This past week, the 12 mid-Atlantic and New England states that comprise the Transportation Climate Initiative released an outline of a concept policy that would reduce Greenhouse Gas (GHG) emissions from the transportation sector, and would raise revenues for badly needed transportation investments.
The transportation sector generates more carbon-based GHGs in New Jersey than any other source. Despite the gas tax increase enacted in New Jersey in 2016, additional revenue is needed to address the State-wide backlog of transportation projects still unfunded after years of budget neglect – and to anticipate the slowdown in gas tax revenues that is occurring with increased auto fuel efficiency; slowed growth in vehicle travel; and an increasing share of electric cars in New Jersey’s vehicle fleet (see chapter 3 of this report).
After hitting a high of 106 million barrels of gasoline consumed in 2007, New Jersey’s gasoline consumption had, by 2017, declined to a consumption rate of just 95.4 million barrels a year.
The policy would work by setting a ceiling on the amount of carbon dioxide emissions in the 12-state region that stem from combustion of fossil fuels used in transportation (specifically, “finished motor gasoline and on-road diesel fuel”). Wholesalers and distributors of motor fuels throughout the region would bid against one another in an auction of “carbon allowances” for the right to generate carbon emissions. The payments received by the 12 TCI states would be shared and made available for other productive uses. The increased costs to wholesalers would most likely be experienced by consumers in increased fuel prices at the pump.
Connecting the impacts of motor vehicle operation with funding for investments that improve service on motor vehicle alternatives is a proven approach. In California, a similar arrangement to the one proposed by TCI has resulted in a dedicated stream of revenues to support construction of the state’s high speed rail system.
Closer to home, New York State’s congestion pricing legislation promises a minimum of $1 billion per year to fund critically needed investments in New York City’s transit system.
A priority concern of the TCI policy framework is that the adopted policy be equitable in its implementation and impacts. The document emphasizes that the TCI policy eventually adopted should improve transportation options for communities that have limited clean and affordable travel options today, whether urban, suburban or rural; and that are particularly affected by transportation pollution.
Another equity option is to use carbon-impact revenues to offset impacts to low-income households in New Jersey. According to one source, “In 2014, the top-echelon quintile spent an average of $3,789 on gasoline, or 3.3 times as much as the $1,160 spent by the poorest 20% of households … [and] accounted for 31% of the total, while the lowest quintile contributed just 9%.” As a result, many carbon tax proposals include carbon tax “dividends” for low-income households to offset the impacts of climate change policies.
While the merits of a “wealth tax” continue to be hotly debated in New Jersey, the potential offered by a TCI-backed program to raise revenues for sustainable transportation investments while protecting at-risk households is one that is too attractive to ignore.