Next Up: Carbon Tax, Cap and Trade On Your SUV

They are coming next for your SUV.

While the Air Pollution Control Board still has steps to take, it is safe to consider Virginia’s membership in the Regional Greenhouse Gas Initiative a done deal.  That will quickly hit you in your electric bill, as Virginia’s two major electricity generators will have to pay a tax on their carbon emissions and alter their generation fleets to steadily reduce their CO2 output.

Here is what’s next:  The counterpart to RGGI for another major sector of the economy is the Transportation and Climate Initiative (TCI), which Virginia announced it would join in September.   In addition to Virginia, the current TCI member jurisdictions are Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, with policy support from Georgetown University.  

Neither interstate compact has the blessing of the Republican-controlled General Assembly, but legislation to prevent Virginia’s participation without legislative approval has been vetoed.   Again. Thursday marked the third year in a row a Democratic governor has vetoed similar bills on RGGI, but this year the Assembly also passed a bill requiring legislative consent to join TCI.  Governor Ralph Northam vetoed that, too.  The vetoes will stand.

The RGGI approach is understood and has been operational in other states for many years.   Exactly what steps the TCI states are contemplating to substantially reduce CO2 emissions in the transportation world remain undefined, at least in information publicly available.

Following a stakeholder process, this set of amorphous TCI goals was published in December:

  1. Determine the level at which to cap emissions;
  2. Develop monitoring and reporting guidelines to ensure that transportation related emissions decline over time;
  3. Identify the regulated entities and determine which fuels to include;
  4. Develop mechanisms for cost containment and compliance flexibility;
  5. Identify shared priorities for investment of proceeds;
  6. Establish clear processes and timelines for implementation; and
  7. Assess ways to foster broader transportation equity across communities.

More detail should emerge as a stakeholder and modeling process leads to plans ready for implementation in 2020, according to this summary from a national law firm, Latham & Watkins.

As with fossil-fuel power plants, caps will be placed on CO2 emissions from fossil-fueled cars, trucks and other vehicles, with reduction goals to follow. Those caps will probably be accompanied by a carbon tax to provide an incentive to reduce consumption.  No tax is mentioned, but item 5 says there will be “proceeds” to “invest,” which implies a substantial tax.  At least some of the money will “foster broader transportation equity.”

So TCI in action probably starts with a high additional tax on gasoline and diesel, and a list of new economic sticks and carrots for people to switch to hybrids or fully-electric vehicles.  Moving vehicles to natural gas probably won’t be acceptable, despite the huge benefit, because natural gas is now deemed as evil as coal or oil.   Zero emissions is the grail.

TCI goes back to 2010 but languished until the federal government changed direction under President Donald Trump.  RGGI is a regional effort to duplicate the impact of the dead federal Clean Power Plan.  The TCI could implement a regional corporate average fuel economy (CAFE) standard to substitute for weaker federal standards.  If you’ve determined CO2 is dangerous, regulating all sources is as legally justified as regulating any one source.

Under RGGI, all Virginia fossil fuel generation plants above 25 megawatts are now under a rationing scheme and must buy carbon credits.  What’s to prevent a similar rationing approach to gasoline distributors?  Couldn’t the various states set a cap on  gasoline vehicles licensed within their borders?  And then shrink that cap, creating a tax, cap and trade market place for a reducing number of gas-powered vehicles?  No reason cap and trade couldn’t work there.  (Sorry, you must bid in the auction for the right to buy that new gas F-150!)

California is such a large market its state-specific regulations can drive national industry decisions.  Combine California with these twelve Northeastern states and imagine the possibilities.  Cars, trucks, trains that don’t meet TCI Zone standards might be denied entry at the borders, or at least kept out of newly-designated CO2 non-attainment zones.

As the federal government reduces tax credits for electric vehicles, the states could give those credits instead.  The road-diet movement taking hold in Richmond and other cities could become a state mandate, giving the highways over to bicycles while intentionally inconveniencing motor traffic.

The social equity movement was unhappy with the December TCI report.  The Climate Justice Alliance issued a statement in February demanding that TCI’s “generated revenues (be) committed to adequately funding “just transition” initiatives from low-income, environmental justice and frontline communities of color that seek to finance relief from the disproportionate burdens of transportation emissions while providing support to workers displaced by the shift to a renewable energy economy.”

Turns out, Low-income, frontline, environmental justice communities and communities of color that have been historically overburdened by the impact of the fossil fuel economy.”   

Messing with people’s electric bills is easy, almost invisible, and for the most part the utility takes it in stride as long as its profits are secure.  Messing with people’s cars, SUVs and pick-up trucks will be far more transparent.  The business interests around that industry will not take things in stride, and people everywhere have demonstrated a real and sometimes irrational hatred for fuel taxes.

It was climate-inspired fuel tax changes which sparked the violent Yellow Vest protests in France.  TCI as it finally takes shape may be the wake-up call for America’s working class about what all this is going to cost them.  Every Democrat in the General Assembly is now on record with a vote for TCI and will get to vote again to sustain the Governor’s veto.  Before November, somebody needs to get them to flesh out what they have planned for us in the Green New World.