TCI Regional Policy Design Stakeholder Submissions

To whom it may concern,
Attached are comments on behalf of Consumer Energy Alliance concerning the Draft MOU of the Transportation Climate Initiative. We appreciate the opportunity to provide our feedback.

February 28, 2020

To: Governor Ned Lamont, Governor John Carney, Governor Janet Mills, Governor Larry Hogan, Governor Charlie Baker, Governor Chris Sununu, Governor Phil Murphy, Governor Andrew Cuomo, Governor Tom Wolf, Governor Gina Raimondo, Governor Phil Scott, Governor Ralph Northam and Mayor Muriel Bowser.

On behalf of Vermont Businesses for Social Responsibility (VBSR), I am writing to express strong support for the Transportation and Climate Initiative (TCI) and comment on the draft Memorandum of Understanding (MOU.)

Vermont Businesses for Social Responsibility is a business association representing over 730 business members in every industry and every county across the state; united in our shared mission to advance an ethic that protects the natural, human, and economic environments of Vermont as a business thrives.

From global brands like Ben & Jerry’s and Burton to small startups like Mamava, VBSR members are some of the most successful and iconic businesses in our state, who together shape the Vermont brand. Of the top 25 companies in Vermont, 13 are VBSR members – including our champion members Green Mountain Power and National Life Group. Those 13 companies together earned over 9 billion dollars in revenue in 2012, according to Vermont Business Magazine.

In 2018, we surveyed our members on annual revenues – just under 50%, or about 185 companies, earn less than $500,000 a year. About 16% earn between $500,000 and $1 million a year, 9% earn $1 to 5 million a year, 7% earn $5-20 million a year, and 10%, or about 70 companies, earn over $20 million a year in revenue.

No matter their size our businesses recognize that our continued reliance on fossil fuels is triggering a climate crisis and stifling our economy. The longer we delay in taking action the more exacerbated these impacts become. For Vermont, the transportation sector accounts for nearly half of our carbon emissions and so it is imperative that we seize this rare opportunity to decarbonize our region’s transportation system with a strong, equitable TCI cap-and-invest program.

The potential benefits of this carbon pricing system make it a far cry from the gas tax opponents claim it will be. A cap and invest system would establish a limit on carbon emissions and a regional auction for participating states to sell their emissions allowances. They can then invest those revenues into cost-saving programs designed to reduce prices at the pump such as electric vehicle (EV) incentives, rural broadband to support remote work and telemedicine, bike and pedestrian infrastructure, public transit, and more. Conversely, a gas tax means higher costs at the pump without any palpable transportation or environmental benefit.

VBSR urges the working group to develop a program that will not only decrease climate pollution but use program revenues to address the needs of rural, low-income communities who are overburdened by vehicular pollution, transportation costs, and a lack of clean transportation options. These communities are often those most directly impacted by the adverse effects of climate change and as such should enjoy the strongest benefits of this program. Considering the different challenges each state faces in our region, we also call for strategic, state-by-state investments to be made to ensure equity.

The challenges rural, working Vermonters face are far different than those living in Boston, Baltimore, or Burlington, so it is essential that we give states the flexibility to invest program revenues into transportation solutions that serve their respective communities rather than take a one-size-fits-all approach.

The urgency to develop and implement TCI cannot be overstated and VBSR is pleased to see that the timeline outlined in the draft MOU reflects this. The initial compliance period launch on January 1, 2022 recognizes the need to take swift action while providing states with adequate time to elevate the program and prepare for participation.

Along that same line, we strongly urge that the working group adopt an emissions cap on transportation pollution at a pace and scale in line with science by requiring no less than a 25% pollution reduction in the first ten years from the program’s 2022 adoption. There is a clear consensus within the scientific community that significant, rapid pollution reductions are needed, and we implore you to consider pursuing even more ambitious greenhouse gas reductions moving forward as well as continuous programmatic evaluation of TCI to ensure its continued progression and efficacy.

Climate change is without question the single greatest threat to Vermont's communities, ecosystems, and shared way of life. Spring is arriving earlier, heavy rainstorms are becoming commonplace, and our summers are hotter and drier than ever. Meanwhile more frequent and severe storms cause floods that cost us millions in damaged property and infrastructure. From winter recreation and local food driven tourism to manufacturing and service industries, these changes disrupt nearly every facet of our state’s economy— and we can no longer afford half measures.

TCI offers one of the most promising opportunities to advance solutions that recognize our shared responsibility to take action, strengthen our economy and bring Vermont’s most vulnerable along in our climate future by reducing pollution from the transportation sector. We appreciate the opportunity to comment and your continued work to improve and implement a strong, equitable program.

Thank you,

Jordan Giaconia
Public Policy Manager
Vermont Businesses for Social Responsibility
Jordang@vbsr.og
860-304-2251(mobile)

This is a letter from 147 Maryland LCV Supporters who signed a petition in support of TCI and the following: attached are their names and cities.

To Whom it May Concern:

I am a strong supporter of the The Transportation and Climate Initiative (TCI), a collaboration of twelve states and D.C. that would cap transportation emissions and auction emissions allowances. This is a once in a generation opportunity to reduce greenhouse gas emissions and raise much needed revenue to modernize our transportation system on a regional scale.

As a Marylander, I thank Governor Hogan for his leadership in supporting TCI and request that Maryland formally join the program. We ask that leaders of the TCI choose the most aggressive greenhouse gas reduction targets- as current scientific studies show that we need.

We also urge that the policy prioritizes clean investments in all of Maryland's communities overburdened by pollution and for those who do not have access to transportation choices.

Thank you for your time,

Supporter

Thank you for the opportunity to provide the attached comments.

