Tufts Study Projects Major TCI Carbon Taxes

Abandoned Gas

An abandoned gasoline station in North Carolina that failed after that state raised its fuel taxes substantially higher than Virginia’s.

By Steve Haner

Monday the organizers of the Transportation and Climate Initiative, a carbon tax and rationing regime for Virginia motor fuels, will be announcing details of the underlying interstate compact, according to media reports.

The media in Virginia has been disinterested in the issue, but the debate is raging in New England. The Boston Globe set the stage with a story last week. While 12 states and the District of Columbia have been involved in the planning, there remains some suspense over which states will press forward. New Hampshire is already out, and some other governors have expressed concerns. 

During the 2020 General Assembly, skeptical Virginia legislators pressed Northam Administration officials on the issue and were assured that any proposed interstate compact would come to the General Assembly for approval.

How many details will be revealed Monday? Will we know the initial carbon tax amounts planned for 2022? How much Virginia revenue it is likely produce in that year and the following ones? How Governor Ralph Northam plans to spend it? Or will Virginia take a pass, at least in part because that same 2020 General Assembly already approved major fuel tax increases with elections looming?

From Tufts University Center for State Policy Analysis, November 2020. This shows the projected 2032 TCI allowance prices, gasoline price increases and revenue in Massachusetts.  The impact in Virginia should be similar.

The legislators and voters in Massachusetts have more background data to work with than we do, thanks to a report from the Center for State Policy Analysis at Tufts University. The report is supportive of the goals of TCI, referring to the “baleful emissions” from motor fuels, but also refreshingly honest about the economic implications.

The report should be read by every legislator, stakeholder, and reporter. It supports every concern highlighted in previous reports on Bacon’s Rebellion. The conclusions are consistent with a report sponsored by the Thomas Jefferson Institute for Public Policy from another Massachusetts research group, the Beacon Hill Institute.

The researchers at Tufts have predicted major price increases for gasoline and diesel, in the range of 20 to 30 cents per gallon initially and then up to 40 to 50 cents per gallon in the out years. The report is quite candid that any oil wholesaler forced to buy carbon allowances will pass the cost to consumers.

“And far from being an unfortunate side-effect, this pass-through to consumers is part of why TCI is expected to reduce emissions. In the short term, higher gasoline prices will encourage people to seek ride-sharing options, consider public transit, and rethink the expense of shipping goods by truck.”

The carbon allowance is only part of the calculation behind rising prices. TCI freezes the supply of fuel at current levels and then begins to artificially reduce that supply. The goal is to shrink fuel sales 25% over ten years, and the supply and demand pressures drive up the price.

The Tufts summary also admits that the proposal had a more harmful impact on low-income consumers and on those more rural parts of the state where longer commutes are common. If you believe there will be health benefits (debatable) from slightly reduced emissions, they will be in the urban core. If you believe consumers can easily transfer to mass transit or even walking or biking, that will also be in the urban core.

Massachusetts with its 7 million people is substantially smaller than Virginia with 8.5 million and covers less land area. Tufts predicts a massive influx of tax revenue from the carbon tax for the Bay State, and it is fair to assume Virginia’s will be in proportion. Tufts is projecting up to $1 billion annually starting with 2022, growing from there. That is assuming the states agree on that 25% reduction goal. A tighter goal forces a higher carbon tax.

Tufts dismisses the likelihood that drivers in that state will simply go across state lines to fill up but notes that tactic will work in other parts of the region and be most attractive to interstate truckers.

“Some TCI states will inevitably border non-TCI states, which could create perverse incentives for drivers to hop the border and fill up in non-TCI jurisdictions. This problem will be exacerbated if TCI ends up attracting a patchwork of states, rather than a contiguous region.”

Virginia is in such a patchwork. Non-TCI states West Virginia, Kentucky, Tennessee, and North Carolina will all beckon as lower cost sources for gasoline, diesel, and the other commerce that takes place at those stations. Trucking companies carefully plan their fuel stops.

The folks at Tufts recognized that if the program works, and gasoline sales do drop appreciably, so will the traditional transportation revenues.

“By encouraging people to drive less and switch to electric vehicles, TCI would reduce revenues from excise taxes. In a separate calculation, we find that these losses would offset roughly 4 to 5 percent of the revenue gains from TCI, though the interplay is complicated by the fact that excise taxes are generally used for different purposes.”

