TCI Regional Policy Design Stakeholder Submissions

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

I am concerned about reducing pollution from transportation. I am grateful to Governor Baker for his leadership and request that Massachusetts formally join the program. I ask that leadership chooses the most aggressive greenhouse gas reduction target that the most recent climate science tells us we need. I urge that the policy prioritizes clean investments in areas overburdened by pollution and/or for those who don’t have access to transportation choices.

Emphasize conservation replacement of fossil fuel use, adhere to Obama Era mileage standards, shift resources to public transit upgrades

I am for a regional transportation initiative but with reservations, as the devil is always in the details. Since 40% of emissions come from this sector, it is critically important to develop smart, clean and efficient transportations systems that are designed to reduce emissions to the greatest extent possible. Accountability, through frequent benchmarking and 3rd party review are needed to ensure that TCI investments deliver actual pollution reduction, improved air quality, increased sustainable transportations options and are being done in an equitable manner that protects vulnerable populations, rural areas, small businesses, good jobs and good workplace standards. I support the most ambitious emissions reduction of 25% by 2030 with funds going to green transportation infrastructure, not highway expansion or road maintenance. Transparency is very important. I would like to be informed of the actual emission reduction this program will garner, separate from the reductions that are already anticipated from measures already in place and that we already count on to allow us to reach net zero by 2050 or sooner. We do not have time and cannot afford misinformation or overinflation of benefits when we discuss programs that influence taxes and create or fail to truly create solutions for a viable future. A regional transportation system that uses our best green technology and initiatives, that is grounded in the importance of our collective health, safety and future, rooted in honestly, not fraud, embellishment or self-dealing is what I want to pay for. I want this for myself, my children and grandchildren and for you and yours.