A proposed regional climate initiative could cost New England families nearly $800 a year in gas prices alone, according to a study released Tuesday on the impact of the Transportation and Climate Initiative (TCI).
TCI is a proposal to use a cap-and-trade pricing approach to drive down greenhouse gas emissions and generate revenues for transportation infrastructure among New England and Mid-Atlantic states. The initiative is facilitated by the Georgetown Climate Center, which worked closely with the Obama administration to design and implement climate change policies.
However, several governors, including Republican Chris Sununu of New Hampshire and Democrat Janet Mills of Maine, have expressed reservations about participating due to the expected impact on gas prices.
A report released last December estimated a 17 cent-per-gallon boost, to reach TCI’s goal of a 25 percent reduction in greenhouse gas emissions (GHGs). However, a new study by the Beacon Hill Institute for Public Policy Research, and commissioned by the Massachusetts Fiscal Alliance, projected a price increase of up to 26 cents per gallon. For diesel fuel, prices could jump as high as 52 cents per gallon.
According to the study’s author, William Burke, the Beacon Hill Institute’s research director, the new estimates will have a devastating impact on drivers in the New England region whose states participate in TCI — especially hard hitting low-income families. Though the study concentrated on Massachusetts, all area members of TCI could be affected, Burke told InsideSources.
“The Transportation and Climate Initiative is [trying to impose] a hidden gas tax that’s going to directly hit the households in Massachusetts,” he said. “Really, these gasoline taxes are very regressive in nature, so essentially lower-income households are going to be the ones that are most adversely impacted under this tax.
“Something of this magnitude under a 25 percent scenario — which is the most aggressive scenario that TCI has laid out so far — households are going to see up to $800 losses in their incomes, which is something that’s pretty extreme,” Burke said. “For a lot of lower-income households, you’re talking about a major impact, where they’re not going to be able to spend that money on groceries and other things.
“So, this is something that can be very harmful for the economy.”
Massachusetts Gov. Charlie Baker has backed TCI, despite the fact that neighboring states — like Rhode Island, Vermont and New Hampshire — have voiced opposition to the multi-jurisdictional compact.
In December, New Hampshire Gov. Sununu announced that he would be withdrawing New Hampshire from the TCI agreement.
“New Hampshire is already taking substantial steps to curb our carbon emissions, and this initiative, if enacted, would institute a new gas tax by up to 17 cents per gallon while only achieving minimal results,” Sununu said at the time. “This program is a financial boondoggle and the people of New Hampshire will never support it.”
According to the study: “While benefits from the reduction of GHG [greenhouse gases] would materialize under an emissions cap, Massachusetts and other cooperating jurisdictions would bear the costs, while all global citizens reap the benefits.”
The study concludes that Massachusetts should consider these implications before it signs on to TCI.
Ken Kimmel, Union of Concerned Scientists president, said TCI’s benefits to members of the initiative are “enormous.”
“In addition to cuts from carbon footprints in transportation, it would make a health difference,” Kimmel said. “We could see $17 billion in the first three years raised that we could invest in cleaner, more responsible transportations.”
Opponents note that this $17 billion would be paid at the pump by local drivers, truckers and businesses.
“The challenges of climate and transportation issues for rural states like Maine are unique,” Gov. Mills office said in a statement. “The state will be appropriately cautious when considering these issues.”
Chris Dempsey, director of Transportation for Massachusetts and a TCI supporter, said the new study is not “credible.”
“The Northeast region’s decade of experience with a bipartisan, cap-and-invest approach to the electric utility industry offers real-life evidence that TCI will reduce pollution, increase energy efficiency, and stimulate innovation and economic development — all with minimal impact on gas prices,” Dempsey told InsideSources.
“The document commissioned by TCI opponents is not a credible analysis of the pros and cons of this proven, market-based approach,” he said. “For example, it ignores the substantial economic benefits that will result from increased investment in transportation infrastructure.
“It also misses the public-health benefits that will result from reductions in tailpipe pollution that cause asthma and heart disease and particularly harm senior citizens and children.”
