Revenue

Modeling indicates that the program could raise up to $68 billion to invest into clean modern transportation in the TCI region in 10 years. The more ambitious the cap, the higher allowance prices are expected to go, which leads to greater revenue.

Potential Revenue from TCI

State 10-year revenue Connecticut $3 billion Delaware $900 million District of Columbia $230 million Maine* $1.8 billion Maryland $5.5 billion Massachusetts $6.3 billion New Hampshire* $1.3 billion New Jersey $11.5 billion New York* $14.9 billion Pennsylvania $12 billion Rhode Island $765 million Vermont $666 million Virginia $9.3 billion TCI Region $68 billion

*Gov. Sununu pulled New Hampshire from the TCI process on December 17th. New York and Maine are still in “observer status” for the TCI process, meaning they are involved but not actively participating in the design process.

Source: Georgetown Climate Center and author’s calculations.

Given the relatively low ambition of the cap trajectory and allowance prices projected, it will be crucial to direct the revenue from TCI towards clean, modern transportation projects that lower pollution in the region, improve public health, and achieve other key goals of the states. In this way, investment revenue can be used as a multiplier of emissions reductions and climate solutions, while keeping frontline and disproportionately burdened communities at the forefront of those investment benefits.

Program Benefits

The program went through extensive modeling exercises to see what benefits the region will realize from such a cap-and-invest program, and the results are promising. Virtually every measure of economic and social well-being improves from this program over the reference case, including:

Up to $10 billion in public health benefits , including 1,000 fewer premature deaths, 1,300 fewer asthma attacks, and 1,700 fewer traffic injuries.

Net cost savings of $4.9 billion for consumers through reduced reliance on gasoline and diesel to get around.

$5.6 billion increase in regional GDP and up to 25,000 new jobs created, largely due to decreased reliance on imported gasoline and increased spending on the local economy.

How Should We Be Thinking About This?

The program is diligently designed and thoroughly modeled, but it still lacks ambition currently. As expected, TCI is following a similar progression as the Regional Greenhouse Gas Initiative (RGGI), where the outset of the program is designed to be overly conservative in order to avoid any political or economic risk. Then, the program can be adjusted downward in future years to claim credit for emissions reductions that were primarily driven by other factors.

We have decades of experience with carbon pricing programs and know that there is massive economic and environmental benefit to capping emissions, raising revenue, and investing that revenue into the modern transportation solutions that the region desperately needs. The billions in economic and public health benefits found by modeling exercises come as no surprise.

Nothing is technically or legally keeping the region from putting together a more ambitious proposal. Greater ambition equals better benefits for all of us. Rather, what determines the details of this program will be the political dynamics of each state and their negotiations with each other. This stage of modeling indicates that a 25% cap trajectory is as far as the governors are willing to go at this time.

If this holds true in the finalized policy, then other design aspects of the program, such as the price floor, future cap adjustment processes, and revenue spending priorities, will be key priorities to get right. What will ensue is a vigorous deliberation process between the TCI states and the public to hash out how far this program is willing to go.

The TCI states have set a goal of completing a final policy design and MOU by Spring of 2020.