Northeast States Ready Cap and Trade for Transportation

Proposal would require fuel distributors, terminals to buy pollution credits
Photograph: Shutterstock

CHICAGO — A regional coalition of states is readying a cap-and-trade program for transportation, with fuel suppliers as the regulated party.

The Transportation and Climate Initiative (TCI) was founded in 2010 by a group of environment, transportation and energy agencies in the Northeast and Mid-Atlantic states and the District of Columbia. Today it has 13 participating jurisdictions, including Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Virginia. With transportation supplying more than 40% of carbon emissions in the Northeast and Mid-Atlantic regions, the TCI aims to cut greenhouse gases from the sector and upgrade the areas’ transportation systems to be cleaner and better serve disadvantaged communities.

At the end of 2018, nine of the TCI states and the District of Columbia agreed to design the framework for a regional program within one year to cap and cut carbon emissions from motor fuels. This October, the group released its proposed program framework, which aims to cap carbon dioxide emissions from the combustion of finished motor gasoline and on-road diesel in the region. (It is still weighing how to treat biofuels.)  

The proposed program would govern any fuel destined for final sale or consumption in a TCI jurisdiction upon removal at the rack or for fuel that originates from outside a TCI jurisdiction. Fuel suppliers would be the regulated entity under the program and be required to hold allowances to cover reported emissions. These would include owners of fuel at terminals in a TCI jurisdiction and owners of fuel delivered into the jurisdiction for final sale or consumption in the state from a facility in another jurisdiction. Owners and operators of fuel supply infrastructure such as terminals, pipelines and distributors could also have reporting or record-keeping obligations.

According to the proposed program, fuel suppliers would be required to report emissions and supporting information to TCI jurisdictions on a monthly or quarterly basis. The specific compliance obligations would be calculated based on the emissions that occur when the fuel is combusted. To verify the accuracy of reported data, the jurisdictions could use third-party verification, an agency or self-certification.

Over the next couple of months, the TCI will be gathering public comments on this proposal framework and then release a draft proposal in December 2019 with the costs and benefits of different approaches. It will then have another public comment period and release a final proposal in spring 2020. Through the coming months, each jurisdiction would decide whether to sign on and take any necessary legislative steps to implement the program.

The TCI program would begin as early as 2022 with an emissions cap that adjusts downward each year, at a rate set by each jurisdiction based on its goals. The program would aim to hit a target emissions level in 2032.

“By working together on this, we can really deliver a better, cleaner, more resilient transportation system benefiting all of our communities, particularly those who are underserved by current transportation and also disproportionately affected by pollution,” said Kathleen Theoharides, secretary of Massachusetts’ Executive Office of Energy and Environmental Affairs, according to The Hill.

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