TCI Regional Policy Design Stakeholder Submissions

Attached are PBF Energy's comments in response to the draft Memorandum of Understanding (“MOU”) regarding the Transportation & Climate Initiative (“TCI”), as proposed by the Georgetown Climate Center (“GCC”).

Regards,
Brendan Williams
PBF Energy

According to the IPCC report from 2018, human activities have already resulted in a 1°C rise in global temperatures. They estimate that we have at most 10 years to get our act together. And by “get our act together” I mean make thoughtful, definitive changes to make sure we have our best chance at a livable future. As a young adult who will be around for that future regardless, I urge you to sign on to the Transportation and Climate Initiative. I don’t feel the need to list off facts about why climate change is an issue or about how transportation is Vermont’s biggest contributor to greenhouse gases. You already know this. There is no longer a question of whether we need to do something to combat climate change, but rather, what should be done?
In human time, 10 years can seem like a lot, but in government, 10 years is not much time at all. As it is, the TCI will not be enacted until January 2022. The truth of the matter is that time is of the essence and TCI has great potential. Its formation and structure have many similarities to the Regional Greenhouse Gas Initiative, in which Vermont has had great success. Since 2008, Vermont has received $21.4 million from RGGI and has been able to turn this into $95 million in energy savings for its people. It has also allowed Vermont to avoid more than 200,000 tons of CO2 in emissions. RGGI has given Vermont experience with cap-and-invest programs in cooperation with other states so that TCI will not be some experiment, but rather a proven system for success.
There are areas of TCI, however, that still need more consideration and solidification. Based on the proposed system of fuel suppliers purchasing allowances in TCI, it is understood that this cost will be passed on to consumers through roughly an 8-10 cent increase in price per gallon of gasoline. Because this will in many ways act as a regressive tax, it is important to understand and mitigate the impact it will have on low-income individuals in Vermont, specifically those living in rural areas that rely more heavily on cars. This could come through priority status in receiving rebates or increased rebates on electric vehicle purchases. Another option to consider is reducing gas prices for individuals that fall below a certain income and live in areas where their cars are their main form of transportation. This could be done through methods similar to gas promotions that many companies run where an input of a code or a sliding of a card can take 4-5 cents off of the gas price. Ultimately, while there is a valid concern that TCI will put a strain on lower income Vermonters, environmental destruction caused by climate change will have a greater impact on these individuals as well. Because of this, it is important that we look out for each other not only in the short term by considering ways to reduce financial burdens, but also in the long run by implemented systems like TCI to reduce the emissions that would lead to greater environmental destruction.
Additionally, just as with RGGI and Vermont’s investment in Efficiency Vermont, it will be important that the state invests the money received from TCI in an effective manner. Because of the success of Efficiency Vermont, I have full confidence in the state to repeat this behavior, but urge the state to look into sustainable transportation beyond just electric vehicles. While EVs will most likely play a big part in reducing transportation-based emissions, it will also be important to improve public transportation and increase bike paths and accessibility as alternative methods to achieving Vermont’s goals.
The jurisdictions involved with TCI will be remembered as pioneers in the fight for our future. And cooperation within this region of America will serve as a valuable reminder to our country and the world that together, we can achieve more. I urge Vermont to sign on to the Transportation and Climate Initiative and be a part of a cleaner, brighter future.

Thank you for your time.

Bibliography:
Gillis, Justin. “Would You Pay Higher Gas Prices to Slow the Climate Crisis?” The New York Times, 26 Feb. 2020.
IPCC. “Summary for Policymakers.” Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty. World Meteorological Organization, Geneva, Switzerland, 2018.
RGGI, Inc. “The Investment of RGGI Proceeds in 2017.” The Regional Greenhouse Gas Initiative: An Initiative of the New England and Mid-Atlantic States of the US, 2019.

Environmental Defense Fund (EDF) appreciates the opportunity to provide the attached comments on the Draft MOU for the Transportation and Climate Initiative.

Thank you,
Drew Stilson

Please find attached Electrify America's comments to TCI on the draft MOU and proposed program framework.

Regards,
Andrew Dick
State Government Affairs Manager
Electrify America, LLC

Please see the attached program design input, resubmitted from 2/27 with updated signatories.

IETA SUBMISSION TO TRANSPORTATION & CLIMATE INITIATIVE (TCI)
The International Emissions Trading Association (IETA) appreciates this opportunity to share input on the Transportation & Climate Initiative (TCI) Draft Memorandum of Understanding (MOU) (the MOU). On behalf of our 130+ multi-sector business membership worldwide, we believe that flexible market instruments – including trading, broad access to natural climate solutions, and cross-border cooperation – must form the backbone to any jurisdiction’s successful climate policy effort. We welcome the TCI’s climate leadership, cooperation, and support for flexible market instruments.

