Though only Massachusetts and three of the 13 state and city governments that had been part of discussions around creating a regional effort to staunch vehicle emissions along the East Coast agreed Monday to be part of the program from the get-go, Gov. Charlie Baker said it is "a pretty good place to start."
Twelve states and Washington, D.C. began the process more than two years ago of developing a regional "cap-and-invest" program to reduce carbon pollution from cars and trucks and generate the resources needed to expand clean transit options and improve public health. On Monday, the leaders of four jurisdictions — Massachusetts, Rhode Island, Connecticut and Washington, D.C. — signed on to be the program's initial members.
The program would set a limit on vehicle emissions, and hold auctions for fuel suppliers that transport gasoline into Massachusetts and other states to purchase allowances for every ton of carbon dioxide that the fuel they are carrying would emit when burned.
"It's my hope that over the course of the next couple of years you'll see additional people come aboard, but you got to start somewhere," Baker said Monday afternoon. "The price of doing nothing is very big."
Baker continued: "If you think about the amount of money that the federal government, state government and local governments spend these days on weather events — far more significant weather events than anything anybody used to see on a very regular basis. ... We have many instances here in Massachusetts and around the rest of New England where flash storms will flood out whole parts of some of our downtowns for days and sometimes a week at a time where people don't have to make the investments to clean up the mess but don't actually get to the point where they make the investment that would make that area resilient so that it wouldn't happen the next time it occurs."
The coalition settled on a carbon emission reduction target of 26 percent by 2032, which could add an estimated 5 to 9 cents to the price of a gallon of gas, according to officials involved in the effort. The program is expected to generate annual proceeds for the participating governments that could exceed $366 million by 2032. That money would be reinvested into low-carbon transportation initiatives, clean energy and public health improvements.
"Reducing transportation pollution is of paramount importance if we are to meet our climate commitments and protect frontline communities. TCI will provide valuable investment opportunities to accelerate progress for economy-growing clean transportation vehicles, systems, and infrastructure by leveraging private capital and innovation," New England Clean Energy Council President Peter Rothstein said.
Among the other groups that welcomed the news Monday were Our Transportation Future, Environmental League of Massachusetts, Mass. Taxpayers Foundation, Massachusetts Business Roundtable, NAIOP Massachusetts, Ceres, the Union of Concerned Scientists, the Metropolitan Area Planning Council, Alliance for Business Leadership, MassPIRG, the 495/MetroWest Partnership, and more.
"Massachusetts has a proud history of national leadership on major public policy issues and Governor Baker has maintained that tradition by becoming a founding signatory to a program that will make real progress on climate change, one of the most pressing issues of our time," said Chris Dempsey, director of Transportation for Massachusetts. "Perhaps more importantly, he has created a program that will bring significant public health, environmental, and economic benefits to residents of Massachusetts."
The reduction in emissions will almost certainly come at a cost to drivers in the form of higher gasoline and diesel prices passed along from the distributors. Energy and Environmental Affairs Secretary Kathleen Theoharides, who chairs the TCI coalition, said Monday that updated modeling projects the potential cost to consumers to be about five cents per gallon with "an absolute maximum estimated at 9 cents."
At 5 to 9 cents, the estimated increase in fuel costs for drivers falls below the high-end forecast of 17 cents per gallon that TCI states gave last year. The Center for State Policy Analysis at Tufts University has suggested it could be even higher depending on how aggressive states choose to be in reducing emissions.
While numerous energy and environmental groups praised the states that signed the initial TCI framework Monday, much of the opposition focused on the possibility of gas price increases for consumers and businesses.
"The same small businesses that have faced shutdowns, countless restrictions, new regulations, and capacity limits will now face higher fuel costs due to Massachusetts joining the TCI," said Christopher Carlozzi, Massachusetts director of the National Federation of Independent Business. He added, "Higher fuel costs as a result of TCI will not just impact struggling small businesses attempting to grow jobs and rebuild the shattered Massachusetts economy, it will hurt the wallets of workers who must commute to their jobs in vehicles every day."
Trade groups representing the "retail fuels industry" — the National Association of Truck Stop Owners, National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America — flatly claimed, "The TCI program, as currently constructed, will not work. The program will result in higher costs without any meaningful environmental benefit."
