Governor Shouldn’t Plunge Into Gas-Tax-Like Climate Change Initiative, Taxpayer Advocate Says

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The Massachusetts Fiscal Alliance is calling on Governor Charlie Baker to get approval from the state Legislature before implementing a climate-change program that could lead to higher gasoline prices.

Baker administration officials say the Transportation and Climate Initiative program isn’t a gas tax but rather a “cap-and-invest” program, meaning that the state would cap allowable emissions and use the money garnered from fuel providers to invest in transportation approaches designed to reduce pollution that state officials say is leading to global warming.

One difference between a gas tax and the “cap-and-invest” program is that consumers wouldn’t be assessed the cost increase directly at the pump, since the assessment would hit suppliers first. Another, say supporters, is that the state government can use the money it gets from the program to provide ways for consumers to avoid the price increases, such as better public transportation or financial incentives to obtain electric cars.

Baker administration officials say they may already have authority to implement the program under an anti-global-warming state law passed in 2008.

“This raises the concern that such a far-reaching tax could be implemented without the legislative approval process,” wrote Laurie Belsito, legislative director of the Massachusetts Fiscal Alliance, in a letter to Baker dated Thursday, October 10. “Make no mistake:  this is a very slippery slope for Massachusetts. Although this is still in the early stages, lawmakers from other states in the TCI agreement are seeking legislative approval. Your administration, whether legally required or not, should also act in good faith and seek the same. There must be an open and transparent legislative process on the details of the agreement.”

A comparable program in California (called “cap-and-trade” there) adds about 13 to 14 cents per gallon in the cost of gasoline to consumers, according to a study published in July 2018 by Stillwater Associates, a transportation fuels consultant.

Gasoline and diesel prices affect not just people who drive cars but also tend to lead to increases in prices of goods, since many of the things consumers buy are transported by trucks that use oil-based fuel.

But supporters of the approach say it’s needed in order to lower emissions from fuel-burning motors, which they say are leading to climate change, which they say is harmful.

Here’s how the Union of Concerned Scientists, which supports “cap-and-invest” programs, describes the approach:

A cap-and-trade program establishes a limit on emissions of global warming pollution, lowers that limit over time, and uses the power of the market to reduce emissions at the lowest cost. Owners of facilities such as electric power plants and oil refineries must buy a carbon “allowance” for every ton of pollution they emit. If companies find ways to reduce their pollution at a lower cost than the allowances, they can sell any surplus allowances to companies that cannot. The resulting market creates an incentive to implement cost-effective cuts in global warming emissions, and encourages investments in new low-carbon technologies.

The 2018 Stillwater Associates study assumes that all of the cost of the so-called “carbon allowance” would be passed on to consumers, although the study acknowledges that it’s possible a portion won’t be because of market efficiencies in complying with the emissions standards.

Kathleen Theoharides, the Massachusetts secretary of energy and environmental affairs, said this week that state officials are still researching whether they need the approval of legislators in order to implement the “cap-and-invest” program recommended by the Transportation and Climate Initiative, according to State House News Service.

“We believe we have significant authority under the Global Warming Solutions Act,” Theoharides said earlier this month, according to WBUR radio.

The Massachusetts Global Warming Solutions Act, signed by then-Governor Deval Patrick in August 2008, gives the secretary of energy and environmental affairs authority to address climate change through what the law calls “market-based compliance mechanisms”:

Section 7. (a) The secretary, in consultation with the executive office of administration and finance, may consider the use of market-based compliance mechanisms to address climate change concerns; provided, however, that prior to the use of any market-based compliance mechanism, to the extent feasible and in furtherance of achieving the statewide greenhouse gas emissions limit, the secretary shall: (1) consider the potential for direct, indirect and cumulative emission impacts from these mechanisms, including localized impacts in communities that are already adversely impacted by air pollution; (2) design any market-based compliance mechanism to prevent any increase in the emissions of toxic air contaminants or criteria air pollutants, with particular attention paid to emissions of nitrous oxide, sulfur dioxide and mercury; and (3) maximize additional environmental and economic benefits for the commonwealth, as appropriate.

The Transportation and Climate Initiative is recommending in its draft regional policy proposal that the 12 states that belong to it (from Maine to Virginia) implement the “cap-and-invest” programs by the spring of 2020.

The Transportation and Climate Initiative is a regional collaboration that includes Washington D.C. and the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.

The organization is accepting public input on its proposal through an online portal until Tuesday, November 5.