Four or five percent? If true, what that should tell you is that the TCI carbon taxes will ultimately be substantially more lucrative to the state than the gasoline and diesel taxes ever were. But it is also based on Massachusetts data, not Virginia. Will anyone even make such a calculation for Virginia before legislators vote?

Finally, the Tufts report agrees with the data from TCI’s own studies that CO2 emissions from transportation sources are already going down substantially without any forcing necessary.

“Without TCI, emissions from motor fuels are likely to fall between 2022 and 2032. Our central estimates suggest a decline of 14.2 percent (in our moderate-economic-growth scenario) or 17.5 percent (in our low-economic-growth scenario).”

The TCI data also reports a range of possibilities but centered on a 19% drop in emissions over ten years as likely. So, the vast majority of the CO2 reductions being sought will happen anyway, with no taxes, no rationing, and no legislative battles of how to spend the piles of money. The same is true about the Regional Greenhouse Gas Initiative, by the way – it didn’t change the expected CO2 reductions from power plants one bit. It is just a tax increase.

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74 responses to “Tufts Study Projects Major TCI Carbon Taxes

    • Hasn’t worked that well in California, either. But faith conquers reason.

      • “The virus that we’re talking about having to do, a lot of people think that goes away in April, with the heat, as the heat comes in, typically that will go away in April,”

        “If we have embers of corona coupled with the flu, that’s not going to be pleasant, but it’s not going to be what we’ve gone through in any way, shape, or form. It’s also possible it doesn’t come back at all.”

        “It’s about poll watchers who were not allowed to watch. So illegal. It’s about ballots that poured in and nobody but a few knew where they came from. … It’s about machinery that was defective, machinery that was stopped.”

        Damn, you’re right! Faith, or lies, does conquer reason!

  1. Baconator with extra cheese

    I can’t wait… I love the idea that the Lululemon mafia voted for the blue wave. I am so excited the idea that the costs to heat/ cool their POS Mcmansions will double and the cost to drive (in her Tahoe with the TVs) in the back the kids to anti-racist soccer practice in the West End will go up 50%.

    • Yep, a carbon tax on electricity approved in 2020, a carbon tax for fuels in 2021, and the 2022 General Assembly will move on to natural gas and propane for home and business use. If they actually care about PM 2.5 gotta ban wood burning, too.

  2. If we follow this agenda, forced supply constraints and mandated price increases on a commodity that is already producing declining emissions, we will earn the title of the Socialist Republic of Virginia.

    • Well, to be precise, gas is still gas, but many in the public are already moving to electric or lower-emission vehicles and that trend is expected to continue. CNG as transport fuel is a huge improvement in that regard over gasoline. This is the green greed folks getting in front of the parade to claim credit and fatten the public purse.

      • There are well over 3 million light duty vehicles registered in the Commonwealth with less than 20,000 being electric or less than 1%. It will take a long time before the internal combustion engine is relegated to a museum. GNG works for centrally fueled vehicles, most heavy duty ones.

  3. Zero emission car advocate extraordinaire Mary Nichols, many years head of Ca’s CARB, lost the Biden admin EPA chief position reportedly due to hundreds (rounding up) of enviro-justice groups opposing her for Cap and Trade, due to eco-justice crimes of Cap and Trade.

    There is a huge truth problem. New cars are almost zero pollution, except CO2, and liberals are trying to add car emissions as extreme poison to their lists of reasons.

    One area liberals do NOT need to use any science is in proclaiming the extreme toxicity of things they do not like. What’s wrong with erring on the safe side (I’ll add LG’s comment for him)?

    • I dropped a paragraph at the end for length, but the Tufts report has an interesting omission. After a glancing reference to greenhouse gases, it was all about the claimed health benefits. Even if you totally buy the BS that CO2 is a direct thermostat, this doesn’t move the needle. You’ve got to get rid of it all, and even that doesn’t move it much. Tufts just ignored all that.

      It is always a cost-benefit decision, TBill, but the advocates for this don’t want to even mention the cost. That’s why the Tufts report was so refreshing.

