TCI: Meager benefits, high costs

Beacon Hill Institute study flags concerns

THE TRANSPORTATION AND CLIMATE INITIATIVE (TCI) bills itself as a regional collaboration designed to improve transportation, develop clean energy sources, and reduce carbon emissions from the transportation sector. To accomplish these goals, TCI proposes implementing a regional “cap and trade” scheme whereby a cap, established by individual states in collaboration with regional authorities, would be set on greenhouse gas emissions from the combustion of finished gasoline and on-road diesel. Emissions allowances under the set cap level would then be sold to the highest bidder at auctions region wide.

With a cap on emissions from the final consumption of finished gasoline and on-road diesel, the price of both products will increase. Essentially, TCI imposes a hidden tax on both fuels.

Motor fuels such as gasoline and diesel are vital components of economic activity. Everything from the price of groceries to local tourism is impacted by the price of motor fuels. Gasoline taxes are regressive in nature insofar as lower income households spend larger portions of their income on gasoline.

The Fiscal Alliance Foundation commissioned the Beacon Hill Institute to study the economic impact that TCI would actually have on our state economy, including the upfront costs average residents will see. The study found that emission caps as stringent as those proposed under TCI could increase the price of finished gasoline by as much as 26 cents per gallon and increase the price of on-road diesel by as much as 52 cents per gallon.

Using its “MA-STAMP” model, the Beacon Hill Institute estimated the economic impacts of various scenarios for implementing TCI in Massachusetts. In the first year, under a 25 percent emissions cap, TCI would cost Massachusetts residents over 9,000 jobs, over $300 million in business investment, and over $900 million in state gross domestic product. It would increase the tax burden on the average Massachusetts household by $738. While TCI would create a new source of tax revenue, Massachusetts would stand to incur considerable losses in other revenue streams.

TCI fails to deliver benefits to justify its substantial costs to the taxpayer. Transportation sector emissions within the TCI region total 340.6 million metric tons of carbon dioxide equivalents, whereas emissions from California, Florida, and Texas alone are 554.9 million metric tons, according to the most recent data from the Environmental Information Agency.

According to the PBL Netherlands Environmental Assessment Agency, global emissions total 50.9 gigatons. The emissions affected by TCI represent 0.6 percent of total global emissions. Since global emissions are increasing year after year, TCI will have negligible effects on greenhouse gas emissions worldwide.

Meet the Author

William Burke

Director of research, Beacon Hill Institute
Meet the Author

Laurie Belsito

Legislative director, Fiscal Alliance Foundation/Massachusetts Fiscal Alliance
While being a climate leader is considered important, the massive costs incurred by taxpayers under the Initiative will do little to reverse or slow anthropogenic climate change caused by greenhouse gas emissions.

William Burke is director of research at the Beacon Hill Institute and Laurene Belsito is legislative director of the Fiscal Alliance Foundation.