Price Cap Will Ease Compact’s Gas Cost Concerns, TCI Supporter Says

TCI Backers Question New Tufts Report

Matt Murphy11/19/20 4:06 PM

NOV. 19, 2020.....Supporters of a regional effort to cap vehicle emissions urged patience Thursday as states work to finalize details of the Transportation Climate Initiative before the end of the year, putting little stock in a new report that suggested consumers could pay a much higher price at the pump than previously forecast.

Massachusetts is one of 11 states, with the District of Columbia, working to develop a new cap-and-trade program to reduce carbon emissions along the East Coast by between 20 percent and 25 percent by 2032. A new report published Thursday by the Center for State Policy Analysis at Tufts University and its director Evan Horowitz suggested that consumers could pay increases of up to 38 cents per gallon of gas as a result of TCI, which is more than twice the 17 cents that TCI states forecast last year.

But the price for drivers depends a lot on how aggressively states choose to pursue emission reductions, whether they put a cap on prices, how states choose to invest in clean energy and how the economy rebounds from the COVID-19 pandemic. Gov. Charlie Baker said this week his is "still very much a fan" of TCI, but said states were revisiting past pricing models to look at how the market has changed since last November.

"We should be much more concerned with what the states are actually going to propose than the theoretical," said Chris Dempsey, director of Transportation for Massachusetts and a major proponent of TCI.

While the potential cost to consumers scared off New Hampshire Gov. Chris Sununu last year when he pulled out of negotiations, those behind the effort point out that TCI would also generate hundreds of millions of dollars in new revenue for states to invest in clean energy and public health improvements that would cut down on government-funded health care costs.

The Tufts study estimated that Massachusetts could net up to $1.2 billion in new revenue under one scenario, while the middle ground would mean $775 million for the state at a cost of 24 cents per gallon to consumers.

"This is a bipartisan group of governors that is trying to develop a program that is trying to reduce emissions, but in politically viable ways. We do not expect that any of these governors have an appetite for the number that Evan puts on the high end, so there will be price caps," Dempsey said.

James Bradbury, mitigation program director for the Georgetown Climate Center, said the Tufts center made some baseline assumptions that differed from those used by TCI states to project the impact a cap-and-trade program would have on fuel costs.

One of those assumptions has to do with how quickly carbon emissions are likely to decline without any intervention. The TCI states believe that on the current trajectory in the region would see up to a 19 percent decrease in emissions by 2032 without TCI, but the Tufts study assumes a smaller 14.2 percent decline.

Horowitz based his model on data form the U.S. Energy Information Administration, which he called the "gold standard." But TCI officials said EIA's figures for the cost of electric vehicles are higher than the current cost of electric cars on the open market, which can impact the transition to cleaner vehicles.

Bradbury also said the CSPA study uses EIA data on vehicle miles traveled in the region that differ from the states' own projections, which were used by TCI to develop its own pricing forecasts, and made some pessimistic assumptions in some of its scenarios about how effectively states would invest in programs and projects that reduce emissions.

"It leads to some theoretical conclusions about what TCI could look like, but I think what's going to be much more important is what the states actually propose," Dempsey said.

Both the report and Horowitz acknowledge that there are still a lot of unknowns, including if and where states will choose to set a price cap, which would limit costs to consumers, but also constrain emission reductions.

"There are definitely open questions about the future cost of EV batteries and electric vehicles, which could certainly affect the numbers. But the EIA data is the gold standard for this kind of analysis," Horowitz said.

Matthew Casale, the environment campaigns director for MASSPIRG, said it welcomed "rigorous and intellectual critique and review" of TCI, but questioned the validity of the Center for State Policy Analysis report by questioning its financial backing.

"We want to see the program implemented in a way where it provides the greatest public benefit possible. But anytime that critique is carried out with oil industry funding, it should raise eyebrows. We shouldn't be putting big oil interests over public health and the climate," Casale said in a statement.

The charge stems from a blog post that links the Center for State Policy Analysis to the Koch Brothers because the center took funding from Emergent Ventures, which is grant program run through the Mercatus Center at George Mason University that is partially funded by the controversial Koch family.

Horowitz said the CSPA received a one-time, start-up grant from Emergent Ventures, but receives the bulk of its funding from Tisch College at Tufts University and some some additional support from the Boston Foundation, the Essex County Community Foundation, and Blue Cross Blue Shield.

The center's board also include a mix of ideological perspectives, including those of two former governors -- Republican Jane Swift and Democrat Michael Dukakis.

"There's absolutely nothing to this claim, which is really just an attempt to discredit our findings. We've never taken Koch money nor has there been any kind of Koch influence. The whole absurd charge is based on a $25,000 startup grant we got in 2019 for legal costs and logo design, not from the Koch foundation," Horowitz said.

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11/19/2020

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