Regards,

Brett Barry

CenterState CEO is an independent and forward thinking economic development strategist, business leadership organization and chamber of commerce dedicated to the success of its members and the prosperity of the region. CenterState CEO is headquartered in Syracuse, New York and has 2,000 members. You can see more information about us on our website: www.centerstateceo.com. We undertake programs in economic development/business development, economic inclusion, research, policy and planning, as well as innovation and entrepreneurial development to achieve our goals.

We are closely following the development of the Transportation and Climate Initiative (TCI). We have participated in the public information meetings sponsored by the New York State Department of Conservation on November 7, and the TCI webinar of December 17. We thank New York State and the TCI for making those opportunities possible and look forward to continuing to engage in the process as it moves forward.

We are well aware of the climate issues you are seeking to address with this program. We applaud the states for working together to address a problem on this scale, and recognize that the leadership being taken by the states together can have a significant impact on the problem. We urge you to keep the flow of communication open as we are concerned that the general public, and business community awareness of the TCI is not very great at this point. Ultimately the participating states will be asked to pass legislation to implement the TCI proposals, by that time it will be critical to have greater public understanding of what is being proposed and why it is being proposed. The TCI will increase the cost of doing business for New York State employers, it will be critical that you clearly articulate the benefit that will be generated by the actions you propose.

At this point we have more questions, and as an organization we have not taken any position on the TCI. We would ask you to consider several factors as you design this program.
Our employers frequently must compete for customers in national and international markets. We understand that your market model indicated a positive economic impact for the region as a whole. The region’s economic vulnerability is not really caused by whether some customers drive over a state line to buy a tank of gas in another state, but rather when a business in Central New York has to compete for a contract against a competitor in another part of the country whose fuel prices may be lower to produce and transport a product to market. These types of decisions can often be driven by fractions of a cent per unit differences between one plant and another.

The Central New York economy is very vulnerable to changes in transportation costs. We are heavily dependent on trucking to move our products to market. We do not have competitive rail service that major rail centers possess, we are largely the captive of a single railroad. This is not an uncommon situation for middle sized cities in the TCI region. If a CNY business is seeking to sell products to international market, it actually costs more to move goods 300 miles from Syracuse to the Port of New York/New Jersey by truck than it then costs to move that same product from the Port of New York/New Jersey to an international market (such as China) by ship. Therefore, we are very sensitive to increases in fuel prices. If you do follow the “cap and invest” strategy, then some of that investment should be dedicated to alternative modes of transportation in order to avoid significant adverse consequences to a region like ours. Central New York produces a significant amount of agricultural products, lumber, paperboard, and consumer products that are relatively low priced goods that will be very sensitive to an increase in the cost of transportation. To the degree that there would be a shift from truck to rail as a means of goods movement, there should also be a reduction in greenhouse gas emissions, as rail is a much more environmentally efficient way to move products.

It seems that the results from your economic model indicate that the rise in impact on CO2 emissions was generating diminishing returns as you raised the price; i.e. a 5 cent per gallon increase led to a 20% reduction in CO2 emissions, raising that to 9 cents per gallon only generated a 22% reduction and a 17 cent per gallon decrease only generated a 25% reduction. It appears most of the cap and invest strategy’s return came from the initial increase in fuel price, and it is possible that the marginal increase in additional CO2 reduction would not be worth the potential economic damage of continuing to raise the price.

Part of that diminishment of return may be linked to the nature of the opportunities in which the TCI invests. At the public meeting many of the advocates were recommending projects that while they may be meritorious in their own right might not be particularly effective at the scale of the problem that you are trying to solve. Adding a rural bus route to help a hand full of customers get to a center city is not likely to contribute much to the major CO2 reductions you are seeking to achieve. The investment projects need to be about systemic change and you need projects that will change human behavior. We would recommend that you identify large and bold initiatives that can make a difference such as building out electric car infrastructure across the states, investing in the electrification of transit, upgrading electric generation and transmission to make sure that the utility systems can actually serve the increase desired in the sales of electric vehicles, or investing in infrastructure such as inland ports that will move significant amount of freight movements from truck to rail.

The TCI will have to work with the region’s utility providers to assure that they have the capability to deliver the clean electric power that the TCI needs to reduce carbon emissions. For example, in New York State, Upstate New York already has a significant base of non-fossil fueled power sources including wind, hydro, and nuclear. Seventy percent of our power comes from those sources. Downstate, the supply is closer to 70% from fossil fuels, and only 30% from non-fossil fueled sources. A wise investment, while not necessarily a transportation one, would be to increase the capacity of the New York State electric grid to move non-fossil fuel

dependent electricity from Upstate to downstate, or to convert or replace the fossil fuel plants that supply New York City with clean power. There will also be a need to make sure that there is sufficient generation to support the widespread adoption of electric vehicles, and given the challenges in siting and permitting utility generation, this could be a problem that could undermine your efforts.

Another issue the TCI should address is to encourage states to change their transportation investment policies. For example, NYSDOT is currently close to a final decision on replacement of I-81 through Syracuse. This will represent a minimum of a $2.5 billion investment in highways around Syracuse. While this is a good investment, being done in an environmentally responsible manner, the investments that the TCI are proposing will pale in comparison to the amount of money which will have to be spent on roads and highways. You may need to convince member states, and the federal government, to reconsider their own transportation investment policies and put more emphasis on transit or non-highway investments. With the aging of the interstate system, many states will be in the position to consider whether they can turn their transportation investments to replace some of the demand for automobile transportation with other forms of moving people.

We appreciate your willingness to engage the business community on this important and complex issue. We look forward to be engaged in the process, and hope that we can make progress in addressing this problem.

Sincerely,



David A. Mankiewicz
Senior Vice President
CenterState CEO
115 West Fayette Street
Syracuse, New York, 13202
Phone: (315)-470-1942
Email: dmankiewicz@centerstateceo.com