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9 states and Washington, DC propose regional cap-and-trade for transportation

Nine states and Washington, D.C. signed an agreement to launch a regional, declining cap-and-trade system covering at transportation emissions. The letter of intent comes after a year of six listening sessions held to gather input from stakeholders. If the idea comes to fruition, it will be the regional plan of its kind in the United States, and the second transportation cap-and-trade program after the one California launched in 2013. Money from the program would be reinvested into low-carbon transit.

There is, however, a model for this in the region. In 2003, tired of waiting for federal action on the climate, announced the Regional Greenhouse Gas Initiative. It took six years to launch the RGGI, which focused on power plants. In the nine years since, the RGGI is credited with helping to cut power plant emissions by roughly 40 percent.

The transport sector is the largest source of carbon pollution in the country, and the only sector to see its emissions rise in 2017. For the ten signatories — Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C. — transport emissions account for more than 70 percent of nitrogen oxide emissions and 44 percent of all their greenhouse gas emissions. In context of the entire U.S., the president of Union of Concerned Scientists said, “Were these states a country, it would be the world’s fifth-largest economy, just behind Germany…,” however, these TCI states contribute just five percent of our total energy-related emissions in 2015.

This transportation-focused cap-and-trade system will be nearly twice as large as the RGGI. According to figures from the U.S. Energy Information Administration, power-sector emissions in the RGGI — which doesn’t include Pennsylvania — totaled 75 million tons in 2015. Adding New Jersey and Virginia, the figure that year was 125 million tons. In the nine states and D.C., carbon emissions from transportation sources totaled 251 million tons in 2015.

The initiative is happening under the umbrella of the Transportation and Climate Initiative, a program housed at Georgetown University’s Climate Center, that the nine states and the nation’s capital are members of. All of the details have yet to be decided, including the actual emissions cap, which industry to regulate, and the price of individual allotments.

Separately from the cap-and-trade plans, Massachusetts wants to reduce statewide emissions by 80 percent compared to 1990 levels by 2050. If the cap-and-trade program targeted the fuel industry, a study concluded that a Massachusetts driver would pay an additional $7 per month via a gas fee, but the program would put an additional $500 million in state coffers. Individual states could decide how to spend their money, but the big-picture goals for the program are to bolster public transport infrastructure, roll-out more eco-friendly transportation options, provide better transportation for underserved areas.

The TCI plans to spend 2019 putting together a final proposal for the signatories to accept or decline. Success over time could convince the Western Climate Initiative, a group of five states including California and Arizona, to commence a market-based carbon market system they’ve been discussing for at least ten years.