NECEC Clean Transportation Innovation Summit Gives Insights on TCI Regional Program

On March 28, NECEC hosted a Clean Transportation Innovation Summit, bringing together a range of experts to discuss what many consider to be one of our greatest climate challenges (and opportunities): transportation related carbon emissions. Although transportation has witnessed some climate successes with the advancement of electric vehicles (EVs) and EV infrastructure, the numbers tell us we still have a long way to go - transportation accounts for 30% of all greenhouse gas (GHG) emissions in the U.S. and 40% in Massachusetts.

The question of the day was simply “How do we address our transportation climate emissions?” It was clear from all of the speakers that there are valuable policy lessons from our efforts to decarbonize our electric power system. Indeed, similar to the way the Regional Greenhouse Gas Initiative (RGGI) kickstarted the drive to deploy renewables, a regional “cap and invest” program is likely to ramp up progress on reducing emissions from transportation.

The effort to develop a regional transportation emissions program is currently being driven by the Transportation and Climate Initiative (TCI), which is a regional collaboration of 12 Northeast and Mid-Atlantic states and the District of Columbia. The group seeks to “improve transportation, develop the clean energy economy and reduce carbon emissions from the transportation sector.” Within the TCI, a subgroup of nine states and DC have committed to designing a regional approach to capping transportation GHGs.

Like RGGI, the TCI program at its core will be a “cap and trade” or “cap and invest” program where emissions limits are established and tightened over time. Regulated entities will purchase GHG allowances through an auction and the proceeds are then reinvested to spur new technologies and business models resulting in lower compliance costs. According to the TCI and experts at the NECEC Summit, there are several guiding principles for the program:

  • Start with science-based targets to establish goals
  • Use market mechanisms to drive the most efficient solutions
  • Focus on both impacts and opportunities for moderate and low income communities
  • Strive for simplicity and transparency

The experts at the NECEC Summit, also identified other insights as to how the program might look, the challenges that need to be addressed and the likely timeline for implementation:

Regulated Entities: One of the first questions to address: “Who are the regulated entities?” Nancy Seidman from the Regulatory Assistance Project explained that it would be impractical to regulate thousands of retail fuel outlets, making “Prime Suppliers” the most likely to be regulated. Essentially, these are wholesale companies that are bringing fuel into the market. There are about 100 Prime Suppliers in the Northeast, which means fewer regulated entities than RGGI. Hopefully, this makes the program a bit simpler to administer.

Timing: RGGI took two years to design and three subsequent years to enact enabling legislation and regulatory rule making. Experience with RGGI could speed up the design process, but it will be difficult to significantly shorten the time required for the statutory and regulatory changes. So even if the TCI meets its stated goal of a 2019 final program design, it will likely be another two years before it takes effect.

Stakeholders: Ken Kimmel, President of the Union of Concerned Scientists, explained that the politics are still developing. Utilities in the Northeast have been supportive as transportation electrification meets their business interests. Businesses in general are likely to be supportive as the proceeds benefit public transportation, which is a priority for many companies with large numbers of commuting employees. However, environmental justice advocates may see this as an additional cost that low income communities cannot afford, and we'll need to work together to come up with inclusive solutions, acknowledging the associated health and economic benefits.

Flexibility for States: There was unanimous agreement amongst panelists that the regional program should set the broader emissions goals but then allow states the flexibility to implement their own programs to achieve those goals.

Data on Fuel Sales: The existing data that we have today will need to be improved for the program to be implemented efficiently and accurately. Nancy Seidman posited that EIA data is only a starting place and will need to be trued-up against other data sources like state fuel taxes.

Proceeds: Rebecca Davis from the Metropolitan Area Planning Council and Karen Glitman from the Center for Sustainable Energy added to Ken and Nancy’s insights and identified several guidelines for the best way to invest the proceeds from the auction:

  • Maximize environmental, economic, social, and public health benefits
  • Focus on programs that have the most impact on lowering emissions
  • Should make our transportation systems more resilient

Economic Opportunity: It was anticipated that similar to RGGI, the program will drive ancillary economic benefits, ranging from pilots and demonstrations to incentives that will accelerate the deployment of new technologies. In turn this should drive private sector investments into innovation resulting in employment opportunities for tech workers to blue collar infrastructure. Ultimately, much of the money that we currently export out of state to purchase fuels will more likely stay within the local economy.

In conclusion, we learned that RGGI can give us many insights into shortening the implementation timeline and pursuing strategies that will enhance the likelihood of success, such as thinking through the impacts and opportunities for moderate and low income communities. The only thing we seem to be missing at this point is a clever acronym for the program!

Further Reading: Reducing Transportation Emissions in the Northeast and Mid-Atlantic, Georgetown Climate Center

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Jim Cabot

Jim is President of Cabot Strategies.