      • BTW when I say “cars” are near zero emissions, I am talking gasoline cars only. Something like a Prius hybrid is near zero emissions. Diesel is still somewhat a source of transport contaminants, though greatly improved in last decades.

        Liberals, I feel, are divorcing themselves from the need to consider if the level of contaminants are harmful, and if so, do we need to consider further controls to reduce it? Liberals just want to execute things they feel are politically incorrect, and liberal “common sense” is good enough justification.

        Essentially we have a zero pollution movement taking shape in EU and USA, but humans have never seen air as clean as today in America, so why the fuss? We cannot run the world on a zero pollution scensrio, we would need 3rd world to make everything, and allow lots of pollution there, then USA could have zero in our boundaries.

      • All you have to do is look at the deforestation they are willing to undertake to place solar panels. The fact that they aren’t aware that trees are Co2 scrubbers and they are removing them, means they shouldn’t really comment on “science”.

  4. And think of the huge transfer of wealth from ordinary people to owners of oceanside and bayside properties.

  5. the boogeyman cometh once again!

  6. This is a cheerful blog posting that tends to cherry pick. I take particular interest in the report because Tufts is my alma mater and that of two of my cousins. My father and uncle went to Tufts undergraduate and medical school.
    The nut of the report, which I did read, is that TCI WILL reduce carbon pollution and there will be a cost. It will impact people in central and western Massachusetts largely because there is no real public transit system. Most live in the Boston area where there is a huge, mature and functional transit system.
    Let’s quote the report:
    “Based on best available evidence, our analysis suggests that the TCI program could help reduce emissions and generate substantial revenue for participating states.”
    Also:
    “This revenue could be used to support green investments, promote environmental justice, and amplify the carbon-reducing impact of TCI. However, states will still have a lot of latitude to set their own spending priorities. Data from California suggest that investments would have a real but limited impact on emissions.”

    And:
    “TCI does have a mechanism to prevent large price increases via a price ceiling. However, this ceiling works by creating a direct trade-off, where price stability is ensured by allowing more emissions.”

    I fail to see where anything at Tufts can compare with the so-called “Beacon Hill Institute,” which has a clear agenda – to fight taxes on deadly items such as cigarettes and nix green efforts such as wind turbine energy and RGGI. See:

    https://www.sourcewatch.org/index.php/Beacon_Hill_Institute
    That site states:
    “In December 2013 the Guardian reported that the Beacon Hill Institute had sought about $40,000 in funding to carry out an economic analysis to discredit the Regional Greenhouse Gas Initiative, stating in its proposal that “Success will take the form of media recognition, dissemination to stakeholders, and legislative activity that will pare back or repeal RGGI.” The proposal was presented for consideration to the Searle Freedom Trust by the State Policy Network. Host university Suffolk said the Institute’s grant proposal did not go through the university’s approval process and violated the tenets of scientific research. The proposal was not funded.[20]
    “SPN is a web of right-wing “think tanks” and tax-exempt organizations in 50 states, Washington, D.C., Canada, and the United Kingdom. As of August 2020, SPN’s membership totals 162. Today’s SPN is the tip of the spear of far-right, nationally funded policy agenda in the states that undergirds extremists in the Republican Party.”
    Also see: https://www.desmogblog.com/beacon-hill-institute
    It states:
    “BHI has received funding from various conservative foundations such as the Castle Rock Foundation (funded by Coors), and the Lynde and Harry Bradley Foundation. David G. Tuerck, Executive Director of the Beacon Hill Institute, is the former director of the Center for Research and Advertising at the American Enterprise Institute (AEI), a group that has received more than $3.5 million for ExxonMobil.”

    The Thomas Jefferson Institute for Public Policy has been funded by some of the same sources, records show.
    What gets me is that these conservative think tanks want “market based” solutions to climate change which some of their members deny is happening. Both RGGI and TCI use a market approach to achieve this. Of course there are costs. Of course there needs to be a switch to EVs and public transit. What else do you propose? Doing nothing?

    • Would that you cared who paid the tab at Virginia Mercury, and called the tune…..but no..,..

    • I mean, we had nearly a hundred environmental justice organizations fighting against liberal Mary Nichols for EPA Chief. It is almost funny to think any industry stands a chance against the mega-funded liberal eco groups. Let’s face it, industry is essentially gone, the tide has turned in favor of heavily funded eco-groups wild claims being believed over industry. How much money must be going to these eco-groups, how can they make a living?

