Hughes: Where TCI came from and where it can take us

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Hughes: Where TCI came from and where it can take us

Sun, 02/16/2020 - 3:02am -- tim

by Tom Hughes Later this spring, Governor Phil Scott will have the opportunity to strengthen the economy, promote equity, and protect the environment by joining the Transportation and Climate Initiative (TCI). If Gov. Scott refuses to join our regional neighbors in the fight against climate pollution, it is very likely that Vermonters will pay higher prices for fossil fuels without receiving any of TCI’s investment benefits.

HISTORY & CONTEXT

In 2008, then-Senator Scott voted to authorize Vermont’s governor – whomever he or she might be – to advocate for a regional carbon trading program for transportation fuels.[1]

In the decade since, a bipartisan group of administration officials from Maine to Virginia have been designing a cap-and-invest program for transportation fuels modeled on the Regional Greenhouse Gas Initiative (RGGI).

RGGI was developed as a collaboration between states to reduce climate pollution from coal-fired electric plants. Republican Gov. Jim Douglas led the RGGI negotiations and signed Vermont onto the initiative – and it’s working. In the decade since its launch, CO2 emissions from power plants in the RGGI states have fallen 90% faster than in the rest of country, while economic growth in the region has outpaced the rest of the country by 31%.

Since taking office, Gov. Scott has maintained Vermont’s seat at the TCI negotiating table. In fact, up to this point, the governor and his team have been the only Vermonters at the table.

The draft TCI proposal released late last year is a product of Gov. Scott and the other governors. It proposes a) limiting the flow of fossil fuels into the region, b) requiring fossil fuel companies to purchase allowances for the pollution they cause, and c) using the proceeds to modernize the region’s transportation systems. Their memorandum of understanding makes clear that governors will establish the limits for fuel distributors, and then individual state legislatures will craft the benefits that best meet their state’s needs.[2]

What are those benefits?

A STRONGER ECONOMY

From a dollars in/dollars out perspective, Vermonters will receive back more from TCI than they put in.

Much like hotel stays and restaurant meals, out-of-state travelers purchase a significant share of the transportation fuels sold in Vermont. The Agency of Commerce and Community Development estimates that 25% of transportation fuels are sold to out-of-staters.[3]

If – as is currently contemplated – TCI funds are returned to the state in proportion to the gallons of fuel sold, for every dollar Vermonters pay in pollution allowances the state will receive as much as $1.33 for investments.

TCI is a smart way to leverage additional funds for Vermont. Even better – according to TCI researchers, the more aggressive the governors are at limiting fossil fuels, the more it will grow our economy.[4]

On the flip side, there is economic risk if Gov. Scott refuses to join TCI. Like RGGI, most of the facilities that will have to purchase allowances are located outside of Vermont and, according to Vermont’s lead TCI negotiator, it is “possible and very likely” that these companies will pass on their compliance costs to Vermonters whether or not the state participates.[5] So, to take advantage of TCI’s economic benefits and avoid a situation where Vermonters are paying for modern infrastructure in New York and Newport News, Gov. Scott must join the program.

A CLEANER ENVIRONMENT

TCI will reduce pollution – and that will save lives and money.

The Vermont Department of Health recently analyzed what meeting the transportation goals of the Comprehensive Energy Plan would mean by 2050.[6] The benefits include:

  • 2,000 lives saved due to cleaner air and safer roads and other benefits; and
  • $1.1 billion in costs avoided from reduced health care costs and increased productivity.

EQUITY FOR LOW-INCOME AND RURAL VERMONTERS

A critical component of TCI is that it provides resources to address inequities in Vermonters’ energy burdens.

Low-income Vermonters pay a higher percentage of their incomes on transportation than their wealthier neighbors. And rural Vermonters have higher transportation burdens than their Chittenden County friends and family.[7]

The state can and should address some of this inequity by targeting TCI benefits to low-income and rural Vermonters.

Investments can take the form of infrastructure and public transit improvements: things like rural van lines that cover more territory and travel more frequently, expanded park & ride lots, EV charging stations at every general store, bike lanes, sidewalks, and commuter rail.

Investments could be in the form of incentives, rebates, or targeted tax credits. Think free bus passes, expanding the Energy Assistance Program that lowers the cost of electricity for low-income families, tiered incentives for electric vehicles so that those with the least get the most help, or an increase in the Earned Income Tax Credit which benefits over 40,000 working Vermont families.

TCI revenues could also be used for dividends or “cash-back” payments that could go directly to households based on need. Several Canadians provinces adopted the carbon dividend model last year.

Of course, policymakers could mix and match TCI proceeds. Some could be used for infrastructure, some for incentives, and some for direct payments to low-income households.

And, it’s important to note, the financial benefits of low-carbon transportation accrue fastest to Vermonters who currently drive the longest distances – they’re the ones with the most to save, and the most to gain.[8]

CONCLUSION

The economic, equity, and environmental benefits of TCI far outweigh its costs. In fact, refusing to join TCI means Vermonters will likely pay its costs without receiving any of its benefits. Gov. Scott should honor the commitments he has made to reduce greenhouse gas pollution by joining the Transportation and Climate Initiative.

Tom Hughes is the Energy Independent Vermont campaign coordinator at the Vermont Public Interest Research Group (VPIRG).