You could be forgiven for not having heard of the Transportation and Climate Initiative of the Northeast and Mid-Atlantic States (“TCI”). Undeniably, the blockbuster state-level public policy news of 2019 on the climate change mitigation front was the Climate Leadership and Community Protection Act (“CLCPA”), signed into law in July and previously covered in this blog. But TCI has the potential to have a dramatic impact. Notably, while the CLCPA established ambitious targets for carbon emission reduction, it does not nail down the exact policies that will lead to these reductions – enter TCI.

But first, what is the TCI exactly? Modeled after the Regional Greenhouse Gas Initiative (“RGGI”), the first mandatory market-based program in the United States to reduce greenhouse gas emissions, the TCI is a regional collaboration of Northeast and Mid-Atlantic states that seeks to reduce carbon emissions from the transportation sector. The participants are Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia. TCI has the support of the various state governments, but its recommendations do not have the force of law and the program it designs will have to be independently ratified by the state governments.

TCI proposes to create a regional cap-and-invest program for the transportation sector, like the RGGI did with some success for power plants in a mostly coterminous region. How it angles to work is that by establishing a limit on the total amount of carbon that allowed to be emitted by the transportation industry. To emit this carbon, fuel companies will have to purchase carbon allowances from the government, which will function like a permit to sell carbon emitting fuels. Each state uses its share of the proceeds to fund energy efficiency and renewable energy programs and other measures that reduce the dependence of the industry on carbon emitting fuels. The number of allowances issued will be gradually (or perhaps not-so gradually) decreased over time until the states reach their carbon reduction goals. New York, for instance, aims to make its economy carbon neutral by 2050 under the CLCPA.

Policy experts at TCI are busy working out issues such as where to locate the point of regulation. RGGI was simpler to implement in this regard given the relatively small number of power plants compared to the myriad points of distribution for fuels used in the transportation sector. Which entities will be covered under the cap, the amount of the initial cap, and the speed of the reduction are also up in the air. Perhaps the biggest question mark is what states will do with the proceeds. The possibilities range from investment into renewable energy startups to walkable infrastructure improvements to public transportation.

While still in the planning and development phase, TCI’s program has the potential to be a major disruption for the regional economy, and one of the central implementation devices for the goals set out in the CLCPA. However, to do so the program will have to be designed in such a way as to be palatable to political decision makers. Those decision makers will be concerned with the potential for industrial flight to non-member jurisdictions, and the coterminous hemorrhaging of valuable jobs and tax revenue. TCI must also be sensitive to issues of environmental equity. Neither the environmental harms associated with climate change or the economic vicissitudes associated with stemming its progression effect communities equally. Therefore, whatever the final proposal looks like, it will likely have some mechanism to address the concerns of disproportionately harmed groups.

Community involvement in the crafting of this program is invited. TCI is in the midst of a wide-ranging public input campaign and is having meetings and open comment periods to solicit as much feedback as possible. To get more information or to get involved in the process of crafting this policy, visit https://www.transportationandclimate.org/.