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Research & Commentary: TCI Becomes Far Less Acceptable to Virginians Once They Know Its Cost

January 13, 2020

Cap-And-Trade Scheme Would Substantially Increase Gasoline Prices, Cause Economic Harm To Low-Income Virginians

A poll conducted by Mason-Dixon Polling & Strategy for the Thomas Jefferson Institute for Public Policy (TJI) finds there is little support for the Transportation and Climate Initiative (TCI) cap-and-trade scheme among Virginia voters once they find out the massive costs of the program. Gov. Ralph Northam and his administration signaled their intent to join the program in 2018.

TCI, an initiative being pushed by the Georgetown Climate Center, is based on California’s cap-and-trade program and the Regional Greenhouse Gas Initiative (RGGI) consortium of states in New England and the Northeast. The purpose of TCI is to reduce carbon dioxide (CO2) emissions from cars and trucks to head off climate change. It does this by placing a cap on gasoline and diesel fuel allowed for sale in the states participating in the program. This increases the price at the pump for these fuels, discouraging consumers from buying them.

Gradually, the amount of these fuels allowed for sale is reduced while wholesalers would have to purchase CO2 allowances to stay in business. TCI is scheduled to be operational by 2022, and to reduce CO2 emissions from transportation fuels by 25 percent by 2032.

The TJI poll of 625 registered voters initially finds Virginians are supportive of joining TCI based on its goals that it will seek to “improve transportation, develop the clean energy economy and reduce carbon emissions from the transportation sector.” After this question, 61 percent of respondents support the program.

However, when asked if they still support TCI after adopting the program meant “an additional tax on automotive gasoline and diesel, starting at 18 cents per gallon and rising higher, while reducing money set aside for road repairs and new road construction,” 58 percent respond that they do not. This includes 63 percent of independents and 85 percent of Republicans. In no region of the commonwealth does TCI come close to receiving majority support.

“The Virginia General Assembly and others who love this idea need to understand the voters will not,” said Steve Haner, the Jefferson Institute’s senior fellow for State and Local Tax Policy in a news release accompanying the polling results. “Adding almost 20 cents per gallon to fuel costs will take significant funds out of their family or business budget. This is a carbon car tax.”

Despite claims from supporters, cap-and-trade programs, RGGI, and TCI do little to reduce carbon dioxide emissions. Even worse, they are basically regressive taxes. Cap-and-trade programs disproportionally burden low-income households, many of whom can’t afford the higher energy and gasoline costs these programs are designed to produce. The more someone pays at the pump means the less they can afford to save or use for food, rent, mortgage payments, utility bills, etc.

A Manhattan Institute study estimates the California cap-and-trade program raised residential electricity costs by as much as $540 million in 2013. California’s Legislative Analyst’s Office (LAO) estimates cap-and-trade will increase gasoline prices by 15–63 cents per gallon by 2021, and by 24–73 cents per gallon by 2031. LAO projects Californians will spend an additional $2 billion to $8 billion on gasoline by 2021. It also estimates the increased gasoline prices will cost $150–$550 per household by 2026. Retail electricity prices in the Golden State are also 53 percent higher than the national average. Prior to the enaction of its cap-and-trade program, they were only 40 percent higher.

In a Cato Journal article released in 2018, David T. Stevenson of Delaware’s Caesar Rodney Institute writes there are “no added reductions in carbon dioxide emissions, or associated health benefits, from the RGGI program. RGGI emission reductions are consistent with national trend changes caused by new EPA power plant regulations and lower natural gas prices. The comparison requires adjusting for increases in the amount of power imported by the RGGI states, reduced economic growth in RGGI states, and loss of energy intensive industries in the RGGI states from high electric rates.”

A TJI report estimates TCI would reduce the amount of tax revenue used for road maintenance in Virginia by 20 percent in 2022, at a time when the Virginia Department of Transportation estimates 40 percent of the commonwealth’s secondary roads, 15 percent of its primary roads, and 9 percent of its interstate highways are in “poor or very poor condition.”

“Virginia needs $5.2 Billion to get structurally deficient roads up to only ‘fair’ condition and $7.9 Billion to get structurally deficient bridges into no better than ‘fair’ condition,” the TCI report notes. “The Virginia Department of Transportation highway construction budget is $2.8 Billion per year. The TCI would rob Virginia of its ability to keep its roads safe for the electric vehicles it would have to replace gasoline and diesel fueled vehicles.”

“The TCI is a poorly conceived, fundamentally regressive, and economically damaging proposal,” declare the signatories of an Institute for Energy Research coalition letter. “It would— on purpose—make the day-to-day transactions of life painfully expensive, especially for those … who are going through bad times and are struggling every day to get by.” Virginia lawmakers should work to ensure the Old Dominion stays away from TCI, which would cause considerable economic harm to all Virginians, especially low-income Virginians, while having a minimal effect on carbon dioxide emissions.

The following documents provide more on TCI, RGGI, and cap-and-trade programs.

