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Three US East Coast states, DC approve pact to cut auto emissions

22 December 2020

Three US states and the District of Columbia signed up for a first-of-a-kind regional cap-and-trade program to cut greenhouse emissions from vehicles, with nine more states across the Northeast and Mid-Atlantic pledging to soon follow suit despite concerns among some governors about the impact on gasoline prices.

In a breakthrough for an initiative that has been in the works for several years, the governors of Massachusetts, Connecticut and Rhode Island, and the mayor of the District of Columbia said they would become the first members of the Transportation & Climate Initiative (TCI) program, which is scheduled to become effective in 2022.

Meanwhile, New Jersey, New York, Vermont, Delaware, Maine, Pennsylvania, Maryland, North Carolina and Virginia are in negotiations to eventually sign up. The nine states issued a statement 21 December pledging to be involved in the development of the program and to conduct public outreach about the market's benefits and potential impacts.

The program will require car and truck fuel providers to buy allowances to meet a gradually tightening emissions "cap" that is expected to cut greenhouse gas pollution by 25% by 2032 compared with 2022 levels. The system is designed to give polluters a financial incentive to eventually replace diesel and gasoline with cleaner fuels such as hydrogen, biofuels, or electricity.

The auctioning and sale of allowances is expected to generate $300 million annu­ally for the states to invest in public transit, electric school buses, electric vehicle charg­ing stations and other clean transportation infrastructure.

A business coalition was launched this fall in support of the cap-and-trade market that includes BP, Shell, Ford and utility owner National Grid — companies that have pledged to reach carbon neu­trality by mid-century.

New Hampshire is still listed as a participating TCI state on the group's website, but Republican New Hampshire Gov. Chris Sununu opted out a year ago, saying his state should not have to pay a "gas tax" to reduce vehicle emissions and pay for alternative fuels transportation infrastructure in neighboring states.

Concerns about gasoline price increases also were voiced in Massachusetts and Vermont in recent months, but the governors of those states decided they would benefit more from being in the market than not.

"By partnering with our neighbor states with which we share tightly connected econo­mies and transportation systems, we can make a more significant impact on climate change while creating jobs and growing the economy as a result," Massachusetts Gov. Charlie Baker (Republican) said 21 December.

Rhode Island Gov. Gina Raimondo (Democrat) said 21 December that TCI will provide $20 million in new revenue for her state to invest in "green" projects.

"Most importantly, it will provide much-needed relief for the urban communities who suffer lifelong health problems as a result of dirty air," she said.

If companies passed on the cost of allow­ances to customers, rather than reducing their carbon output, the anticipated fuel cost would only rise up to 5 cents/gal, said Vicki Arroyo, executive director of the Georgetown Climate Center, which has advocated on behalf of TCI.

While this can have an impact on drivers, "I will say that this is often the variation in price you see from one gas station to another," she noted in an interview 21 December.

Transportation is the largest source of cli­mate-warming pollution on the East Coast and in the US as a whole, accounting for 28% of the country's greenhouse gas emis­sions and as much as 40% in North­east and Mid-Atlantic states. This comes after the U.S. power sector, long the largest carbon polluter, steadily shrank its carbon foot­print over the past decade by switching from coal-fired generation to renewable and natural gas facilities.

All the states expected to participate in the TCI market, except for Pennsylvania, already belong to the decade-old Regional Greenhouse Gas Initiative, which caps emis­sions from the power sector in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. Pennsylvania is crafting rules to join RGGI in 2022.

But while RGGI has faced little contro­versy due to the relatively low-cost emissions reductions it has provided, several states involved in the TCI talks have discussed how a cap on transportation fuel emissions might affect consumers that are already struggling in an economy ravaged by the coronavirus pandemic.

In their statement, the nine prospective TCI states said they will "con­tinue to analyze the long-term impacts of COVID-19 on transportation and pollution and ensure the TCI is designed to boost our economic recovery and facilitate the future of work in a post-pandemic world."

Specifically, they said, the program must achieve equitable outcomes to ensure emission reductions and economic benefits serve "overburdened and underserved" communities.

A recent study from Harvard University's T.H. Chan School of Public Health projected 300 deaths will be avoided every year by 2032 if all states in the region implement the program. That would translate into as much as $3 billion in annual public health and safety benefits, the study found.

Based on original reporting by Karin Rives for The Energy Daily.

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