TCI Regional Policy Design Stakeholder Submissions

The City of New York offers the attached comments in response to the Transportation and Climate Initiative’s (“TCI”) December 17, 2019 request for public input on its draft Memorandum of Understanding (“draft MOU”) and initial projections of the potential economic and health benefits of a regional cap and invest program.

February 28, 2020

The Connecticut Energy Marketers Association’s (CEMA) motor fuels members own, operate and distribute gasoline to approximately 1,000 convenience stores in the state. Our members own property in virtually every municipality, pay local and state taxes, employ thousands of people, and play a vital role in Connecticut’s economy.

While electric vehicles (EV’s) may be an attractive way to lower emissions, it appears that more consideration needs to be given to several factors that will have an impact on jobs, the economy, property values, electric reliability, emissions and family owned businesses. But, it is essential that TCI does not pick winners and losers by allowing regulated utilities to unfairly use their monopolistic status to overpower private businesses that depend on free market forces to support economically viable alternatives to electricity. Allowing massive (and in some cases foreign owned) utilities to do this would be unfair, it would destroy competition, and drive local family owned companies out of business taking with them thousands of jobs.

Allowing monopolies with a guaranteed rate of return to control EV charging would not only discourage private companies from investing in future alternative fuels, but it would also have a detrimental effect on their ability to maintain the current infrastructure that motorists depend on.

Over the past decade, federal policies such as the Renewable Fuel Standard (RFS), the Biodiesel Blenders Tax Credit, and others, have created incentives for fuel retailers to invest in infrastructure necessary to bring cleaner burning fuels to the market. Our members support policies that encourage a vibrant and competitive market that will deliver the most efficient prices to the public, but if electric utilities are allowed to exercise TCI and government granted power in the motor fueling space, private businesses will not be able to compete.

TCI needs to examine a regulatory landscape which encourages fuel retailers to invest in alternative fuels before generations of investment in thousands of locations throughout the state are irreparably harmed. We have one chance to get this right, or a major segment of the economy will be decimated.

While utilities need to play a role as EV’s enter the market, they should be focused on grid enhancements, distribution upgrades (ie. line extensions), cyber security and other issues to ensure that the “lights stay on” as demand for electricity grows - these are fundamental to the reason that they have been granted monopoly status. TCI should seek and support pathways that leverage the current fueling


network that has been privately developed to bring alternative fuels to consumers - not tip the scale in favor of electricity.

TCI also needs to be cognizant of the impact that the “electrify everything” policy that the state is pursuing will have on grid reliability, the cost electricity, and emissions.
Attached is a spreadsheet the looks at the need to add electricity supply if EV’s replace gasoline and diesel fuel for transportation purposes and the replacement of heating oil and natural gas for heating. In Connecticut, Governor Lamont’s Executive Order number three seeks to achieve zero emissions in the electric sector by 2040, coupled with the need for additional electricity capacity to meet the demand that EV’s and electric heat pumps will add to the grid is going to place immense pressure on the need for renewable energy generation.

To do that we need to look at what it would take for wind and solar to meet this goal. It is a fact that solar and wind electric power farms are much more land intensive than oil, gas, or nuclear power plants. For example: “Wind farms require up to 360 times as much land area to produce the same amount of electricity as a nuclear energy facility, a Nuclear Energy Institute analysis has found. Solar photovoltaic (PV) facilities require up to 75 times the land area.” https://www.nei.org/news/2015/land-needs-for-wind-solar-dwarf-nuclear-plants. It’s simply the nature of the science and engineering behind wind and solar plants that they are land intensive.

Given TCI goals and that the state of Connecticut wants to move entirely to renewable power plants, specifically wind and solar, for electricity generation, it’s reasonable to ask how much land such plants would consume.

SOLAR
Let’s look at solar first. Connecticut has a large solar farm currently in Somers, CT. https://en.wikipedia.org/wiki/Somers_Solar_Center It has a capacity of 5 MW of electricity, and covers 50 acres of land. According to ISO-New England, Connecticut power plants have a nameplate capacity of 8,700 MW https://iso-ne.com › grid_mkts › key_facts › final_ct_profile_2013_14

Doing the math, Connecticut would require some 1,740 solar farms the size of the one in Somers to replace all existing electric power capacity in the state, and doing another calculation, this would require some 87,000 of land use. This land area is equivalent to the total sum of all the land taken up by the cities of Hartford (11,490 acres), Bridgeport (12,400 acres), New Haven (12,870 acres), Waterbury (18,530 acres), New Britain (8,576 acres), New London (6,886 acres) and Meriden (15,440 acres).




WIND
Wind power plants come in two forms, onshore and offshore.

