CommonWealth Magazine: East Coast states outline carbon pricing plan

October 1, 2019

Officials from Massachusetts and Maryland on Tuesday laid out in broad strokes their plans for a forthcoming program across the East Coast to reduce harmful tailpipe emissions and fund greener transportation alternatives by pricing the carbon contained in gas and diesel fuels.

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On Tuesday, Theoharides, Maryland Deputy Transportation Secretary Earl Lewis Jr., and Vicki Arroyo, executive director of the Georgetown Climate Center, outlined the thrust of the program, and announced a framework that has been agreed to by the participants.

The proposal would put a price on the carbon content of motor gasoline and diesel destined for final sale or consumption in the region. The participants have not yet agreed on how to treat biofuels.

The proposal would mimic a gas tax in that it would raise the price of gasoline. But officials said a price on carbon is distinct from a gas tax in two key ways – the ultimate price at the pump would be influenced by market factors and the overriding focus of the program is reducing emissions instead of establishing a set tax rate on fuel.

“One of the things that distinguishes this from a gas tax is the way the program has been designed,” Theoharides said.

Unlike the per-gallon metric for taxing fuels at the pump, the TCI program would require state fuel suppliers to purchase allowances for the emissions contained in their fuels, and those allowances could be auctioned off and traded by the suppliers, said Theoharides.

Setting a cap on emissions from gas and diesel, which would decline annually, would strongly influence the cost of allowances and ultimately the price at the pump. The cap has not been set yet.

Another distinguishing feature of the cap-and-invest proposal is that it is focused on the environmental outcome of putting a cap on emissions rather than simply affixing a set price to a unit of fuel, said Arroyo.

The precedent for the transportation policymaking is the Regional Greenhouse Gas Initiative, which has successfully reduced carbon emissions from the electricity sector, and used the proceeds from carbon credit sales to finance the Green Communities program and Mass Save.

Read the full article by Andy Metzger in CommonWealth Magazine