Is It A Plan To Fight Climate Change Or A Gas Tax? TCI Faces Pushback
In the annals of Connecticut’s legislative brawls, this one has the makings of tolls 2.0.
The new transportation effort that is grazing the guardrails is the Transportation and Climate Initiative, TCI. It’s a climate change-combating concept that seeks to replicate through the motor vehicle sector what the Regional Greenhouse Gas Initiative (RGGI) accomplished through the electric power sector — cutting greenhouse gases and other emissions while raising money to cycle funds back into related climate change programs. In the case of TCI, it could also cycle funds into the state’s dwindling transportation fund.
TCI is envisioned as a cap-and-invest program for motor vehicles, just like RGGI is for power plants. Both essentially put a price on carbon pollution to incentivize using less of whatever is producing that pollution. In RGGI, for the right to pollute above a set cap that goes down over time, power plant owners buy emission allowances from their states through quarterly auctions. The states get the money, most of which is supposed to be invested in consumer benefits such as energy efficiency programs that help lower energy use further.
Only the broad outlines of TCI exist at this point. Enabling legislation needed to start the process of designing an actual plan, specific for Connecticut, has been hit with pushback rarely seen in Connecticut on matters related to climate change. Normally bipartisan affairs, this measure made it through the environment committee on a party-line vote. And full-bore PR campaigns by supporters and opponents can make it tough to tell if the two sides are even talking about the same bill.
“Stop the gas tax” is the GOP and fossil fuel-related industries’ high-octane approach — focusing solely on the likelihood that TCI will cause gas prices to increase. It poses an arguably Trumpian-tactic that TCI supporters — who have been working toward this for more than a decade — have had to counter with less headline-grabbing explanations and decidedly lower-key outreach.
“They’re coming after the middle class wallet,” proclaimed Senate Republican Leader Kevin Kelly of Stratford at a kickoff event last month during which the words “climate change” were uttered precisely once — though not by any of the legislators in attendance.
“Any time government puts their hand in our wallet, it’s a tax,” Kelly said.
“It’s not a tax. Categorically, it’s not tax,” said James Bradbury, mitigation program director at the Georgetown Climate Center, which has acted as TCI’s facilitator since 2010 when 11 states from Maine to Maryland plus the District of Columbia signed the initial declaration of intent. Republican M. Jodi Rell was governor at the time. Virginia and North Carolina have since joined.
“It’s an environmental program that is first and foremost designed to reduce emissions,” Bradbury said. “It’s convenient for the opposition to call anything they don’t like a tax.”
But proponents have had to wind their way through the reality that gas prices are expected to rise about 5 cents a gallon when TCI is slated to take effect in 2023. The increase is capped at 9 cents, which has not stopped opponents from seizing on a study by Tufts University — now discounted by some, including the author himself — that gas prices could rise by 38 cents a gallon.
Opponents have also seized on the fact that of the 14 jurisdictions that have been working through the development of TCI, only four — Connecticut, Massachusetts, Rhode Island and the District of Columbia — signed the memorandum in December to move into the final stage, though all the remaining states say they are working toward that. Those three New England states account for three-quarters of the region’s motor vehicle emissions.
“You counter it with the facts,” said Charles Rothenberger, climate and energy attorney at Save the Sound. “I think one sign of the desperation of the opposition is that they’re really resorting now to things that are factually untrue. A less polite person would call them lies.”
Supporters point out that gas prices tend to fluctuate wildly in the best of times due to standard market forces. For instance, they plunged at the start of the pandemic and now have gone back up by almost $1, so 5 cents due to TCI would be negligible.
“Fundamentally, what this policy is is a cap on pollution that comes out of motor vehicle tailpipes,” Rothenberger said. “It’s that simple.”
Many moving parts
Coupled with plunging natural gas prices, RGGI was extremely successful and has all but eliminated coal and oil power plants in New England and provided billions of dollars to all the participating states, mostly for energy-efficiency measures to help further reduce the need for electricity.
But TCI has more moving parts.
In TCI, the cost of the carbon will be paid by large suppliers of transportation fuels — gasoline and on-road diesel — at the wholesale level. In Connecticut alone, it’s estimated those payments will bring in $89 million in 2023, increasing to as much as $117 million in 2032. Just as ratepayers picked up some of the cost under RGGI, consumers likely will pick up some of it under TCI — the per-gallon price increase. It’s not a tax.
But TCI deals with a more complicated sector than RGGI. Motor vehicles cut across every swath and socio-economic sector of life with impacts that are uneven. For instance, low-income people driving older, less-efficient vehicles would likely get hit harder at the pump, as would rural residents and others who have no public transit options to help defray costs. Wealthier people with newer, more efficient or even electric vehicles would obviously feel it less.
The regional structure for all the states — first released in 2019 — requires that at least 35% of each state’s auction proceeds from selling emissions allowances be reinvested in those communities and/or to the people who typically suffer disproportionately from the impacts of climate change and pollution in addition to those with limited transportation options.
