Baker admin taking the lead on carbon pricing effort

WHILE GOV. CHARLIE BAKER has resisted entreaties from his own appointees to come up with new revenues for transit, his administration has taken the lead on a multi-state effort to do pretty much that, or something similar.

The Transportation Climate Initiative, which will hold an all-day workshop at the Boston Public Library on Tuesday, is designing a mechanism to put a price on vehicle carbon emissions. The so-called cap and invest approach would increase the price of motor fuels by requiring industry to buy emission allowances at market rates, with states then investing the proceeds into greener mobility options. A similar regional cap-and-trade system for the electricity market has both reduced carbon emissions and been found to benefit participants economically.

Some supporters of the Republican governor’s approach seem eager to highlight distinctions between the carbon-pricing initiative and traditional forms of taxation.

“It’s not a gas tax,” said Sen. Marc Pacheco, a Taunton Democrat who has advocated for new measures to reduce greenhouse gas emissions. “It would be dealing with the wholesale market not the retail market at all.”

While some of Baker’s appointees to the MBTA Fiscal and Management Control Board, as well as key members of the Legislature, have called for new taxes or other revenues, the governor said in March that carbon pricing for transportation and increased T fares are the only revenue-raising ideas “on our radar.”

The governor on Monday acknowledged that whatever form the program takes, it should generate money that could be used to reduce emissions.

“It’s hard for me to say at this point what that might look like when it’s finished,” Baker told reporters. “But I certainly do believe at the end of the day one of the things that’s supposed to come about as a result of that is an opportunity to make investments to continue to improve on our greenhouse gas emissions performance.”

The governor’s Future of Transportation Commission suggested the cap and invest program could yield $500 million in new revenue for Massachusetts if the prices are commensurate with a similar program in California. If the prices are more in line with the emissions allowances in place for the existing energy sector cap-and-trade program, it would yield roughly $150 million for the state and cost the average driver about $2 per month. For comparison, the T hikes approved earlier this year are projected to raise about $29.5 million.

Massachusetts voters have shown price sensitivity to gasoline taxes before. In 2014, voters repealed a law enacted roughly one year earlier that would have automatically increased the gas tax with inflation.

For Baker, who campaigned on a tax-averse platform and supported the repeal of the automatic gas-tax increases, the Transportation Climate Initiative could be seen as a delicate political matter, but his administration has taken the lead on the effort.

Matt Beaton, who is leaving his role as energy and environmental affairs secretary, has been the chairman of the leadership team for the initiative.  Marty Suuberg, the commissioner of the Department of Environmental Protection, is co-chairman of the executive policy committee. Other Bay State officials hold leadership roles on two of the initiative’s three workgroups.

“That was a nod to Massachusetts leadership in this area,” said Pacheco.

Eight other East Coast states – Connecticut, Rhode Island, Vermont, Delaware, Maryland, New Jersey, Pennsylvania and Virginia – plus Washington, DC, are part of the effort, and Baker on Monday said he hopes New York joins. The group still hopes to have a proposal developed by the end of the year.

“We have finalized the work plan together as the nine states. We are conducting modeling and policy analysis now, and moving into stakeholder engagement,” Undersecretary for Climate Change Katie Theoharides told senators last week. “What we’re aiming towards is at the end of the year we have a policy proposal that states can agree to.”

On Monday, Theoharides was named as Beaton’s successor.

A video webinar from the Georgetown Climate Center at Georgetown University, which has helped convene state leaders around the idea, explains the basic process for coming up with a policy. Policymakers will need to set a limit on the amount of carbon emitted; determine a means for distributing carbon allowances, such as by auction; and figure out where to invest the proceeds. Some suggested investments shared in the webinar include electrifying transit fleets, incentivizing electric vehicle purchases, and investing in affordable housing near transit. States would have control over how they spend the proceeds, but they could also work in concert with each other.