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.

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23 responses to “Next Up: Carbon Tax, Cap and Trade On Your SUV

  1. The biggest “bites” for cars is not the fuel tax , it’s the sales tax on new cars and then the annual tax chop on “personal property”. The fuel tax is chump change in comparison.

    Beyond that, most folks don’t have a clue how much that sales tax is – I bet most who read here don’t know it off the top of their heads – so that’s an area of “transparency” not generally checked by most.

    The personal property tax is an abomination and insult to injury when they claim that it has been “reduced” by “tax relief”.

    At any rate – the ruminations about RGGI and TCI are gloom and doom without specifics..much like Bacon’s “Armageddon” / sky will fall terror that will …come.. sooner or later.

    I just think without real numbers – getting my innards in an uproar about it is way premature… and my bet is that any “fees” are going to be just as slick as the sale tax on new cars or local property tax is – right now.

  2. Well I am glad to see the Dems embracing the New Green Deal which includes criminalization of fossil fuel and people who use it, as well as 70% tax brackets. In my mind the extremism on the left is why Trump got elected.

    But also need to realize, politically, the electric utilities are highly supportive, because they see an opportunity to expand the use of electricity for vehicles. Electric demand seems to be on a downturn due to LED lighting. And we know state and local politicians feel the utility business is the state’s main business opportunity.

    In North Carolina we have a repub putting through a bill to demand the state build EV charging stations everywhere. Now is this guy an environmentalist, or a puppet of the utilities? Not sure, but I have a guess.

  3. I personally don’t think electric cars are non-fossil fuel if the electricity is generated with fossil fuels but I digress…

    But also in terms of “socialism” and the “green new deal” and all that rot – and the folks on the right “rescuing” us from those Dems – at some point… folks will recognize that public roads and public education, Medicare, the VA, even employer-provided health care and more are all “socialism”.. and we’ve been this way for quite a while and I doubt seriously we’re going back if the GOP wins again!

  4. Pure hybrids (non-plug-in) do not get much support in the U.S.A. In part hybrids are Toyota strength, and why favor Toyota? Our U.S. mentality has been promote plug-ins, which Toyota is actually not too interested in (much to the dismay of plug-in advocates). I would like to see hybrids like Prius get more support, but I do not see it happening…not politically correct. Of course I am Prius owner.

    Plug-in America is almost as bad as ethanol lobby as far as power…this could be interesting lobbyist fight.

    • I LIKE the Prius but when I look at other “hybrids” like the Highlander and the stampeding crowd of other brand hybrids – usually with cost premiums of 5-10K – I’m not really impressed.

      ANY technology that increases gasoline mileage is good – both from an economic perspective and a pollution perspective.

      Plug-ins are going to happen – they will find favor as 2nd or 3rd cars with families that have multiple cars and the plug-ins will be for local trips.

      whether they are “non-polluting” or not will depend a LOT on the grid and what fuels it uses to generate electricity.

      In general on an apple-to-apple basis – if we take natural gas – it’s LESS polluting to use it to generate electricity that it is to transport it then use it in cars.

      I’m not in favor of mindless, do-gooder type “green”. I’m in favor of “smart” green where it not only makes environmental sense but economic sense.

  5. These overzealous policies and their rapidly growing ilk chasing monopolistic state policies imposed by the an ever expanding and intruding regulatory state likely will hit the poor first then suck out whatever monetary wealth and civil and social capital is left in America’s middle and upper middle class. This modern vampire state will continue the widening divide between America’s affluent and everyone else who then will be living from pay check to pay check, credit card to credit card, or gov. handout to gov handout.

    If it gets its way, the progressive movement will close down the American dream altogether, leaving a fragile and depressed, but volatile, society where only a privileged over class will have opportunity, or freedom.

