The Carbon Car Tax Nobody Is Discussing

By Steve Haner

So far there appear to be about six schemes before the 2020 General Assembly to save the Earth and its inhabitants from the fiery holocaust of climate catastrophe. The one that is going to cost you the most money in the shortest period of time is still missing in action. Finally we have details, but not from anybody in Richmond.

The organizers of the Transportation and Climate Initiative (TCI) met and held a streamed webinar in Washington, D.C. Tuesday, releasing their long-anticipated draft memorandum of understanding and quite a bit more information about the impact of this new carbon car tax. See the slides here. Does a starting bid of 17 cents per gallon on gasoline get your attention? Do not confuse this with the separate proposal from Governor Ralph Northam to add 12 cents onto the existing state excise tax. 

The other side is organizing, as well, including the Thomas Jefferson Institute for Public Policy. You can read that opposition coalition’s initial statement here, along with an analysis by my Jefferson Institute colleague David Schnare.

The TCI interstate compact, in formation since 2010, reaches from Maine to Virginia, including the District of Columbia. In New England the public is starting to get riled up, to the point that Governor Chris Sununu of New Hampshire is now on record opposing his state participating. The cartoon above was produced by a Connecticut group opposing the idea.

In Virginia we hear only crickets.

Right now, TCI is all about over-the-road fossil fuels, gasoline and diesel. Make no mistake about it, the long-term goal is elimination of those fuels from Virginia’s economy, perhaps along with aviation fuel and then off-road uses of petroleum products.

This uses a classic cap and tax approach, with the amount of fuel offered for sale capped and then slowly reduced (rationed). The fuel wholesalers will be the ones required to report their sales and buy allowances (a.k.a. a carbon tax) for each gallon they procure. They will be chasing after allowances from a shrinking pool, and if all the allowances are used up, the organizers of TCI will cheer. You won’t, of course, but they will.

The plan is to approve this by spring, implement it in 2022 and start the carbon tax and supply reductions (rationing) from there. The presentation Tuesday focused on a goal of a 25% reduction by 2032, but normal market forces are already reducing these emissions by up to 19% over the same period. A TCI goal of a 25% is too easy for these activists, with a laughably infinitesimal reduction in atmospheric CO2. Actually, it is a laughably infinitesimal reduction in the growth of CO2, which will keep on rising.

One estimate already produced using the same CO2 models used by the United Nations found the impact too small to measure, a zero and decimal followed by more zeros before an integer appeared. In their presentation Tuesday, the TCI organizers spent very little time on the claimed climate benefits and more time talking about other health benefits they project from reduced fuel use, based on other pollutants emitted by engines. Their main selling point, however, is the wonderful things that can be done with the piles of revenue to come.

The 25% solution they modeled would collect $5.6 billion in taxes in 2022 and $6.9 billion by 2032, so about $60 billion over ten years out of the pockets of individuals, businesses and (one assumes) governments buying fuel. The goodies they propose to spend it on include charging stations and other support for electric vehicles, mass transit expansion, bike and walking paths – just about everything but the roads, bridges, tunnels and maintenance Virginia needs and is already struggling to fund. Has anybody told the bonding agencies backing state highway debt about this?

A switch to a vehicle-miles-traveled approach will become essential to funding transportation infrastructure. For the Governor to propose a gas tax increase as a solution, when he has joined a conspiracy working toward the elimination of liquid hydrocarbon fuels, is like a magician waving one hand to distract you from his other one.

A 17 cents-per-gallon gasoline tax coupled with a process to ration the fuel toward eventual prohibition will have far more impact on people and businesses than the possible costs of the Regional Greenhouse Gas Initiative on electric power. Nobody is pointing to and analyzing the interaction between these two, either. (Example:  Should this succeed in forcing us all into EV cars and trucks, what does that do to power generation needs? To a grid more dependent on intermittent renewable sources?)

The wall of silence surrounding this idea needs to come down. This very bad proposal needs a full airing with the affected people and businesses, and then must be adopted or rejected openly by the General Assembly. The polling released in advance of the details was effectively skewered as cooked by blatant question bias by Jim Bacon last week. Had anybody asked Virginians about a carbon car tax, results would have been very different.

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18 responses to “The Carbon Car Tax Nobody Is Discussing

  1. Well we know how rural Virginia will feel about it but I do wonder if all those liberals in NoVa would like it.. if they thought it was going to expand mass transit and more bike/ped, etc?

    My bet is that any such bill is going down to ignoble defeat in about two shakes but who knows?

    I think BR needs a regular feature for you guys – The “OUTRAGE RANT of the DAY” – so you can look forward to some fun each day!

  2. When you look at polls for climate change:

    A solid majority of citizens not only think it is real -they think we should make changes soon.

