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TCI has flexibility to meet Vermonters’ needs

by | Feb 6, 2020

I recently read former Commissioner Jeffrey Wennberg’s commentary “Transportation and Climate Initiative doomed to fail,” about the Regional Greenhouse Gas Initiative and plans for the Transportation and Climate Initiative. I would like to challenge some of the points he makes in the hope of clarifying current discussions about these programs.

In 2003, when Wennberg was commissioner of Vermont’s Department of Environmental Conservation, his air director, Dick Valentinetti, and I represented Vermont in discussions with energy and environmental staff from nine other Northeastern states. We were engaged in designing the RGGI program so it would work for a specific market — electricity. The biggest lesson from that work was that the approach we were developing can be flexible in useful ways.

We recognized, for example, that for a very low price – in other words, with a hardly noticeable effect on consumers – RGGI produces revenue that lawmakers can direct for investment purposes to the things that they want to see happen. We thought we’d developed a cap-and-trade program. That wasn’t right; we’d developed a cap-and-invest program.

Good news: TCI possesses the same flexibility. It can be designed to put a low or a high price on transportation fuels. The highest price TCI planners have considered so far is 17 cents on a gallon of gas. Before we go through the roof over that, TCI state staff indicate that over the last 10 years, per-gallon prices have gone down by as much as a dollar and gone up by as much as a dollar and half over current average per-gallon prices.

If this would cost too much for low-income households or our most vulnerable communities, the state could decide to rebate that amount to, for example, the bottom third of Vermont earners, and shield them entirely. The point: TCI can price flexibly, and decision-makers can make those adjustments.

The same flexibility for pricing is available for investing. TCI can be designed by lawmakers to produce the effects they want. Just as we can buffer low-income Vermonters from program costs, we could direct investment on their behalf as well. We could pay for needed rural transit. We could fund programs to make available new EVs or lower-cost, preowned EVs either through ownership or leases. Lawmakers could decide.

Wennberg also argues that cap-and-trade programs create an expensive bureaucracy. That is not what happened with RGGI. Vermont pays only about 1% of its RGGI revenues to participate in that program. It is also important to remember that this is precisely the advantage in sharing program functions like an auction platform and an independent market monitor, and their related costs with other states. This is something that lawmakers should watch, but it’s unlikely to be a problem in a regional cap-and-trade program that only applies to a small number of major fossil fuel importers and wholesalers in the Northeast.

So I hope we’ve busted a couple of myths:

  • “The price on transportation fuel has to be high to get any results.” No, it doesn’t. You will get more resentment than change with a high price. You drive change by agreeing to a modest price, and by investing proceeds for the benefit of Vermonters.
  • “TCI will hurt low-income Vermonters.” It doesn’t need to. If necessary, carve out the most economically vulnerable Vermonters from any price effects. Then, invest aggressively on their behalf. After all, climate change is more regressive and investment in energy-saving transportation choices, targeted first to our vulnerable fellow citizens, will save them money and, we hope, improve their lives.
  • “TCI will be an expensive bureaucracy.” No, it doesn’t need to be. Program costs are modest and would be shared with 11 other states. Lawmakers can require reporting that shows how much Vermont plans to pay, and how much it actually pays from program revenues.

Evidence shows that much of Vermont’s transportation system – the way we move people and goods around the state – is outdated, expensive, inefficient, and doesn’t meet everyone’s needs. Furthermore, when compared with other Vermonters, lower-income Vermonters pay disproportionately more to get to work, to the hospital, and to places where they can shop and enjoy other services. A 21st century transportation system that is more affordable, and meets everyone’s needs, will address the challenge that many Vermonters face in trying to access basic services. If we remember the lessons that we learned from RGGI, the Transportation and Climate Initiative can be useful to our state and help us invest our way into the future.

This commentary is by David Farnsworth, of South Royalton, who is a principal with the Regulatory Assistance Project, a Montpelier-based nonprofit organization. From 1995-2008, he was a staff attorney and hearing officer for the Vermont Public Service Board, which he represented on the Regional Greenhouse Gas Initiative Staff Working Group.

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