    • To understand how the consequences of policies like these, if improperly applied, can so easily impose retrogressive costs, taxes, and fees on everyone among us but the rich, consider for example how these policies will twist, distort, harm and raise prices on the now booming US market for oil and natural gas, its extraction, distribution, and consumption, on which so much in America, its national security and its industry, depends.

      Consider too how these policies threaten to unwisely push solar and wind energy generation into an unready, unwilling and untested market. One that on large scale today is functionally untested, quite speculative, highly inefficient, demonstrable unreliable, and very costly. And only now is plainly raising citizens concerns about its own threats to our environment.

      Who are the people and interest groups pushing this on citizens? Who elected these people? Who gave them their power over people’s lives?

      Does Virginia really want the policies, prices and lifestyles of “the current TCI members – Connecticut, Delaware, DC, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont, with policy support from Georgetown University?

  6. I continue to see Solar as a valuable “supplemental” fuel – to use – WHEN it actually IS available – IF it actually is less costly to use than gas or other fuels.

    I favor solar also because it’s during the day that we encounter peak electrical demand and that’s the same time when Solar is available.

    We can and should site solar where has less visual impacts on land that is not used or useable for other purposes and start incorporating it into buildings, roofs, and other infrastructure – like landfills, power-line right of ways, the spaces around existing industrial facilities, etc.

    When we make SOLAR an all or nothing, binary, pro/con issue – we fail.

    No method of generation of electricity is without impacts. The primary difference between solar and the other generation is the other generation is often remote in rural areas away from where the electricity is used in urban spaces – much the same way things like chicken and pork are raised away from cities but most of it – consumed in the urban areas of which few in those urban areas would find poultry and pork animal operations in close proximity to where they live – acceptable – either. So most of the things that make cities “go” – food, electricity and water are kept away and out of sight but make no mistake – all of us depend on them but we also want “out of sight, out of mind” on their visual and other impacts.

  7. Who is going to pay for the bus conversions or purchase of carbon credits for schools like RVA? Schools who can’t seem to find a way to even maintain a building. (FYI Richmond Free Press has an interesting RVA schools write up quoting Cranky)
    Again I am confused as it appears RGGI and carbon taxes will probably disproportionately affect those economically disadvantaged, maybe even some minorities, and thus be racist or at least insensitive. (I need a racist policy/funding/hate speech/cultural appropriation flowchart, can someone publish one)
    I’m curious as to why Northam isn’t going green. If you go by the mansion there are typically 3 or so SUVs in the driveway.

    • You expect the cops who protect our politicians to drive short-range, light-weight EV cars? Love it. Great idea…..

      Yes, the same people who are pushing the cost of electricity higher will also complain about the disproportionate impact on low-income families. So they want to take a percentage of our bills and use that to improve insulation and provide energy star appliances for those deserving families. Doing that to the extent that made a difference would be incredibly expensive.

      Larry, I’m a big fan of solar but I’ve also seen the capacity factor charts. Powhatan County VA is not the same as a Mohave Desert or West Texas. Take the huge subsidies off the table and I suspect solar would not be spreading far from the areas where it makes the most sense, but with the subsidies….it goes where it doesn’t make as much sense. But just like Big D, those firms are also chasing big profits and that’s the first consideration. Always start by following the money. I just LOVE the enviros who decry the profit speck in Tom Farrell’s eye and ignore the profit mote put in their own by solar and wind developers, and the energy efficiency consultants.

      • Steve opines:
        “Powhatan County VA is not the same as a Mohave Desert or West Texas.”

        True enough. I hold Powhatan County in high regard too, but growing up did you never see Disney’s 1953 movie “The Living Desert?” How it blooms by Day? How it comes alive by Night? Did you not see critters everywhere, all over its nocturnal living sands, thousands of bits of life burrowing, flying, crawling, hopping about, lively lit by moonshine.

        And where would T. E. Lawrence be with an Arabia covered with metal blade spinning wind towers and solar panels from the Red Sea to Persian Gulf? Poor Lawrence and his Seven Pillars of Wisdom would be Nowhere, Man, Nowhere!