      • The climate change tidal wave is probably too strong to reverse. As a nation we have done many things right to correct environmental externalities, including climate change. But this environmental band wagon is being driven by elites and predicated on a worse case scenario. Two assumptions overwhelm everything else–natural variability and climate sensitivity. If it turns out that the human impact is less than assumed and climate sensitivity is lowered, we will have squandered billions of dollars.

  7. I don’t see why bringing Ning up the Virginia Mercury is relevant. You are talking about the TCI

    • You’re falling behind Peter. It’s a double whammy. First left wing Dems come up with these really bad ideas AND the leftist media chooses to not report it so – it’s BAD-BAD!

  8. Btw. Suffolk University cut its ties with BHI

  9. Not to nitpick, but this thing looks like it’s been abandoned for a decade. Any bets on a brand new Valero or BP minimart a mile away?

    • More than likely it got stranded by a new highway project or a high-volume competitor set up nearby.

      We travelled to NC several times a year and I can assure folks that there
      still are plenty of places to buy fuel.

      And the reality is – some states do charge a huge tax relative to other states, but the “harm” of it is not so easily quantified. I’m not supporting or justifying it, just pointing out that California, for instance, continues to be the 7 or 8 largest economy in the world despite all the criticisms of higher prices gas and electricity.

      Fuel and electricity in Europe, Asia and Canada is through the roof compared to us but look – they all get health care for 1/2 what we do, live longer, and their kids beat the pants off of our kids academically.

      We’re a bunch of whiners!

      • Not “we”.
        But there are certainly a lot of control freaks masquerading as Conservatives. “We don’t like F*** UVA” signs. If you don’t do what we want, “No gifts for you !”

        It’s called a “gift”. You don’t have to give it. If you want to tell them why, fine. But your “gift” is just that, not a cudgel.

        Maybe it’s not a masquerade?.

    • The photo was taken by a Virginia dealer, one of three he sent me. I only have him as a source that they failed due to the tax/price differential, but he would know. His own fear of that fate seems genuine.

      • The City of Norfolk used to have online listings of openings and closures grouped by year. I’m sure Covid has driven that nuts, but I cannot imagine that NC doesn’t also track business licenses, openings and closings. They have State resources for helping close business.

        Logic dictates that a station within a few (10?) miles of one located across the border might suffer, but is driving 20 minutes round trip worth $2 a tankful? If it’s a choice of driving 5 miles north or 5 south, maybe.

        I think the real deciding factor would be the combination of gas and cigarette taxes in those such locales.

      • And beer.

      • And, as a last word… if I stopped at a gas station like that one while less than a hour from home… my wife wouldn’t speak to me for a week. It’s not the economy. It’s the facilities!

        “You try aiming backwards while standing on the seat and trying not to touch anything.”

    • What’s so special about that? Abandoned, derelict gas stations are common in Virginia.

  10. I dunno. I can open Google maps, center it on the Va-NC border someplace, and search for “Gas Stations” and there doesn’t look like a dearth of little flags in NC. In some places (out by Danville), there’s more in NC

  11. Yeah, I’m noticing how the EPA mileage standards for cars “destroyed” the economy. Same with sewage treatment plants that charge folks for teating sewage – just devastrated people’s finances.

    Oh and now we have to pay to dispose of tires, build storm ponds, and pay to clean up coal-ash and abandoned service station fuel tanks.

    just devastating – and yep – it was usually and mostly Aa liberal thing, Conservatives fought against them tooth and nail… dang do-gooders..

    And after each one is done – Conservatives claim that they were in favor all along but NOW – we’ve done ENOUGH and time to stop cuz NOW… it actually is hurting the economy and taxpyers. Same old. Same old.

  12. Of course, this is going to hurt lower-income and lower-skilled people. The Dems in the GA are raising the price of electricity because they are green. But they also are raising it higher for most people to provide a subsidy for the “poor.”

    Apply the same logic to this this initiative. The costs of this carbon tax will raise the price of energy even higher. Won’t that also hurt lower income people?

