What is TCI and How Will It Help the Transportation Problem?
| December 2, 2019
By: Brooke Thomson
Massachusetts lawmakers continue to debate the best method of paying to repair and upgrade the state’s overburdened transportation system.
Associated Industries of Massachusetts and its 3,500 member employers oppose widespread calls to raise the gasoline tax. AIM instead favors a gasoline-fee increase through a nascent multi-state regional cap-and-invest program called the Transportation and Climate Initiative (TCI).
What is TCI and why is it better than a gas tax?
TCI establishes a regional (currently 12 states plus the District of Columbia) cap on carbon emissions while auctioning emissions allowances. Proceeds from the TCI fee would be sent back to each participating state to incent fuel users not to pay the TCI fee. A gas tax, by contrast, often generates revenue for transportation projects that may not reduce greenhouse gas emissions.
Think of TCI as an energy efficiency program for transportation.
Massachusetts has maintained a successful energy efficiency initiative during the past decade for the electric generation and building sectors. Many AIM members have been able to utilize generous incentives to install solar panels or perform energy efficiency upgrades. The electric generation sector is on track to be virtually carbon free by 2050.
Energy efficiency has been a key result of the Global Warming Solutions Act (GWSA) signed by Governor Deval Patrick in 2008. GWSA requires an 80 percent reduction in carbon emissions from all sectors of the Massachusetts economy – electric generation, buildings (businesses and residential), and transportation.
Transportation is now the largest generator of carbon emissions, producing nearly 45 percent of the total and increasing as other sectors decrease. The only option for reducing greenhouse gases in the transportation sector is either to ban cars or switch to low-carbon transportation alternatives, including electric vehicles and better and more accessible public transit.
TCI will do this by allowing states to develop programs that encourage the purchase of electric and low-carbon emissions vehicles (fleets, buses, and passenger vehicles and rail) and upgrades to the electric-charging infrastructure. It will also stimulate investments in public transportation (including much-ignored areas outside Boston).
How much will TCI add to the price of a gallon of fuel? The best guess is about 10 cents per gallon, but it’s hard to estimate because prices under TCI will be set at a private auction that won’t begin until 2021 or 2022. The TCI region will establish an overall cap on carbon emissions – there is no set amount as a per-gallon fee.
A gas tax is regressive and anti-competitive since it falls most heavily on people outside developed urban areas who have no option other than to drive. Gas-tax increases drive consumers over the border for cheaper fuel. And it raises money that the Baker administration says the commonwealth does not need now.
If your company uses large amounts of gasoline or diesel fuel, a gas tax or TCI fee could harm you. But you are also the perfect customer for rebates using TCI funds because the programs can make it cost effective to purchase a low- or no-carbon vehicle, just like programs that make it cost-effective to install solar energy or install new equipment.
Governor Charlie Baker, Secretary of Transportation Stephanie Pollack and Secretary of Energy and Environment Katie Theoharides plan to lead a briefing for senior business executives on TCI on December 11 in Boston. CEOs interested in attending should contact AIM for more information.
AIM will work throughout the process to make sure that the right incentives and programs are implemented that will save money for drivers and companies that switch to electric vehicles while reducing greenhouse gases in the transportation sector as the law requires. Those are all things a gas tax won’t do.