        And how would Poor Jesus wandering 40 days across a desert of wind towers and solar panels from the Red Sea to Persian Gulf, find God there. Nowhere, Man. The Devil there could have fooled Jesus easy, him then us.

        These ungodly, abused and wasted and dying, places of glass and metal panels, and spinning metal blades, covering God’s Green Earth, killing gods creatures on its land and in its airs, these false idols are the Devils work, tempting man to fall down and worship the Devil. Matthew 4:1-11

        Matthew 4:1-11

  8. What’s the difference between Northam unilaterally obligating the state to RGGI and Trump’s national emergency shifting money to fund the border wall?

    • Not much, that I can see. But the executive v. legislative power struggle is as old as the Republic.

      • I agree on both points. But I must point out the general silence on Northam’s actions from the Ministry of Enlightenment and Propaganda (WaPo) as it constantly hammers on Trump. And people wonder why most people hold journalists with so little regard and respect.

        I still go back to high school English class when we “studied” journalism briefly. We were told that a reader should not be able to determine the journalist’s personal views from reading or listening to the article/news item. What happened?

        I still believe that, if media outlets went back to reporting news instead of advocating the reporter’s or the media company’s views, more people would pay for their news.

        This situation raises very serious issues, both on the merits and procedurally. But I guess it’s easier to scream “Climate Change” without more.

    • RGGI we can leave anytime ala Pa. NJ…but we are stuck with the wall unless someone wants to tear it down like the Iron Curtain. Newseum could have a section of the torn down wall, I guess we could get some use.

  9. First: Thank you, Steve, for your reporting on this issue. I had not heard of TCI, and I pay a lot more attention to such things than most people. Your post reinforces the fact that Virginia desperately needs an alternative news-gathering organization capable of surfacing stories that legacy media overlooks.

    Second: I cannot conceive of how it would be constitutionally permissible for the Governor to enter into an inter-state compact that would impose new regulations and costs upon a particular sector (in this case the energy sector) without enabling legislation from the General Assembly. Along these lines, how can Northam make Virginia a signatory to RGGI, imposing carbon caps on utility emissions, without General Assembly approval? where does he get that authority?

    • I agree with Steve that, a la France, there is a limited public tolerance for do-gooder measures that raise the cost of ordinary things like electricity. But there is also a need for national, federal policy on such matters as greenhouse gas emissions, and the residents of a few eastern seaboard states have lost patience while waiting for federal legislation. And Steve, when you say, “Under RGGI, all Virginia fossil fuel generation plants above 25 megawatts are now under a rationing scheme and must buy carbon credits” — that rationing scheme is not yet in effect in Virginia, although it’s certainly being discussed. And Jim, I agree with you, such an initiative, imposing emissions costs on generators, amounts to a tax on those generators and should be authorized like any other tax, through legislation.

  10. Jim, in brief the EPA and federal courts have ruled CO2 a pollutant, so the Air Board assets its authority to regulate it. Reinforced by a friendly AG opinion from Herring. If a power plant can be regulated that way, I’m sure a similar argument will be made for vehicle engines.

  11. Reed, I spent three years living on the Mojave, while my Dad was at Edwards showing his version of The Right Stuff. I saw somewhere that the blooms this year are spectacular, after the end of California’s “permanent” drought.

  12. Steve, regarding the Mojave, and American desert country generally knowledgeable people, including serious environmentalists, formerly gun-ho on large solar panel and wind tower projects now oppose such large facilities in these desert places, including the Mojave.

    For example, see:

    The tortoise is collateral damage in the Mojave Desert, large solar arrays can harm threaten species, published in High Country News, March 19, 2014.

    Also see: https://quillette.com/2019/02/27/why-renewables-cant-save-the-planet/

    This latter article also deals with Mojave, and it also puts the issues and problems solar and wind generation in a far larger perspective.

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