Over half of our nation’s carbon emissions are produced by the electricity and transportation sectors.
In the Northeast and Mid-Atlantic, nine states have worked collaboratively to reduce emissions in generation through the Regional Greenhouse Gas Initiative, now in its 10th year. With a modest impact on consumer bills, RGGI has raised well over $2 billion to invest in energy efficiency, clean energy, and other programs, produced net economic benefits of $4 billion, created 44,000 jobs, and reduced emissions by over 50 percent.
A number of states are looking to build on RGGI’s success through a first-of-its kind emissions allowance program for transportation, responsible for over 40 percent of carbon emissions in the Northeast and Mid-Atlantic. Collaborating through the Transportation Climate Initiative, the states include Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C. New York is actively participating and might officially join later this year.
TCI states could raise a meaningful amount of revenue for investment in clean transportation by requiring wholesale gasoline and diesel distributors to purchase allowances for the embedded emissions of the vehicle fuels they sell in participating states. Even a minimal fee in line with natural price variability would raise a significant amount. As with RGGI, these targeted investments could reduce emissions through investments accelerating deployment of electric vehicles and supporting infrastructure as well as electrifying public transit and other fleets, such as school buses.
Of course, the cost-effectiveness of the TCI program, like RGGI, will depend on how the resulting funds are invested. The regional program’s cap-and-invest structure resulted in economic benefits that well exceeded costs, even before accounting for the significant health and climate benefits of the emissions reductions themselves. A cost-effective program will ensure maximum investment where it is needed the most. Given the scale of the climate challenge, every dollar must be spent wisely to leverage further investment in safe, reliable, and clean transportation for everyone.
Such investments would (and should) vary according to local needs; a notable characteristic of the TCI program is the flexibility it provides for each jurisdiction to focus on programs with the greatest need by the public. Proceeds could be used, for example, on transit and other fleets that bring clean transportation options to low-income and other marginalized communities that may be less able to purchase personal EVs. Further, by cleaning up bus and other depots that tend to concentrate in low-income communities, TCI could have an amplified benefit by improving local air quality. The initiative represents the all-too-rare instance where disadvantaged communities may realize a meaningful share of benefits from clean energy investments.
During 2019, the TCI jurisdictions will dig into policy design, including the identification of regulated entities and fuels and the development of emissions cap levels, monitoring and reporting guidelines, and cost containment and compliance flexibility mechanisms. As with the implementation of RGGI, reaching consensus on many of these issues will be challenging, but is critically important for the region. Given the continued lack of federal action on climate issues, the leadership of the states in pursuing innovative emissions reductions programs like TCI and RGGI is essential in the fight to protect our environment.
TCI and RGGI are notable for another reason: they are examples of states coming together on a regional basis to address a problem. Like electrons in the power grid, people using the nation’s transportation infrastructure cross local and state lines without regard to boundaries. Indeed, the very purpose of a vibrant transportation system is to allow the smooth movement of people and goods across large areas. A system wherein multiple modes of clean transportation “work” across state boundaries is just as essential as a reliable, resilient, and clean power system.
It is exciting to see states bring to the transportation sector the creativity they have used to achieve emissions reductions in the electricity sector. As other jurisdictions consider opportunities to address our climate challenges, they should look to the regional, market-based approaches being used in the Northeast and Mid-Atlantic states – vibrant examples of how to do things right.
About the author: Kathleen BarrÃ³n is senior vice president, government & regulatory affairs & public policy, at Exelon Corp.