI regularly has access to this latest policy information, analyses and outlooks.
Final regulation should see more prescriptive, enabling language to more easily recommend and adopt future market linkage opportunities. For example, international market programs under development (e.g., Article 6/ITMOs, voluntary, international aviation etc.) and existing domestic market programs (e.g., Quebec-California cap and trade programs).

2H. Emission Reporting Requirements.
The proposed requirement for covered facilities to submit a report and supporting information in an electronic emissions reporting system appears sound and defensible. We also support independent third-party verification of the report, recognizing the importance of transparency and verification in ensuring environmental integrity of the system. IETA strongly supports drawing upon lessons and standards from existing greenhouse gas programs in the design of the monitoring reporting and verification (MRV) requirements.

2I. Regulated Entity Compliance and Flexibility.
IETA strongly supports the framework’s inclusion of allowance banking, multi-year compliance periods, and offsets. These instruments should be available to compliance entities to meet full regulatory obligations across these jurisdictions. We hope to see these principles of flexibility and cost containment continue as core principles, guiding the finalization of TCI regional program rules and frameworks.

2J. Auctioning and Alignment.
IETA encourages the TCI jurisdictions to use auctions as the primary method of distributing allowances. Auctioning allowances and allowing a strong market-based approach will incentivize reductions and allow for appropriate price-setting. IETA encourages TCI to collaborate closely with near-term jurisdictional linkage partners (i.e., RGGI, and Quebec and California). Harmonizing and aligning core design rules, standards, joint market infrastructure (e.g., auction platforms, tracking systems etc.) across priority partners are foundational steps towards building broad, linked markets. Cross-border collaboration also allow business, particularly those with regulatory exposure across multiple regions, to more efficiently and cost-effectively plan and invest.


3. Investments and Equity
3A. Investment of Proceeds.
Proceeds from a pollution pricing program can play a dramatic role in supporting TCI jurisdictions’ climate mitigation actions over time. Other jurisdictions – in North America and internationally – earmark and disburse revenue from their pollution pricing programs to support clean technology, innovation, and emissions reductions initiatives. IETA is pleased to learn that the TCI is considering a range of options for investing auction proceeds, and encourages further examination of existing successful programs, including the New York Green Bank, the Australia ERF, and the UK Low-Carbon Innovation Fund (LCIF). In particular, we support investments made towards helping TCI jurisdictions reach their climate policy objectives while supporting regional businesses and consumers to transition to carbon constraints and economic decarbonization.

3B. Equity Shared Priority.
IETA strongly supports the goals of equity, environmental justice, and non-discrimination – and encourages TCI to continue to pursue these goals, including working with disadvantaged communities to assess the impacts of the program.


4. Regional Organization
IETA supports the proposed structure of the regional organization, including its functions, authorities and limits on authorities.


5. Addition or Withdrawal of Participating Jurisdictions
IETA supports the TCI’s approach to new participating jurisdictions and withdrawal from the TCI program. We are pleased to see that the participating jurisdictions will encourage other jurisdictions to the program with the goal of expanding the geographic reach of the regional program. IETA believes that the expansion of this program will benefit all participating jurisdictions by expanding the market. IETA also supports the approach to withdrawal, and that the program can be adjusted based on jurisdictions leaving and entering the program.


6. Program Monitoring and Review
IETA strongly supports continued monitoring of the progress of the program. We urge TCI to undertake ongoing and frequent reviews. Frequent reviews, which are clearly defined and communicated to all stakeholders, will ensure that program parameters remain relevant and reasonable within the context of changing industries, trade and broader macro-economic conditions.


CONCLUSION
Transportation stands out in the TCI region – not only because the sector is now the number one source of carbon emissions, but also because those emissions are increasing. Once again, we applaud the TCI for moving forward – in a cooperative, transparent manner – to harness the power of markets to tackle this challenge in practical and cost-effective manner.
IETA appreciates this opportunity to record our comments on the TCI’s MOU. Our community looks forward to close engagement with the TCI through 2020. If you have questions or follow-up regarding this submission, please contact Justin Johnson at johnson@ieta.org.