    We need a constitutional amendment that gives any elected official five years to deliver the predicted results for any legislation they sponsor that raises taxes or otherwise causes a greater outlay from the public or they get beheaded – literally. Apply it across the board – conservatives – moderates – progressives — Democrats and Republicans alike. We’d have a lot less BS legislation. Indeed, a lot less legislation period.

    • Sounds like a Taliban type governance!

      We make progress. It does not come easy and sometimes it’s two steps forward and one step back, but over time, we get improvement.

      Right now today, we provide tax bebates in the tax code for fuel efficient HVAC and related equipment.

      see this:

      https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-updated-questions-and-answers#:~:text=credit%20for%20homeowners%3F-,A.,overall%20credit%20limit%20of%20%24500).

      But I ask … if you’re looking at this – is there actually a calculated cost-benefit?

      What justifies this in the tax code right now?

      • Larry, all you’ve been doing lately is making excuses for failed government policies and programs. I thought that was the job of the Washington Post. “We gotta do something.”

        This program will create slush funds for rent seekers. But it makes white suburbanite women and their cuckhold husbands happy. The minority folks in California have a point — environmentalism that makes woke white folks happy often hurts lower-income people and won’t make a dime’s worth of difference preventing temperature rise.

        • See TMT, I don’t consider them “failed” and you do!

          And I have no clue where thinking like this comes from: ”
          But it makes white suburbanite women and their cuckhold husbands happy. ”

          jesus

  13. I think that Tufts needs to redo their study to consider the effects of Covid. There will probably be permanent changes in commuting habits.

    Some people will resume working in offices once social distancing is lifted, but a lot will continue working from home, especially if businesses downsize their office space when they renew their leases. Mass transit use wasn’t significant outside large metropolitan areas, and a lot of people have become too scared to get within sight of another person to even think of getting on a bus or train to commute.

    Many people will gladly put up with commuting so their families can live in the open space away from cities, but others have no choice but to commute. Construction workers can’t move every time a building they are working on is completed and their company starts building another one in a different town, so they often have to drive 50 to 100 miles to the jobsite.

    BTW, I thought the tire fire discussed several posts above was near Winchester, not Roanoke.

    • One of the planning things that happen that many are not aware of is called the Long Range Transportation Plan done by most METRO areas (and suburbs). Looking ahead to 2050 to try to figure out what transportation facilities should be planned for.

      This is done by entities known as MPOs – Metropolitan Planning Organizations – a sort of Federal equivalent to Virginia’s Planning Districts but solely devoted to transportation.

      So, they look at things like predicted population growth, jobs, and commuting which, this year is turning out to be a bit of a crap shoot in terms of whether people will continue to commute or work from home.

      On top of this , VDOT has instituted a process called Smart Scale which uses various critera to “score” a given proposed project but roads that serve solo commuting are scored low – the idea now is what transportation facilities move the most people – not the most cars.

      Commuting and population and job growth as a little bit of chicken-egg anyhow if your population growth is basically new commuters moving in and not local jobs increasing.

      So, my prediction is that the era of roads to support commuting are ending. Congestion won’t get better and congestion tolls will become more and more the norm.

      It’s not that folks won’t be able to commute. It’s that it will cost them more in time and money unless they want to carpool or vanpool or ride transit to/from work.

    • Our office of 20, including 3 retiree consultants, has dropped to 4 onsite employees because of Covid, and they are there only to support classified work. The rest are at home full time. The company now pays for internet and cellphones for everyone and discussions have started on permanently reducing to 1/3 of current office space and continuing current arrangements past the pandemic. We are not alone, I’m sure.

      I wonder if the IRS still has the home office depreciation and deductions? YES! Ooooh, this could get interesting in the future. Think I’ll bring up 1099 consulting as an option going forward. Well, I may have just carved out some overhead work for myself.

  14. Some thoughts-

    > COVID has changed the whole picture, we do not know if HOV-3 car-pooling, slugging, and mass transit make as much sense anymore. Therefore the proposed TCI program is out-of-date.

    > Some years ago I saw literature references to NoVA becoming a CARB “state” by itself. Apparently that never happened, but presumably was considered as a potential way for a bifurcated Virginia to participate. Not that I favor such a scenario… just saying what to look out for.

