Coming Your Way (Relatively) Soon: A Carbon Fee on Transportation Fuels

The 12 states and the District of Columbia participating in the Transportation and Climate Initiative announced today the release of a new draft Memorandum of Understanding that outlines the framework of what they are calling a cap and invest program for cars and trucks.  In short, it will require persons selling gasoline and on-road diesel at the wholesale level to hold allowances – which will be auctioned – in order to continue to sell such on-road fuels.  Think of it as RGGI for cars.

Given continued progress at decarbonizing our electricity supply, transportation is the next big hurdle.  A lot remains to be done before a program is in place (the MOU states that the first compliance period will “commence as early as January 1, 2022″).  Nonetheless, this is a significant accomplishment.  Getting a regional transportation climate program off the ground will be a major success.

Like the early Wright Brothers’ efforts, keeping it off the ground will be the next major success.  And that’s the big dilemma faced by those charged with making TCI work.  Just last week, MA Transportation Secretary Stephanie Pollack stated that the administration does not expect the major reductions in transportation-related GHG emissions to come from the carbon fee.  Instead, the bulk of those reductions will come from the investments in a clean 21st Century transportation system made possible by the revenue from the fees.  However, that’s a long-term project and we’re not going to see the return on those investments for a number of years.

In addition – and here’s the real dilemma – if the fee is small, then the program won’t generate enough revenue to make the necessary investments.  On the other hand, if the fee is commensurate with the size of the problem, then the public might revolt, particularly given that the positive results won’t be seen for some years.

Getting that juggling act right is the big task before the TCI states (and DC).  It won’t be easy and I wish them well.  Of course, the next job will be to tackle building GHG emissions.  That might just make TCI seem like a piece of cake!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.