By Steve Haner
In this politically sensitive moment, they don’t call it “cap and tax” but instead “cap and invest.” Yet, the recently released draft Transportation and Climate Initiative proposal fits a Bacon’s Rebellion prediction in March that next they would be coming to tax your SUV.
Reducing CO2 emissions from electric power plants with a cap and tax scheme is not enough, of course. More of those dread emissions (you and I call it exhaling) come from vehicles, despite rapid improvements in engine efficiency and alternatives to fossil fuel combustion. The Northam Administration has Virginia fully engaged. Legislation to require General Assembly approval for this regional compact was vetoed.
The October 1 draft proposal outline is here. Notice it is devoid of data on what the starting allowance for Virginia emissions would be, how the caps would decline, and what prices should be expected in the allowance trading scheme that will make the system work more smoothly. But it is the Regional Greenhouse Gas Initiative (RGGI) for cars and trucks, with enforcement focused on fuel wholesalers rather than electricity generators. After all, the other gasoline taxes are collected “at the rack,” right?
The proposed program would cap emissions of carbon dioxide from the combustion of the fossil component of finished motor gasoline and on-road diesel fuel in the region. The TCI jurisdictions are evaluating whether and how to include and treat biofuels in the program. Affected fuel would include fuel destined for final sale or consumption in a TCI jurisdiction, upon removal from a storage facility (i.e., a “terminal rack”) in the TCI jurisdiction, or, for fuel removed from a facility in another jurisdiction, upon delivery into the TCI jurisdiction….
The program would begin with an initial emissions cap set at a level that then declines every year at a rate chosen by TCI jurisdictions to support their emissions reduction goals and informed by analysis of the program’s impact. The initial cap would be set using a combination of baseline emissions for three recent years, and projected emissions estimated through modeling. The program would begin as early as 2022 and reach a target emissions level in 2032. Each jurisdiction’s allowance budget would be a percentage of the regional emissions cap….
Each TCI jurisdiction has different transportation needs and unique authorities; therefore, each jurisdiction would independently decide how proceeds are invested to achieve carbon emission reductions and other policy goals—like improved air quality and more affordable access to transportation. Additionally, jurisdictions may identify shared priorities for investment of proceeds including to maximize the efficiency of the regional program and to ensure greater benefits. TCI jurisdictions are committed to equity and meaningful community engagement when making new investment decisions and conducting program review….
Any “proceeds,” of course, would be from the missing word: “tax.” If you try to avoid this tax by filling up in North Carolina or some other non-TCI state, well, they’ll figure out a way to get you.
As is the case with electricity generation, rapid progress is being made in lower or non-CO2 transportation. Many people want electric cars (my next one might be), and many larger vehicles are using compressed natural gas. I would love to see the transit systems here which are so common in Europe. But this is also a marketplace where many consumers are not with the program, want to keep the old guzzler or drive the gigantic SUV that blocks half the aisle in parking lots. Perhaps a carbon tax on fuel will change that behavior, but it is doubtful.
Jim Bacon will be pleased to see that the document opens up with a riff on equity and justice. Just as low-income families spend a larger portion of income on their electric bill, so perhaps do they on transportation costs (private or public). It is good that removing this added economic burden from them is front of mind for the authors, but watch it become yet another income transfer mechanism.
This is the start of a process, with a public comment period next. It is hard to imagine Governor Northam or any of the other true believers listening to cries of alarm, and probably only minor adjustments will be accepted. Absent a political directive from Virginia voters and Virginia business, prepare to pay more for gas or start hunting for that first electric car.
Enough rambling – go to the document, or the TCI homepage, and do your own digging and form your own conclusions.