    > The big loser to watch is the ethanol lobby, as they will lose market share. Presumably Dems may allow %ethanol in gasoline to climb to 15-20% to keep corn states whole, and that will be a happy mess, since ethanol is worse for emissions.

    • Good article. We sometimes spend so much time discussing the fact that government is imposing a tax for purposes that some disagree with that we miss the part about what happens to demand for gas if cars become more and more efficient. If demand affects price and demand is less with more and more fuel efficient cars then price normally goes down except this tax will come in and keep the price from falling further?

      Overall the price of fuel has dropped over time from when it was over $4 a gallon to where it’s close to $2 now in some places and the news reports that the OPEC nations have a “glut” of oil – and US supplies of oil are shutting down because they can’t make money at current prices.

      In other places of the world, the price is much, much higher and demand for fuel is also weak and I’d suspect the higher taxes on fuel in those countries goes to pay for things like transit and health care.

      I suspect many Virginians will have little to say about this as long as gasoline prices do not skyrocket. Conservatives and anti-taxers will continue to have their hair on fire, no doubt.

  15. I am a little fatalistic about gasoline price in NoVA.

    If DC and MD raise gaso taxes 60 cents/gal, the fuel marketers will probably increase NoVA too. My theory, the marketers do not want DC and MD drivers flocking to NoVA to fill-up, because NoVA is not in a favorable distribution location, and they apparently do not want to have armies of tank trucks in-hauling gaso to NoVA. Especially if truck fuel price is going up specifically to discourage truck traffic in the first place.

    If that theory is correct, and others I think have noted this trend, we have a choice: pay a 40 cent/gal overhead profit to the fuel marketers, or charge 40 cents more state gaso tax in NoVA and use the monies in state.

    This is why I was not too upset about the recent state gaso tax increase. NoVA is better off if we match MD/DC pump tax.

  16. A few days ago we found out that Virginia state government spending has increased by 24% net of inflation and population growth over the past 10 years. Now we’ll see another jump in state spending if the TCI passes.

    Is Kirk Cox awake?

    Rampant increases in state spending and related taxes during a time when many can barely make ends meet is the perfect issue for Republicans.

    Cox should be frying McAuliffe over this issue since McAuliffe was accountable for 4 of those 10 years and wants another chance to keep turning Virginia into Illinois.

  17. In driving thru Danville to NC, its notable that the gas stations on are on the Virginia side and the bars on are the NC side.

    What would make an interesting economic study is if its possible to deduce from location of these businesses whether customers would drive further to cheap gas or cheap booze

    • If we deduce nothing else, TCI could start messy state border situations that might have political backlashes for the implementers….for the main purpose of allowing Dems to claim they forced a reduction of fuel use that is apparently happening anyways without the virtue signal.

      • I think unless and until gasoline at the pump jumps 50 cents or a dollar, the TCI issue will be only an issue with anti-taxers!

        If gasoline spikes, then trouble, yes.

        • There’s certainly an economic decision that individual consumers will make based on thier personal cost-benefit, and in this particular case taxes play a role.

      • That’s not unlike when indoor smoking was prohibited. The market was already favoring non-smoking facilitates, while there were a few that were focusing on giving smokers an option. Astute politicians, seeing the trend, passed a law restricting smoking indoors and took the credit.

        • Well, politicians saw that more and more people were not going to put up with smoking in restaurants and decided they better get behind it.

          Most major restaurants saw the trend also but some local mom/pops still persisted and in some respects people would have sorted themselves out. We walked out of more than one restaurant when we realized they still allowed smoking in “sections” and we could clearly smell the smoke.

          The bigger thing – was not that different from masks.

          The folks that smoked said it was their “right” and others had no right to restrict them.

          That’s how it played out.

          I was a smoker long ago but I would have NEVER smoked if it bothered friends or others but I was fully aware of the smokers who said it was their “right” and no one else had the right to restrict them.

        • Ruination! No smoking on elevators. Oh well, just leave an SBD as you’re getting off.

          Tougher to do on a barstool, but it can be done.

  18. Pingback: Virginia and Other States Pass on Carbon Tax Pact | Bacon's Rebellion

  19. James Wyatt Whitehead V

    At least Tufts acknowledges that this will be another crusher for the working class Virginian. Tufts. Now I can’t get that magic dragon song out of my head.

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