Mass. exploring carbon fee on auto fuels

Advocates say announcement likely next week

MASSACHUSETTS IS EXPECTED to join other East Coast states in attempting to design a system that would assess a fee on the carbon content of automobile fuels and use the proceeds from that fee to finance a transportation system generating fewer greenhouse gases, according to people familiar with the planned announcement.

The system would require new carbon permits to be purchased by the wholesalers of gasoline, thereby increasing the cost of fuel and lessening demand, according to advocates. The revenues generated by the sale of the permits would then be invested in greener transportation modes, according to the advocates, who did not want to be identified speaking about the program before states publicly sign onto it.

An official within the Baker administration said a draft press release has circulated and that, as of Friday, the plan was for states to make their announcement Tuesday. The Georgetown Climate Center, which has spearheaded the multi-state effort to reduce transportation emissions, did not respond to a request for comment.

Gov. Charlie Baker’s Commission on the Future of Transportation in the Commonwealth released its report on Friday and one of its recommendations called for a market-based program to reduce greenhouse gas emissions in the transportation sector.

When he was asked about the Georgetown endeavor at the commission’s press conference, Baker said the state’s participation would depend on what the states eventually agree on. He said some of the participating states are about to go through a change in governor, which could delay an agreement.

“We’ve been having conversations as part of that group for a while and they have involved as many as 15 states. I expect those conversations to continue. They’ve been really positive,” Baker said.

The forthcoming announcement will endorse a so-called cap-and-invest approach, and future discussions will chart how the states can go about designing and implementing that type of system, according to advocates.

The goal of the states is to develop a system similar to the Regional Greenhouse Gas Initiative (RGGI), which requires power plants to purchase emission permits. As the cap on permits is slowly reduced, the price of the permits goes up, increasing the price of electricity. The revenues from the sale of the permits are used by the participating states to invest in energy efficiency programs and other initiatives to reduce emissions.

Baker publicly endorsed the idea of a RGGI for gasoline on the campaign trail. “The way to do this one – and we’re currently having conversations with our other colleagues in New England and in the Northeast – is to try to do this the same way the RGGI program works,” Baker said in the last gubernatorial debate. The governor, who plans to make climate change a priority of his second term, said, “We have been talking to the other states about putting together a regional approach to deal with transportation.”

Massachusetts, which has a statutory mandate to dramatically reduce greenhouse gas emissions, already has the legal framework needed to institute a cap and invest program that would increase costs at the pump, according to advocates.

Drivers can be sensitive to gas prices, and increasing those costs for environmental aims could trigger a backlash. Rep. Geoff Diehl, who unsuccessfully challenged US Sen. Elizabeth Warren this year, gained statewide acclaim and notoriety in 2014 when he led a successful campaign to repeal a law that would have increased the gas tax in line with inflation. Baker also opposed tying the gas tax to inflation.

Around the globe, officials have struggled with how to go about achieving the goals agreed to in Paris three years ago for slowing the pace of climate change. Riots convinced the French government to back off from a gas tax increase.

“I think this is going to be the biggest thing that happens to climate policy in the northeast since RGGI,” said one advocate. Another advocate said that states seeking to develop a cap and invest program have emissions reduction goals and will need “bold action and fast action” to meet those goals.

In 2015, about 40 percent of greenhouse gas emissions in Massachusetts came from the transportation sector and transportation emissions are expected to increase unless action is taken. California, which instituted a cap-and-invest program in the transportation sector, is poised to spend $2 billion raised from that, according to the commission.

Meet the Author
If the Northeast auctioned off transportation carbon in line with California, that would generate about $500 million for Massachusetts and cost the average driver an additional $7 per month, according to the commission. If the price of transportation carbon was more in line with RGGI, the program would generate $150 million for Massachusetts, and cost the average driver about $2 per month, the commission said.

Additional steps should be taken before the states implement such a program, according to the commission. Those would include a “detailed study that identifies both the benefits and costs, assuming a reasonable range of program design scenarios,” and new investments in electric vehicles, public transit, and other green transportation modes so that “these options are available before the costs of cap and invest are passed down to consumers,” the commission wrote.