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The coalition of eastern states developing a program to reduce carbon emissions from transportation has decided to focus on motor gasoline and on-road diesel, two sources of pollution that account for over 80% of carbon emissions in the region.
The states are also eyeing a 10-year horizon for the program that will include a cap on emissions from both sources of motor fuel that begins in early 2022 and ratchets down every year through 2032, according to state energy officials and advocates.
The Transportation Climate Initiative, which is a multi-state coalition working to build a program to reduce carbon pollution from the transportation sector, released a draft framework of the program Tuesday.
It's the first in a series of steps that the coalition hopes will convince states to sign an agreement by spring 2020. An emissions cap is still being negotiated, making it too soon to estimate how much revenue the state will take in and how much more consumers could expect to pay at the pump.
Gov. Charlie Baker in late 2018 committed Massachusetts to the TCI, joining 11 other states and the District of Columbia in an effort to tackle climate change throughout the region.
Modeled on the Regional Greenhouse Gas Initiative that targeted emissions from power plants, TCI states are focused on developing a cap-and-invest program to drive down emissions from cars and trucks and facilitate the transition to a low-carbon transportation system.
The states currently involved are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.
Mass. Energy and Environmental Affairs Secretary Kathleen Theoharides said the framework covers all fuel that's on the roads, but not jet fuel or boat fuel.
State fuel suppliers who transport fuel across state lines will hold and trade emission allowances based on cap levels that still must be set. Theoharides said there are hundreds of these suppliers across the 13 TCI jurisdictions.
"Fuel suppliers would have to report their emissions and their compliance would be calculated based on how much emissions their fuel would produce when combusted," Theoharides said.
While states are still studying and negotiating the level for an emission cap, the secretary said the intention is for the cap to decline every year. The proposed cap will be announced as part of a draft memorandum of understanding in December.
Where the cap is set and how fast it declines will signal how aggressively states want to reducing emissions, how much money the sale of allowances will generate for states to invest in low-carbon transportation options, and how much more consumers will end up paying for gas.
The state chapter of the National Federation of Independent Business pointed to a study that found a similar cap-and-trade program in California targeting refinery emissions added 13 to 14 cents to a gallon of gas.
"Will (Massachusetts) suffer the same fate?" the group asked on Twitter.
Theoharides said that the difference between TCI and a gas tax is the point of regulation and the market element of the program, which will allow carbon allowances to be auctioned and traded by suppliers.
The Baker administration has estimated that the sale of allowances could generate between $150 million to $500 million a year for Massachusetts.
"One of the two most significant remaining questions is what is that cap level and will it really be aligned with the climate crisis we're facing because we are running out of time to take significant action," said Jordan Stutt, carbon programs director at the Acadia Center. "We don't have any more time for baby steps."
Stutt said the framework moves the TCI states in a "very positive direction."
"It's not easy to get such a broad group of states with unique transportation challenges and unique politics to agree," he said.
The coalition plans to seek feedback over the coming months on the framework as it finalizes a draft memorandum of understanding to be released in December, which will also include more details on state-based programs to spend TCI funds.
There will be additional time for public input before a final memo is produced by spring for states to sign, and states that need legislative approval to participate can pursue that as the formal rulemaking process begins.
The start date for the program would be early 2022.
Asked if the Legislature in Massachusetts would need to sign off on the state's final participation, Theoharides said the administration was still looking into it.
"We believe we have significant authority under the Global Warming Solutions Act," she said, referring to a 2008 state law.
The framework, according to Theohardies, also highlights a recognition among the states that equity and community engagement is vital to the success of the program, and states must invest in transportation options and other programming in communities that have been disproportionately impacted by poor air quality or lack of transit options.
"It's really important that this is a regional effort because the scale of climate change is bigger than any one state, but it's also important that TCI works for individual communities," Theroharides said.
Transportation for Massachusetts Director Chris Dempsey called the framework "an important milestone" in the process that keeps the state on track for an agreement that will deliver needed revenue for investments in clean, public transportation.
"We want to make sure this is a strong, robust and equitable program," Dempsey said.
Environmental League of Massachusetts Vice President Nancy Goodman also said she was "heartened" by the draft framework, and would be looking for the states to set an aggressive emissions cap.
"This regional effort to price carbon has great promise for addressing emissions from transportation. Collectively, the states have been working hard to meet the year-end deadline to develop a program. This is a positive step along that path. We look forward to the next public announcement and urge the states to be bold to match the urgency of the climate crisis," Goodman said.
Associated Industries of Massachusetts, one of the state's largest business groups, also said it supports the regional approach "as outlined" as an effective way to reduce greenhous gas emissions.
"We intend to work with the administration on state-specific initiatives and investments that maximize potential benefits to the residents of Massachusetts while at the same time reducing greenhouse gases in the most cost-effective manner possible," said Bob Rio, AIM's senior vice president of government affairs.
In legislation filed by governor in July, Baker proposed to earmark half of the revenue Massachusetts receives through TCI for the MBTA.
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