- Onshore
For our onshore example, we look at the Sheperds Flat wind farm in Oregon, the world’s fifth largest onshore wind farm. https://www.power-technology.com/projects/shepherds-flat-wind-farm-oregon/
This wind farm has a capacity of 845 MW and covers some 80 square kilometers. We calculate that 10.3 such wind farms would be needed to replace CT’s 8,700 nameplate capacity, and these would span some 823.7 square kilometers. As Connecticut consists of 14,360 km in area, more than twice the area of the solar plant described above.


- Offshore
Since solar and onshore wind power plants take up so much land space, perhaps an offshore wind plant in Long Island Sound would be preferable. After all, there are no homes or businesses to disrupt out in the Sound.

The world’s largest offshore wind power plant is the Walney Extension wind farm off the coast of England. https://www.power-technology.com/features/largest-offshore-windfarm-world/ Unfortunately, as we shall see, the news isn’t good. The British wind farm has a capacity of 659 MW and is spread over 145 sq. kilometers in the North Sea. To replace CT’s 8,700 nameplate capacity, we’d need some 13.2 Walney-sized windfarms which would cover an expanse of 1,914 sq km of Long Island Sound. But the Sound only covers 3,056 sq km. In other words, this huge wind farm would choke off Long Island Sound, covering 62.6% of its entire surface area. This would mean a wind farm covering every square meter of Long Island Sound from the New York border to Rhode Island, and penetrating from a few miles into the sound at its narrowest point, to over 100 miles at its widest point.

Connecticut and TCI should be cautious before committing to entirely replacing Connecticut’s current power capacity with wind and solar power plants to accommodate EV’s. There are physical constraints to making such wholesale conversion possible. In the meantime, Connecticut can transition to a net-carbon zero energy source in the heating sector, elevating the need to put any additional burden on the existing electric power grid, through the use of biodiesel. Why further burden the grid by adding electric heat pumps, when electrons can be saved with liquid fuels that can deliver on emissions reductions that help the state comply with the greenhouse gas reductions required under the Global Warming Solutions Act? Since biodiesel and renewable diesel can be used as a transportation fuel (along with other low carbon fuels), the state can significantly reduce demand on the grid and significantly lowering emissions by utilizing the potential of local businesses to sell low/net zero liquid fuel to the public.


We know that Connecticut is concerned about increasing what are already the highest electricity rates in America, and as business owners we are troubled about the impact that potentially billions of dollars in ratepayer investment that will be needed to upgrade the grid to accommodate TCI goals, subsidizing new clean electric generation sources to accommodate those goals, the subsidization of EV infrastructure, and EV incentives will have on rates. We believe that TCI should put as much effort into finding low carbon/zero carbon liquid fuels, that utilize existing infrastructure that has been privately developed, as they are into electrification of the transportation sector.

Before Connecticut has even adopted any of the costly suggestions that have been made by EV industry advocates, Eversource customers will pay 15.8% more for electricity in 2020 and United Illuminating (UI) customers will realize 26.4% increase (which equates to average customer using 750 kilowatt hours a month paying $9.65 and $16.55 more per month with Eversource and UI respectively)! Connecticut needs to factor costs in and “right size” their electrification plans before fixed income and low-income families are disproportionally affected by the proliferation of EV’s and the infrastructure that comes with TCI’s plans. TCI needs to address the question of who benefits from all the costs that go into creating an EV future for Connecticut and the region, and needs to avoid the mistakes that have advantaged the wealthy over low and middle income families.

Of the 57,066 households that received the federal EV tax credit in 2016, 78% had at least a six-figure income and 7% reported more than $1 million in income, while less than 1% of all EV credits went to households earning less than $50,000 in 2014, meaning that about half of Americans receive virtually no benefit from the credit. EV manufactures data shows that EV’s are overwhelmingly benefit the wealthy. Tesla’s customers have an average household income of $293,200 while even the buyers of the more modestly-priced electric Ford Focus have an average income of $199,000. On top of the EV tax credit, electric cars owners don’t pay gas taxes to help support the roads they use, shifting more of the burden onto other drivers, contributing to a funding deficit that support our roads and bridges. PURA should not create incentives to purchase EV that will only benefit citizens who would be able to afford them without it.

TCI also, has to ask the question are we trading one type of pollution for another? Much of the literature noted that EV’s emit less CO2 than traditional internal combustion powered engines (ICE). However, the makeup of the electric grid plays a role in the release of other gaseous pollutants and particulates. According to Weeberb J.Requia’s “How Clean Are Electric Vehicles? Evidence-based Review of the Effects of Electric Mobility on Air Pollutants, Greenhouse Gas Emissions and Human Health”, in China, even with an electric grid largely powered by coal, EV’s decrease CO2 emissions by 20% compared to ICE’s. However, in the same study, emissions of PM10, PM2.5, NOx, and SO2 emissions increased 360%, 250%, 120% and 370%, respectively.