The New England Convenience Store Owners and Energy Marketers Association said its concerns about the design of the program were not addressed in the MOU signed Monday, particularly around the point of regulation and "the lack of clarity" for allowances.
"NECSEMA and its members understand the importance of reducing emissions from the transportation sector, but getting it right is more important than acting swiftly. This program's lack of detail for regulated businesses and allowance availability does not instill confidence, and, most importantly, risks upsetting an essential industry while affecting the public," the organization said. "This impact has the potential to go well beyond the cost to consumers by disrupting the free flow, availability and competitiveness of motor fuels."
The Massachusetts Fiscal Alliance, which has been a vocal opponent of TCI for months, said Massachusetts' participation in TCI dooms any future aspirations of Baker and Lt. Gov. Karyn Polito.
"With Gov. Charlie Baker and Lt. Gov. Karyn Polito supporting TCI and entering Massachusetts into the scheme, I don't see a path for either of them being able to win an election in 2022. People are hurting right now and the administration's obstinance on this issue is insensitive to their plight and tone-deaf to their ongoing struggles," Mass. Fiscal spokesman Paul Craney said. "TCI is bad policy and even worse politics."
TCI is a central part of Baker's transportation and climate agenda, and is "critical" to the efforts that will be needed to achieve his administration's goal of net-zero emissions by 2050, Theoharides said.
Mass. Fiscal cited the Center for State Policy Analysis at Tufts University report that found the cost of TCI on drivers could be as high as 38 cents per gallon and said it would expect the cost to "likely be much higher" since a fraction of the states joined. But Theoharides said the program includes protections "in terms of ensuring that prices won't raise above sort of a five-to-nine-cents range."
"Some of the price projections that were in studies as recently as this year did not include those price protections that have been a key component of programs like the Regional Greenhouse Gas Initiative and are absolutely a critical component of this program," she said.
Even if the average price of a gallon of gasoline increases by 9 cents in Massachusetts, the Bay State could still have cheaper gas than other neighboring states that have not agreed to join TCI. The average price of gas here was $2.17 a gallon Monday, AAA said, which would rise to $2.26 per gallon under the "absolute maximum" that Theoharides outlined Monday. At $2.17, AAA said the average price was up 5 cents over last week.
At a post-TCI average price of $2.26 per gallon, Massachusetts would still have cheaper gas than New York (average $2.30 as of Monday), New Jersey ($2.35), and Pennsylvania ($2.53). It would be essentially the same as the current average price of gas in Maine, $2.25 per gallon, but would be more than a dime higher than New Hampshire's current average price of $2.14 per gallon.
The potential cost of the program for consumers scared off New Hampshire a year ago -- Gov. Chris Sununu called it a "financial boondoggle" -- and opponents argue the emissions reductions sought by the cap are not worth the impact on gas prices, particularly because TCI's own projections previously showed emissions were on track to decrease by 19 percent by 2032 even without any action from the compact states.
A year ago, Theoharides said the TCI coalition had not examined how many states it would take to make a regional pact work, but said that a "critical mass" of participation from the original 12 states and the District of Columbia would be necessary to make TCI successful.
"One of the big pieces for us is getting as many states on board as we can," she said last December.
On Monday, she said having Massachusetts, Rhode Island, Connecticut and Washington, D.C., onboard represented enough of a critical mass and that the TCI program "can absolutely be effective with three states and the District of Columbia."
"The states and the District participating in this program are getting the same emission reductions that were expected if all states joined and significant proceeds to invest back into clean transportation in our economies and in our transportation systems," she said. "All four of us have state and city goals, aggressive goals, in terms of reducing climate emissions, improving public health and then investing in clean transportation choices. And this program allows us to do that, allows us to get things started while continuing to work to get other states on board so they can realize those same benefits in their states."
Though only three states and D.C. signed the MOU on Monday, Delaware, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Vermont and Virginia all signed a statement of support for the concept of TCI and pledged to continue to partner with states that sign onto the compact.
Senate President Karen Spilka welcomed the news Monday that Massachusetts would be among the initial states to launch TCI and said she expects that other states will soon follow suit.
"I believe that Massachusetts needs to look at all policy through the lens of climate change and its long-term effects, and so I applaud our efforts to enter into a regional TCI MOU," she said. "The MOU is such a positive start for our region, and I do believe that if we build it, others will come."