MASSACHUSETTS and eight other states plus the District of Columbia pledged on Tuesday to spend a year developing a regional system that would put a price on the carbon contained in transportation fuels and invest the proceeds in initiatives to reduce greenhouse gas emissions.
The states did not commit to any specific plan or any specific size carbon price. Instead, they said they would develop a system to cap transportation emissions and require fuel wholesalers to buy pollution permits for the fuels they sell. Most analysts expect the price of gasoline to rise slightly as wholesalers pass along to consumers the cost of the fuel permits. Revenues from the sale of the permits would funnel back to states for investments in public transit, electric vehicle subsidies and infrastructure, bike lanes, and other initiatives to reduce carbon emissions in the transportation sector.
The participating states – Massachusetts, Connecticut, Rhode Island, Vermont, Pennsylvania, New Jersey, Virginia, Delaware, and Maryland – would each decide whether to proceed with implementation of the new cap-and-invest system at the end of the year-long process.
Terminology is tricky in discussing such initiatives. Some call it a carbon tax. Others say it is a carbon fee. Sen. Marc Pacheco of Taunton says the initiative is neither a tax nor a fee. He notes the Baker administration, which opposes broad-based taxes, lacks the authority to impose a tax without legislative approval. What’s being approved, he said, is a market-based compliance system that may or may not result in a price increase at the gas pump.
Gov. Charlie Baker’s commission on the future of transportation recommended just such a program when it released its report on Friday. At a press conference unveiling the report, Baker was coy about his support for the initiative but indicated discussions with other states on the issue had been positive. He repeatedly cautioned that the makeup of the group could change as new governors take office in January. Maine, for example, is expected to join the initiative when Janet Mills replaces Paul LePage as governor.
The approach is patterned after the Regional Greenhouse Gas Initiative, which caps carbon dioxide emissions from the power sector and requires electricity wholesalers to pay allowances for the carbon content of the fuels used to produce their electricity. The allowances flow back to the participating states to help fund energy efficiency programs and other initiatives to reduce electricity demand.
RGGI is widely considered a success as a proof of concept that the cap-and-invest approach can work. But critics have complained that RGGI addressed climate change on a very slow, incremental basis and wouldn’t have been nearly as effective in backing out dirtier coal and oil generating plants if cheap natural gas had not been available to do the hard work.
The overlap between RGGI and the new transportation emissions initiative is substantial, with all the same states participating except for New Hampshire and Maine, which have been replaced by New Jersey, Virginia, and the District of Columbia.
Environmental advocates generally praised the Northeastern states for moving to set a price on carbon in transportation fuels, which account for 40 percent of the region’s emissions. Many of the participating states have passed laws requiring emissions reductions by 2030 and 2050 that wouldn’t be attainable without a radical transformation of the transportation sector.
Chris Dempsey, director of Transportation for Massachusetts, said Baker “has demonstrated the type of bipartisan, innovative, and reform-minded approach to complex problems for which he is known.”
Sen. Michael Barrett, the cochair of the Legislature’s Committee on Telecommunications, Utilities, and Energy, won unanimous support in the Senate in June for establishing a carbon price on greenhouse gas emissions from transportation and buildings. The House did not approve the legislation, but in a statement Barrett said he felt Massachusetts was close to acting on its own and will now be drawn into a regional collaborative process that will take at least a year to get off the ground.
“The more usual way to drive change is to have progressive states lead by example,” Barrett said in a statement. “Massachusetts did not dilly-dally until the entire region enacted health care for all. It did not insist on a RGGI equivalent for gay marriage. It did not wait for a whole bunch of states to pass education reform. Massachusetts did what had to be done, and other places followed.”
Barrett said RGGI took seven years to get off the ground and called transportation “a harder nut to crack” than power generation. He said Massachusetts should be prepared to pursue carbon fees or carbon taxes on its own if a year passes with no regional agreement. He said specific goals should be set both for reducing emissions and spending the proceeds.
“Money raised by carbon-pricing transportation is broad-based revenue, so discussions on how to refund it or spend it should be wide-ranging. Environmental programs deserve consideration, but so do public transit and even public schools,” he said.