The environmental impact of EV batteries cannot be ignored and needs to be a part of PURA plan. Li-ion battery production primarily occurs in China and South Korea, whose electricity mix is generally carbon-


intensive. Han Hao’s “GHG Emissions from the Production of Lithium-Ion Batteries for Electric Vehicles in China.” (April 4, 2017) showed that the GHG emissions were nearly 30% higher than those for comparable ICE’s. EV battery materials impact the environment in different ways. Batteries that use large amounts of aluminum LiMnO2 and LiFePO4, for instance, have a greater impact on ozone depletion. At the end of the day, TCI needs to factor in the environmental impact of EV batteries and their disposal. A lifecycle analysis of EV and the infrastructure needed to support them needs to be done comparing them to low emissions liquid fuels before ratepayers are burdened with more costs and environmental issues.

Finally, the current electric grid is not clean and adding EV’s (and electric heat pumps) to it will only exacerbate the need for natural gas to ensure that we have enough power to support current demand and the additional demand that EV’s will create. According to Gale Ridge, PhD, a scientist and researcher, “In a one month period, we found about 700 [natural gas] leaks in Hartford. Over a one year period covering the same area, PURA reported 139 leaks. Even recognizing that some of the leaks we found are known to PURA, that’s about a 5 fold difference. We believe that CNG may be missing a large percentage of its leaks.” Current overreliance on natural gas is clearly causing greater methane and CO2 emissions and a massive expansion of EV’s in Connecticut will only drive more emissions for a grid that depends on natural gas to power the state. PURA should not move forward with any plan to electrify the transportation sector until they can verify that the electricity that is being use to power EV is truly emissions free.

We urge TCI to address all of these issues before a final plan is proposed to Connecticut.

Respectfully,


Christian A. Herb
President

The TCI draft MOU and plan is ill-conceived and will negatively impact consumers and businesses as well as the larger economies of Maryland and Delaware. We believe the northeast governors should reject the MOU and disband the Initiative. The TCI plan structure:
• restricts the amount of gasoline and diesel that can be sold in the Northeast region
• imposes a tax on gasoline and diesel, and
• establishes a regional non-profit government entity to oversee the whole TCI Plan, including how billions of dollars in new tax revenue can be spent and how much gasoline a state can receive without penalty.

Restricting the amount of gasoline that can be sold is a bad idea.
The stakes are too high to give complete control over gasoline sales to a newly created non-profit entity that must juggle the competing concerns of 12 states. The TCI proposal leaves many questions unanswered. What happens when a state hits the allowed allotment of gasoline? Who determines if they can get more? Who will control the price? And more importantly, how will the political environment in the Northeast play into decisions? Will Maryland and Delaware be forced to adhere to policies from other states?

Consumers will pay more for gasoline.
The draft plan clearly anticipates $.05 - $.17 per gallon increase in gasoline prices, explaining that money will go to poor and marginalized communities for clean transportation projects. Today, those communities are most reliant on gas-powered vehicles because the transportation infrastructure has lagged. Electric vehicles are commonly purchased by affluent consumers. The per gallon increase set out by the plan will hit poor and rural communities hardest.

State road projects will suffer.
The draft plan requires states to follow rules developed by the newly created multistate non-profit as to how this new gasoline tax can be spent. So far, the initiatives set forth by the plan are suggested spending on bike lines and tax breaks to purchase electric vehicles. Electric vehicles don’t support maintenance of roads and bridges – the current gasoline taxes do.

Businesses will be burdened.
The draft proposal imposes a new regulatory and inspection scheme on thousands of businesses. And, as drafted, the proposal would subject Maryland and Delaware’s business owners to the whim of this newly created multistate entity and tax collector.

Maryland and Delaware’s economy will be hit hard.
It’s simple geography. Delaware and Maryland’s citizens and business owners are on the periphery of the Northeast region. The disadvantages of the cap, tax and spend program on gasoline may be diluted in northern states that are surrounded by other states in the compact. Our region is the southernmost tip of the participating states, meaning Maryland, Delaware and DC are most vulnerable to consumers and businesses choosing to go where they can find less expensive fuels.

On behalf of Environment America, I am submitting the attached comments from 1,834 of our members and supporters across the jurisdictions considering this regional climate policy.

The Transportation and Climate Initiative is an opportunity for the region to reduce fossil fuel emissions and invest in clean transportation, like electric cars and buses, charging infrastructure, sidewalks/bike lanes, and regional rail.
We urge you to move forward with TCI and require that the revenue generated by the program is used to expand clean transportation. There are simply too many cars on the road contributing to our warming climate, not to mention our asthma rates and traffic congestion problems.
In particular, we’d like TCI funds to go towards zero-emission electric buses, EV charging infrastructure, expanded and improved bike lanes and regional rail, as well as tax rebates toward private EV ownership.

To Whom It May Concern:

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

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

Thank you for the opportunity to provide the attached comments.

Regards,

Brett Barry