John McClaughry has challenged the proposed Transportation and Climate Initiative (TCI) as unnecessary and harmful. I do not share Mr. McClaughry’s views on climate change and have worked for years under former Governor Douglas and as a consultant to promote adoption of sound climate policies across the United States. That being said, I believe Mr. McClaughry has understated his criticism of TCI.
TCI seeks to affect our transportation choices and behaviors in the same way the Regional Greenhouse Gas Initiative (RGGI) affected the choices made by northeastern electric utilities in favor of lower greenhouse gas alternatives. As Governor Douglas’ commissioner of environmental conservation, I served as Vermont’s lead negotiator when the RGGI program was hammered out among the original nine states. And while we can debate the degree to which RGGI affected those decisions, there is no question RGGI has raised millions to support state climate policy initiatives and our regional GHG emissions per unit of generation is significantly lower today.
RGGI and TCI are cap-and-trade programs designed to make high GHG generation (RGGI) and transportation (TCI) more expensive than cleaner alternatives. Cap-and-trade is a tool, and like any tool it works best when it is applied to the task for which it was designed. Unfortunately, very few legislators understand how it works.
Applying cap-and-trade to the transportation sector is like using a hammer to turn a screw. Cap-and-trade only makes sense when: 1) the participants in the program make the key decisions affecting GHG emissions; 2) the participants in the program are few in number; and 3) the participants in the program are sophisticated players with significant technical, legal and financial resources. All of these are true for the electric- generation sector and none are true for the transportation sector.
Cap-and-trade requires the creation of an expensive bureaucracy and assumes the participants will undertake complex analyses to “game” the system to their advantage. This is how the program affects decisions that affect GHG emissions. But the decisions that affect emissions in the transportation sector are not made by the participating fuel distributors and gas station owners. They are made by millions of individual consumers. If customers are willing to pay five cents more at the pump, the fuel suppliers will happily pass that cost along and change nothing.
Studies have shown only a major increase in the cost of motor fuels will generate a noticeable change in consumer behavior. Is TCI planning to double the cost of gas at the pump? If so, we can write TCI’s obituary right now. People will not tolerate such an increase and will, at their first opportunity, elect representatives who will repeal it as their first order of business.
Any “price signal” small enough to be tolerable is too small to affect consumer behavior. As a result, TCI is nothing more than an inefficient, bureaucratic, hopelessly complicated way to increase revenue from transportation fuels. If raising more money from transportation fuels is the goal, why not simply add a few cents to the motor fuels tax? Or create a carbon tax? We can do either without adding a single new government position, and have everything in place right now to collect it.
The obvious answer is it is impossible to increase taxes without using the word “tax.” TCI can be enacted without that word appearing in the legislation. Creating TCI with all of its costs and complexity for the purpose of avoiding the “T” word would be nothing short of public policy malpractice.
John McClaughry and I might disagree over whether raising taxes to promote climate action is justified. But I suspect we agree TCI would be the worst imaginable way to achieve it.
Jeffrey Wennberg is commissioner of public works in the City of Rutland and previously served as commissioner of environmental conservation under Gov. Jim Douglas, and as a consultant with the Center for Climate Strategies in Washington. D.C., for whom he managed numerous state, regional and national studies of cap-and-trade policy proposals. Wennberg has also served as chair of a presidential-level advisory committee for U.S. EPA under presidents G.W. Bush, Obama, and Trump.