    I realize there is a significant vociferous minority also but I think if the proceeds from RGGI went into mass transit and high speed rail – it would gain the support of many.

    High Speed rail is a major initiative of the Northam folks… it’s mostly under the radar except for the I-66 tolls but some of that money is targeted to what is known as the “Long Bridge” which is a notorious bottleneck for both VRE and Amtrak between Washington and Richmond. Right now, no increase in service is possible because the bridge is maxed in the 90% range much of the day.

    I think more and more people are supportive of fuel taxes and car tolls going into mass transit and high(er) speed rail between the major urban areas where air travel and auto would take longer than rail.

    Congestion in and around the major urban areas is going to generate support for taxes.

    • Rather than you or I deciding what people will accept in the form of higher taxes and gasoline rationing, why don’t we fully inform them and let them decide? Right now this is under their radar. I don’t see “taxes” and “gas rationing” on that poll you cited.

      • I think there is ample info for people to consume and decide. Those who say they want to “inform” use bomb-throwing words like “ration” – their motives are not exactly pure – they’re trying to argue their point instead.

        The simple truth is that more and urban dwellers typically are more progressive in their thinking these days to include things like mass transit and high(er) speed rail and that thinking is now being reflected by those they elected.

        Here’s an example:

        Post-U. Md. poll: Most Md. residents open to higher taxes to boost school spending

        As Maryland lawmakers weigh revamping the state’s public education system, a Washington Post-University of Maryland poll finds widespread support for dramatically boosting school spending and an openness to higher income taxes to finance it.

        The findings could fuel a growing battle between Maryland Gov. Larry Hogan (R), who has vowed to fight any tax increases, and the Democratic legislative leaders who have made the costly education overhaul a top priority.

        Maryland residents rank education and crime as the most important issues facing the state, with those living in the Baltimore area saying crime is a greater concern. The poll also shows deep concerns about the safety of vaping and support for significant environmental measures.”

        This is a Maryland Poll but the sentiment expressed is fairly common in places like NoVa also.

        It’s just a differing perspective on taxes. You guys never met a tax you liked and the progressives see taxes as necessary for education, environment, transportation, affordable housing, etc.

        For myself, I am NOT a tax-lover – I hate them. I see direct loss of my savings or my ability to do a repair or get a newer car when I have to pay property taxes twice a year – and at tax time – I just pray that I’ve had enough withheld and I cringe when I see how much the Feds actually took.

        Having said that, the GOP has totally abandoned any pretense of debt and deficit… they’re worse than the far left tax and spenders!

  3. Look, Larry, almost everyone is in favor of wetlands/forest preservation, fuel-efficient cars, renewable energy, and all the rest — in the abstract. What these idiotic polls don’t do is reveal voter preferences in the context of tradeoffs.

    If you asked people, do you prefer lower gas prices at the pump and lower electricity rates, vast majorities would respond in the positive. If you asked people if they want to ensure a reliable supply of electricity, they would respond in the positive. If you asked them if they would like to continue driving their cars instead of being compelled to ride buses or bicycles, they would respond in the positive.

    In the real world, we must make tradeoffs. Polls that fail to recognize the tradeoffs are meaningless propaganda.

    • re: ” In the real world, we must make tradeoffs. Polls that fail to recognize the tradeoffs are meaningless propaganda”

      It’s a nice comforting theory for Conservative types but the reality is that urban dwellers vote – and they do have a choice between the guys you like who believe the things you do – and the other side….

      Progressives basically WILL put their money where their mouth is.

      If they did not – they’d vote these guys out and put in Conservatives who don’t like taxes, right?

      Come on – you guys, at some point, have to reconcile why people in urban areas vote Blue even though they KNOW there will be higher taxes than if Conservatives were elected.

      Progressives see taxes as “investments” . Conservatives see taxes as money lost -down the drain. They don’t like spending MO money on “education” – they’re opposed because they think it’s bad money after good. They make that case here in Br – DAILY! Progressives think we are underfunding important things that are essentially crippled by chronic underfunding. It costs money to educate kids from lower socio-economic backgrounds. You can argue that money is not as well spent as it might be – or it need reform but to essentially offer private schools as the solution just turns off people who believe in the importance of public education.

  4. Steve, you report above that the TCI group’s modeling shows that TCI would “collect $5.6 billion in taxes in 2022 and $6.9 billion by 2032.” Do those figures apply to all participating states or just to Virginia?

    • I have the same question. Opponents typically load any/all costs so it looks more terrible!

    • All the states and DC. It comes straight from their slides but does not break it down by jurisdiction. And Larry, proponents “typically” under measure unpopular fiscal impacts, but that’s still real money even spread out over that area.

      • Well yes, proponents typically do – but opponents who “report” thrown in things like “rationing”.. to add to the terrible, no?