The Transportation and Climate Initiative – All Pain and No Gain
https://www.thomasjeffersoninst.org/files/3/AllPainNoGain.pdf
This study by 34-year EPA veteran Dr. David Schnare, Director of the Thomas Jefferson Institute’s Center for Environmental Stewardship, demonstrates that the proposed Transportation and Climate Initiative would be “All Pain and No Gain” for Virginians.

Coalition from NE and Mid-Atlantic Opposes Regional Gasoline Tax Masking as a Transportation Climate Initiative
https://www.instituteforenergyresearch.org/wp-content/uploads/2019/12/TCI-Opposition-Letter.pdf
This coalition letter organized by the Institute for Energy Research lists a number of reasons why IER and co-signing organizations oppose the Transportation and Climate Initiative. Co-signees include think tanks and concerned citizens groups representing each TCI target state. The list includes the Yankee Institute, the Massachusetts Fiscal Alliance, the Rhode Island Center for Freedom and Prosperity, the Thomas Jefferson Institute for Public Policy, Fiscal Partners, the Ethan Allen Institute, the Maryland Public Policy Institute, Citizens Alliance of Pennsylvania, the Maine Heritage Policy Center, Unshackle Upstate, the Josiah Bartlett Center for Public Policy, the Caesar Rodney Institute, the Garden State Initiative, and other national groups including NFIB, Americans for Tax Reform, Citizens for Limited Taxation, and FreedomWorks.

A Review of the Regional Green Gas Initiative
https://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2018/2/cato-journal-v38n1-chapter-11.pdf
This Cato Journal article authored by David T. Stevenson of the Caesar Rodney Institute finds the Regional Greenhouse Gas Initiative has not shown any added emissions reductions or associated health benefits, has had minimal impact on energy efficiency and low-income fuel assistance, and has increased regional electric bills.

Legislating Energy Poverty: A Case Study of How California’s and New York’s Climate Change Policies Are Increasing Energy Costs and Hurting the Economy
https://www.pacificresearch.org/wp-content/uploads/2018/12/LegislatingEnergy_F_Web.pdf
This analysis from Wayne Winegarden of the Pacific Research Institute shows the big government approach to fighting climate change taken by California and New York hits working class and minority communities the hardest. The paper reviews the impact of global warming policies adopted in California and New York, such as unrealistic renewable energy goals, strict low carbon fuel standards, and costly subsidies for buying higher-priced electric cars and installing solar panels. The report finds that, collectively, these expensive and burdensome policies are dramatically increasing the energy burdens of their respective state residents.

Less Carbon, Higher Prices: How California’s Climate Policies Affect Lower-Income Residents
https://www.heartland.org/publications-resources/publications/less-carbon-higher-prices-how-californias-climate-policies-affect-lower-income-residents
This study from Jonathan Lesser of the Manhattan Institute argues California’s clean power regulations, including the state’s renewable power mandate, is a regressive tax that harms impoverished Californians more than any other group.

Five Myths of Cap-and-Trade
https://www.heartland.org/publications-resources/publications/five-myths-of-cap-and-trade
Articles supporting cap-and-trade programs rest on a number of fallacies. In this article by Todd Myers of the Washington Policy Center, Myers identifies and explores five persistent myths concerning cap-and-trade, including the belief that a cap on carbon dioxide emissions guarantees emissions reduction.

The U.S. Leads the World in Clean Air: The Case for Environmental Optimism
https://files.texaspolicy.com/uploads/2018/11/27165514/2018-11-RR-US-Leads-the-World-in-Clean-Air-ACEE-White.pdf
This paper from the Texas Public Policy Foundation examines how the United States achieved robust economic growth while dramatically reducing emissions of air pollutants. The paper states that these achievements should be celebrated as a public policy success story, but instead the prevailing narrative among political and environmental leaders is one of environmental decline that can only be reversed with a more stringent regulatory approach. Instead, the paper urges for the data to be considered and applied to the narrative.

Climate Change Reconsidered II: Fossil Fuels – Summary for Policymakers
https://www.heartland.org/publications-resources/publications/climate-change-reconsidered-ii-fossil-fuels---summary-for-policymakers
In this fifth volume of the Climate Change Reconsidered series, 117 scientists, economists, and other experts assess the costs and benefits of the use of fossil fuels by reviewing scientific and economic literature on organic chemistry, climate science, public health, economic history, human security, and theoretical studies based on integrated assessment models (IAMs) and cost-benefit analysis (CBA).

The Social Benefits of Fossil Fuels
https://www.heartland.org/publications-resources/publications/the-social-benefits-of-fossil-fuels
This Heartland Policy Brief by Joseph Bast and Peter Ferrara documents the many benefits from the historic and still ongoing use of fossil fuels. Fossil fuels are lifting billions of people out of poverty, reducing all the negative effects of poverty on human health, and vastly improving human well-being and safety by powering labor-saving and life-protecting technologies, such as air conditioning, modern medicine, and cars and trucks. They are dramatically increasing the quantity of food humans produce and improving the reliability of the food supply, directly benefiting human health. Further, fossil fuel emissions are possibly contributing to a “Greening of the Earth,” benefiting all the plants and wildlife on the planet.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Environment & Climate News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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