Mass., Conn., RI, DC sign transportation climate pact

MASSACHUSETTS, CONNECTICUT, Rhode Island, and the District of Columbia signed on to a pact Monday to put a price on the carbon contained in vehicle fuels sold within their borders and leverage the revenues gained and the resulting higher price of gasoline to cut transportation emissions 26 percent by 2032.

The group of initial participants is far smaller than Gov. Charlie Baker had been hoping for, but officials said other states in New England and down the East Coast have committed to staying at the table and possibly joining the so-called Transportation Climate Initiative in the future.

The emission reduction goal released Monday is higher than states had been talking about a year ago, but the forecasted impact on gas prices is expected to be smaller. A year ago the Transportation Climate Initiative looked at carbon dioxide cap reductions ranging from 20 to 25 percent by 2032, with gas prices rising 5 to 17 cents a gallon in 2022 depending on the size of the cap reduction. Now officials are calling for a 30 percent cap reduction (which translates into a 26 percent reduction in actual pollution) but saying gasoline prices will rise only 5 cents a gallon – 9 cents at the most – in 2022.

Katie Theoharides, the Massachusetts secretary of energy and environmental affairs, said there are price protections built into the current proposal that didn’t exist with the earlier versions.

Theoharides said Massachusetts needs a program like the transportation climate initiative if it is going to have a chance of reaching its goal of net zero emissions in the state by 2050. “We can’t get there without a program like this,” she said.

The nuts and bolts of the program are still being worked out, but it would require fuel wholesalers to purchase at auctions allowances permitting them to sell gasoline in Massachusetts and the other participating states. Under the memorandum of understanding issued Monday, wholesalers would begin a walk-through of the process in 2022 and begin paying for the allowances in 2023.

Massachusetts will start with a base for carbon dioxide transportation emissions of nearly 24.5 million metric tons in 2023 and that level will be ratcheted back steadily until the level is cut 30 percent by 2032. Georgetown University, which modeled the impact of the Transportation Climate Initiative, is projecting allowance prices of $6.60 per metric ton of carbon dioxide in 2023, rising to $12.50 in 2032. If auction prices fall below $6.50 per metric ton, the cap could be tightened by 10 percent to take advantage of the opportunity to reduce emissions at a lower-than-expected cost. If allowance prices rise above $12 per metric ton, additional allowances could be issued equal to 10 percent of the cap to mitigate higher-than-expected prices.

The price protection helps lower the political risk of the climate initiative for Baker. He has opposed any increase in the state gasoline tax, yet many Massachusetts lawmakers, including Rep. William Straus of Mattapoisett, the House chair of the Transportation Committee, view the impact of the climate initiative as similar to a gas tax increase because it results in higher gasoline prices.

At a State House press conference, Baker said the advantage of the transportation climate initiative is its regional approach and the revenues the initiative will generate that can be plowed back into programs further reducing emissions.

Baker and his aides said the three southern New England states account for 73 percent of total emissions in New England, 76 percent of vehicles, and 70 to 80 percent of the region’s gross domestic product.

The initiative is expected to bring $130 million a year into the state’s coffers. Of that total, Baker has indicated about half would go to public transit. The memorandum signed on Monday by the three states and the District of Columbia said a minimum of 35 percent of the funds would go to projects in communities underserved by the transportation system and overburdened by pollution.

Straus said his reading of the state constitution suggests all of the money has to go into the state’s transportation trust fund. He indicated on Monday he might support legislation requiring that if the administration acts as if the money can be spent at its own discretion.

“If legislation would help focus the administration focus back to the constitution, I guess that is an option,” he said.

The states continuing to participate in deliberations on the Transportation Climate Initiative but on the sidelines for now are Virginia, Maryland, New York, New Jersey, Pennsylvania, Delaware, Vermont, and North Carolina. (Officials said New York was mistakenly omitted from the list earlier Monday but was added later.) Maine and New Hampshire appear to have severed ties with the initiative.

Theoharides downplayed the relatively low initial participation rate, saying it is not uncommon for environmental initiatives to start small and grow support over time. “These things build on the momentum they create,” she said.

Baker adopted a similar message. “You’ve got to start somewhere,” he said. “The price of doing nothing is very big.”