TCI states use that broad structure to tailor the programs to their particular needs. Just a couple of those specific adjustments are in Connecticut’s enabling legislation, including pushing that percentage of the auction proceeds going to the environmental justice community up to 50%, with specific language designating it for overburdened and underserved people and areas — and taking great pains to structure the required equity advisory committee that helps design the state plan to represent as many constituencies as possible.
Katie Dykes, commissioner of the Department of Energy and Environmental Protection, a champion of TCI, has hit the road with Garrett Eucalitto, the state’s deputy commissioner of transportation, to sell the program to skeptical residents and lawmakers.
“It has all the hallmarks of climate programs that have proven successful in our region,” Dykes pointed out. “It’s market-based; it’s regional in scope; it’s ambitious. It’s tackling emissions in a sector that hasn’t been addressed yet. And it’s going to drive billions of dollars in investments in our communities.”
She points out that while climate change mitigation is the goal — since it will lower motor vehicle emissions broadly, by 26% — it will also provide public health benefits, potentially helping to lower the stubbornly high incidence of asthma in the state.
Last month, the American Lung Association’s annual “State of the Air” report once again found parts of the state among the most polluted in the country. Motor vehicles have for some time now constituted the largest sector of greenhouse gas emissions in the state and the nation, about 40%.
“It is a choice of opponents of this program to ignore those very real impacts and to refuse to propose an alternative solution and to call this a gas tax when in fact this is an incredibly cost-effective solution to address a growing source of emissions in our economy — the transportation sector,” Dykes said.
The opposition to TCI
Republican leaders have piggybacked on the No Tolls CT campaign that’s still around from that fight, drawn in another piece of legislation to lower emissions standards on medium and heavy-duty trucks and posited their notion of a gas tax also being a food tax, even though there’s no indication such a move would do anything to food prices.
They’ve also gotten support from the conservative Yankee Institute for Public Policy. Similar conservative groups are fighting TCI in most of the partnered states. While the funding for the anti-TCI campaigns is not clear, many of the opposition groups receive money at least indirectly from well-known fossil fuel-supporting funders such as the Koch family.
The Yankee Institute is responsible for anti-TCI ads that have run recently on gas pump screens in service stations.
Ken Girardin, the institute’s director of policy and research, is making a tax argument, as are other opponents, but with a twist. He’s calling it a new tax, which he said needs to be approved by the General Assembly. Under the TCI procedure, the actual plan with the price increase that he calls a tax would not go through the legislature.
If the state’s objective is to get people to use less gasoline and diesel fuel, then government should say that, the way it did with tobacco, he said. “Instead we get these euphemisms, he said. “If you want to tax people to change people’s behavior, at least say, ‘We’re going to tax you to change your behavior.’”
He and others also point to RGGI funds that were used to plug budget holes on several occasions as an example of what can go wrong with TCI’s likely similar format.
“It’s another slush fund,” said Michael J. Fox, executive director of the Gasoline and Automotive Service Dealers of America. “I just really find it is — appalling isn’t even enough of a word.”
Calling electric vehicles “good things,” his contention is that a modernized infrastructure and an electric grid to supply it should come first. And to pay for it: “The right way to get revenue is tolls,” he said.
If it’s all about climate, which he doesn’t necessarily agree with, everyone should pay, he said.
“Why are they only doing it through only one industry? If it’s climate, let’s put a 1% tax on everything that everybody buys and it goes into a climate fund.”
House Republican Leader Vincent Candelora, R-North Branford, while publicly making charges at the kick-off event including, “No one in my district is happy about paying another tax under the guise of air pollution control,” and all but admitting that the opposition’s gas tax tactic was chosen because it is “a very third-rail item,” was more subdued one-on-one. The differing interpretations between opponents and supporters, he said, is that the intent is to reduce carbon emissions on the front end. But on the back end, folks are looking at the result of how that’s done.
“I think both sides are right,” he said.
He also contended that TCI is not regional because most states haven’t signed on yet. It puts the burden on states like Connecticut to reduce carbon while the other states “can just be reckless,” he said.
The supporters of TCI
TCI supporters have called out such views as misinformation, which some say is being spread with abandon.
Environment committee Co-Chair Sen. Christine Cohen, D-Guilford, and others called the Republican stance frustrating, noting that TCI has always taken a regional approach and has been bipartisan state-to-state all along.
“Connecticut can’t solve for climate change alone,” she said. “Here we have this fantastic strong regional program that is bipartisan, and we’re getting this pushback.”
Sen. Will Haskell, D-Westport, as the youngest member of the Senate, has been the voice of young adults. He said student groups he talks to are “shocked that this is controversial.”
“It’s clear to me most of my colleagues believe climate change is a problem. The question is whether they believe we ought to do something about it,” he said. “What we’re up against is a campaign of slogans.”
He said if they have a better program or funding idea, he’s happy to hear it. “The answer cannot simply be ‘no,’” he said.
But approving the pending enabling legislation will set in motion a very intense process that will require a great deal more creativity than just getting more EVs on the road and taking the train.