        Not what I’ve seen – OPPONENTS – typically pile up all the conceivable costs – worst case scenarios – as a demonstration of how awful it is.

        We used cap & trade before – in fact, if I remember correctly, the concept came from Conservatives:

        GOP Demonizes Once Favored Cap-And-Trade Policy

        Republicans say the Environmental Protection Agency will kill jobs and raise electricity prices with new carbon emissions limits. But their tactics in fighting the proposed rules are targeting a policy that their own party championed during GOP presidencies.

        Republicans are touting a letter signed by 41 GOP senators asking President Obama to withdraw what they call his “cap-and-trade rule.”

        Cap and trade is one of the policy tools that would be allowed under the EPA proposal for states to achieve the new emissions standards.

        In recent years, the term “cap and trade” has become a dirty word for many Republicans. But Republicans used to be the big advocates of cap and trade. It was originally a conservative idea because it’s a market-based approach to environmental regulation.

        Robert Stavins is a Harvard economist who was on the EPA’s Environmental Economics Advisory Board under both Republican and Democratic presidents. And he watched Presidents Reagan, George H.W. Bush and George W. Bush push through cap-and-trade approaches to pollution controls.

        …. Reagan pushed through a cap-and-trade system to phase out leaded gasoline. And in 1989, President George H.W. Bush proposed a cap-and-trade system to cut, by half, sulfur dioxide emissions (acid rain) from coal-burning power plants. And both Democrats and Republicans got behind it. In what today might seem like an almost unbelievable show of bipartisanship, those Clean Air Act amendments passed the House and Senate overwhelmingly.

        but NOW it’s a BAD thing, right?

  5. I do not know enough about these issues to comment on their substance. After I read the materials from both sides, I may have something to say in that regard.

    Nevertheless, I do want to make a couple of general observations. First, it seems that TCI, RGGI, and the additional gas taxes proposed by Northam are interrelated. However, they are being treated in silos. There needs to be some sort of comprehensive, consistent overall policy tying all this together. (How is that for stringing together a bunch of adjectives?) That is one of the disadvantages of Virginia’s policy of not letting governors succeed themselves. As soon as an administration has settled in and found its footing, attention is turning to the successor and key staff are looking for new jobs. Even if a governor’s successor is from the same party, individual governors, even of the same party, have their own priorities and styles.

    Second, as I now understand them, the RGGI and TCI rely on market mechanisms (cap and trade). One prevailing thought, even among conservatives, is the best way to control carbon dioxide emissions is through the market, i.e. a carbon tax. So, I will be interested to see why the Thomas Jefferson Institute is opposed to the TCI approach. It may be it is not opposed to using the market through cap and trade, but to the specific details of how TCI wants to go about it.

    • The argument is not with the cap and trade methodology, which has great merit. The problem is with the goal these folks seek to achieve, and whether it really is needed or will prove effective. Moving to zero is overkill and will have huge negative impacts on the economy and people’s daily lives.

  6. There’s a sameness to the Thomas Jefferson Institute’s reports. It never met a tax it didn’t hate.

  7. I would like to buy a new hybrid RAV4 or something, but I am not looking forward to $1500 a year or so in northern Virginia’s annual car tax. This demonstrates how Virginia’s excessive car tax discourages residents from getting newer and cleaner vehicles. I’d fix that as a first step.

    What we will probably do instead is keep a high car tax on gas vehciles, and give large state subsidies to electric vechicles. But elecric vechiles are not a huge eco-improvement, just a knee-jerk reaction, a big pain in the butt as far as I am concerned that is going to get shoved down my throat by mandates and super incentives, with super penalties on gaso and gaso vehicles.

  8. If we want to move above the limited mental capacity of many journalists (witness the CBS poll), one needs to poll both the benefits and associated costs. Free sells well, including in polls. I favor renewable sources of energy but I’m not willing to pay more for them.

    I keep waiting for all of these generators of lower-cost, just-as-reliable, renewable energy to offer me a lower electric bill than I can get from Dominion. Lots of rhetoric and no concrete offers.

    I receive mailings from both Dominion Energy and Washington Gas’s unregulated gas business for fixed-price natural gas purchase agreements. Obviously, we see some businesses willing to gamble on the risks of commodity price changes for natural gas. Why not renewable energy? Why are none of the greenie billionaires willing to buy or build companies that offer consumers lower, fixed-price electricity created from renewable sources? I can only conclude that renewable energy is more expensive despite all the rhetoric to the contrary.

    With all of this cap & trade and carbon taxes, we are going to see a significant transfer of wealth from working and middle class people to the rent-seeking elites. And “no,” I don’t trust Northam who isn’t man enough to admit that it was he who appeared in blackface as a just-about-to-be-licensed medical doctor.

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