If you would like to be inspired by an example of states working together on an ambitious plan to address climate change, read on—the following is a big deal!
Today, the governors of nine states (MA, VA, MD, CT, RI, VT, NJ, PA, DE) and the District of Columbia announced that their states will establish a regional “cap and invest” program to cut greenhouse gas emissions from the transportation sector and invest in clean transportation solutions. To pass muster, the announcement states that the program must cause substantial carbon emission reductions, ensure equity in its benefits and burdens, foster economic growth and job creation, enhance resilience in the transportation system, and allow states to pursue other, complementary policies. The states are to design the program in one year, at which point these states will make final decisions on participation and seek legislative or regulatory approvals.
This announcement borrows a page from a highly successful playbook. About ten years ago, the governors of many of these same states called for, and ultimately put in place, a cap and invest program that has driven down emissions from the electric sector, and generated billions of economic benefits for the northeast and mid-Atlantic states. This same model can work transportation.
What is ‘Cap and Invest,’ and why do we need it?
As readers of my Boston Globe op-ed and various UCS blogs know, the transportation sector is now the largest source of carbon emissions in the United States and the northeast/mid-Atlantic region. While there are a number of policies in place to lower transportation emissions (fuel economy standards for cars and trucks, incentives and mandates for electric cars, and investments in public transit), transportation sector emissions are expected to stay flat, and may even rise.
Why? Among other things, we are missing two key pieces: 1) a legally binding mechanism to force overall emissions down; and 2) a revenue source to fund the transition to cleaner transportation.
The regional cap and invest program announced today can put these vital pieces in place. It would establish a legally binding mechanism to drive down emissions by setting an overall, regional cap on greenhouse gas emissions from cars, trucks, and buses that will decline over time. To ensure that the cap is not exceeded, companies that bring transportation fuels (gasoline, diesel) into the region would have to acquire “allowances” that would be tied to the greenhouse gas emissions from combusting their fuel. The total allowances sold each year would not exceed the applicable cap, ensuring that the region’s emission reduction goals would be met.
The program also provides a much-needed revenue source for clean transportation. The allowances that companies would have to obtain would be sold at public auction, and states can use the revenues to invest in cleaner transportation, including electric cars, buses, and trucks, better public transportation, and affordable housing near jobs. We estimate that at modest allowance prices that would cost the average driver $6 per month, the program could bring approximately $3.5 billion into the region for clean transportation investments.
That’s an investment that will pay off in spades. For example, when we replace older dirty transit and school buses with ones that run on clean electricity, we can dramatically improve air quality for our kids and protect vulnerable populations that live in polluted areas.
Why is this a big deal?
- It shows again that states are leading, even while the federal government has abdicated its duty to protect current and future generations from climate change, as demonstrated most recently—and shamelessly—by its hawking of fossil fuels at last week’s international climate conference. This bold regional plan announced by these ten states and the District of Columbia will help reassure an anxious world that the United States has not abandoned the fight and demonstrate that the Trump administration does not speak for the country on climate change.
- The scale of this plan is stunning. Over 50 million people live in these participating states, comprising over 15% of the US population and close to 20% of the US economy. If these states were a single country, they would be just beyond Germany as the fifth largest economy in the world.
- This is a bi-partisan success. The governors of 3 of the nine states (MA, MD and VT) are republicans, and the cap and invest approach is an idea pioneered by President George H.W. Bush to fight acid rain. In our current polarized political landscape, bipartisan collaboration, especially on climate change, is extremely rare. This initiative sets an excellent example.
This announcement is a first step. In the coming year, the states will need to hash out a number of important details, such as the initial level of the emissions cap, the pace of decline of the cap, which entities in the stream of commerce will be responsible for purchasing allowances, how revenues will be allocated back to participating states, and the principles for making equitable investments. This will take some time, but the states can take advantage of the fact that California and Quebec already have a working cap and invest program for transportation, and the RGGI program for electricity can also provide useful guidance on how to structure the program.
As the details are being hammered out, diverse stakeholder and public engagement will also be critical, and should include, among others, business, equity, health, justice, labor, and transit advocates. Making sure that these groups are empowered during the process will make for a cap and invest plan that benefits everyone.
UCS has played a major role in advancing this initiative to this stage. We have made the case for it to policymakers and anyone else who would listen, issued fresh technical analysis, built coalitions, and mobilized our members and supporters. We will continue to engage in both technical design and public outreach and education.
But for now, we applaud the governors and officials who have put their states behind a sensible, cost-effective, and much-needed policy to tackle the challenge of building a clean, equitable, modern transportation system for all.