For Rep. Maria Horn, D-Salisbury, an Environment Committee member, backing the legislation meant getting assurances that the needs of her sprawling rural district in the Northwest corner, which is almost entirely car-dependent with no public transit to speak of, would be considered.
“This is a tough issue for us in rural areas,” she said. “Your gas prices will go up. We will pay the cost but won’t see those benefits directly.”
She is keen on solutions such as using TCI funds for better broadband — something her district struggles with as well. It would give many residents a way to work from home and avoid their cars altogether, at least part of the time.
“We’ve got to acknowledge that this is going to be an increase in gas cost and then weigh that as investment. I think of it as an infrastructure investment.”
In the meantime, a large coalition of supporting groups including environmental and social justice advocates such as Transport Hartford/Center for Latino Progress has been quietly fanning out around the state over the last couple of years, educating those likely to feel most of the impacts and picking up support in some unlikely places. The group has its own social equity coalition and a host of major corporations working through Ceres, which works with investors on multiple sustainability issues.
“The way the opposition wins is by scare tactics,” said Amy McLean, Acadia Center’s Connecticut director. “The way we win is putting together constituencies.”
Among their biggest challenges is that there are almost no examples to show how a TCI concept has worked elsewhere. Except California.
The benefits of California’s program
California has a cap-and-trade program, a slightly different animal than cap-and-invest, like RGGI and TCI. It covers the power and transportation sectors — about 75% of emissions overall, although transportation went into effect in 2015, a few years after the power portion. There really hasn’t been time to crunch the transportation data or separate it from the power portion in terms of the emissions impact. The program also started as the San Onofre Nuclear plants shut down, resulting in an emissions increase due to greater use of natural gas at the time.
But Climate-xchange, a research and information group that helps states transition away from fossil fuel, has researched the impacts of California’s cap-and-trade, pointing out that the benefits greatly outweigh the costs in terms of investments. The report also says that TCI states can expect equally robust financial benefits and avoid premature deaths.
The 2020 annual report on California Climate Investments Using Cap-and-Trade Auction Proceeds lists pages of programs that have benefited, many directly from the transportation sector. California’s experience with how to get those revenues to the folks who need them most is instructive and goes beyond just getting people to buy EVs.
Fact sheets compiled by the Greenlining Institute include giving people money toward emissions repairs for their cars, new or used hybrids or plug-in vehicles, public transit passes worth as much as $4,500, providing hundreds of vanpools for agricultural workers in that state’s large farming areas, setting up community air pollution monitoring systems and planting trees in areas disproportionately impacted by air pollution. The group also developed a Clean Mobility Equity Playbook based on California’s experience.
Dykes will rattle off a laundry list of potential uses of the proceeds from TCI: EV rebates, EV charging systems, electrifying school buses and transit buses, expanding public transportation to rural communities, transit-oriented development projects, smarter solutions like traffic signals that help reduce idling, bike trails and walking trails to help people get out of their cars, and more robust broadband service so people can stay connected without having to drive to an office if that’s an option.
With the Biden administration likely to provide funding for cleaner transportation, the revenues from TCI could be critical to providing the matching funds that are often needed to get government grants.
Electrifying fleet vehicles is getting some traction from both sides of the aisle. Eucalitto of DOT said fleets tend to have the most miles traveled, and with central charging points, they often don’t require the EV charging infrastructure that personal vehicles do.
“It’s an opportunity to lower costs for businesses,” he said. “Studies have shown when you target those high-mileage fleets, that’s where you get your biggest bang for your buck.”
Eucalitto said he’s been in touch with California officials on their programs as well.
Despite the examples from California, TCI opponents claim that transportation initiatives don’t work and Connecticut won’t meet its goals.
Danny Cullenward essentially says it depends. He is the policy director for CarbonPlan, an independent non-profit climate research organization, an expert in climate policy and carbon markets, in addition to being a lawyer teaching at Stanford.
He admits his views are somewhat oppositional after watching the California program move along. He says the kind of carbon pricing that TCI, like RGGI, is talking about is really pretty low.
“I’m in the camp that says this stuff is way too hard to get right to do anything other than help a little on the margins, which isn’t to say it’s not good,” he said. “These programs aren’t nearly as big as people talk about, but they’re also sometimes pretty good at their modest small scale.
“The fears are overblown. The benefits are typically overblown, too. But they’re there. They’re real. Everything’s just smaller than people make it out to be,” he said.
Cullenward suggests that a lot of the progress should come from local efforts like urban planning, bikeable areas, local zoning, permitting and planning changes that support the large-scale clean and lower carbon transportation policies and goals.
The biggest issue he said is the politics, something Connecticut is seeing firsthand.
“I think in some ways we’ve been emphasizing some of the wrong strategies. This is a good idea,” he said of carbon pricing programs like TCI. “Will the politics be feasible? I don’t know. It’s about the worst political recipe I can come up with. But it’s a good thing if you all get it done.”