IETA's comments are a result of deep experience and lessons learned across North American and international carbon markets. Our policy and market insights are a testament to the iterative – yet increasingly robust and aligned – nature of carbon pricing system design; an evolutionary process where jurisdictions are not only identifying best practices, but also seeking to embed and operationalize these elements into new or modified program improvements.


OVERVIEW & COMMENTS
IETA’s comments are structured around the sections in the MOU, with detailed comments on: program design elements; applicability; compliance and enforcement; flexibility, allowance allocation and stringency; regional program administration; and additional program design elements.


1. Goals and Schedule
IETA commends TCI’s ambitious objective of releasing a regionally coordinated Model Rule by 31 December 2020, with the intention of commencing the first compliance period as early as 1 January 2022.


2. Model Rule for Establishment of the TCI Program
2A. Affected Fuel.
IETA agrees that the fuels proposed to be covered by TCI’s proposed program, on-road diesel and motor gasoline, are the appropriate ones. In general, IETA and its membership believe the program should cover as much of the fuel in the region as possible while taking account of the renewable components.

2B-C. Regulated Entities & Other Entities.
In order to make the TCI program as efficient as possible, the compliance point should be set such that compliance entities can take full advantage of existing tax and tracking systems. IETA members support the proposal to set the compliance point at the terminal rack, with an alternative for any fuel that moves into the region directly. While there is not a directly comparable pricing and tracking system already in place, the terminal rack is the point from which most of the fuel is distributed in the region; it also upstream of the smallest distributors and allows for a manageable number of entities. IETA recognizes that there are suppliers that import fuel directly into the TCI region and believes that those imports can be incorporated into the program without creating an undue burden on small suppliers.

2D-F. Regional Emissions Cap, Budgets & Scheduled Reductions.
IETA supports a system that sets strong science-based caps on emissions reductions, in line with meeting domestic and international climate targets. IETA generally supports the MOU’s approach to setting the regional emissions cap, and we strongly support a regional base annual emissions cap that declines over time in a transparent and predictable manner to allow for medium and long-term planning by facilities and stakeholders. IETA supports the apportionment of the regional base annual CO2 emissions budget to the participating jurisdictions annual budgets, along with the revision of budgets as jurisdictions enter into or withdraw from the program.

2G. Stability Mechanisms.
IETA strongly supports the potential inclusion of a Cost Containment Reserve (CCR) and Emissions Containment Reserve (ECR) in the TCI program. We look forward to more details as the program continues to develop and encourage TCI to look to other regions for examples of successful CCR and ECR mechanisms.
We are encouraged by the framework’s consideration of price-based flexibility mechanisms, including linking as a mechanism to add flexibility and contain costs. Moving forward, the TCI must look beyond its borders to ensure that the rules and systems are complementary and readily adaptable to the world’s quickly changing carbon landscapes. We urge officials to closely track developments that may affect both regional or global “stringency” acceptance of TCI’s approach to carbon rules, pricing and trade. Now is an ideal time for the TCI to be aware of, and account for, any challenges that could emerge down the line. IETA is well-positioned to support this information exchange with TCI and state officials on carbon policy and trade developments and outlooks. We welcome the opportunity to help ensure that the TCI regularly has access to this latest policy information, analyses and outlooks.
Final regulation should see more prescriptive, enabling language to more easily recommend and adopt future market linkage opportunities. For example, international market programs under development (e.g., Article 6/ITMOs, voluntary, international aviation etc.) and existing domestic market programs (e.g., Quebec-California cap and trade programs).

2H. Emission Reporting Requirements.
The proposed requirement for covered facilities to submit a report and supporting information in an electronic emissions reporting system appears sound and defensible. We also support independent third-party verification of the report, recognizing the importance of transparency and verification in ensuring environmental integrity of the system. IETA strongly supports drawing upon lessons and standards from existing greenhouse gas programs in the design of the monitoring reporting and verification (MRV) requirements.

2I. Regulated Entity Compliance and Flexibility.
IETA strongly supports the framework’s inclusion of allowance banking, multi-year compliance periods, and offsets. These instruments should be available to compliance entities to meet full regulatory obligations across these jurisdictions. We hope to see these principles of flexibility and cost containment continue as core principles, guiding the finalization of TCI regional program rules and frameworks.

2J. Auctioning and Alignment.
IETA encourages the TCI jurisdictions to use auctions as the primary method of distributing allowances. Auctioning allowances and allowing a strong market-based approach will incentivize reductions and allow for appropriate price-setting. IETA encourages TCI to collaborate closely with near-term jurisdictional linkage partners (i.e., RGGI, and Quebec and California). Harmonizing and aligning core design rules, standards, joint market infrastructure (e.g., auction platforms, tracking systems etc.) across priority partners are foundational steps towards building broad, linked markets. Cross-border collaboration also allow business, particularly those with regulatory exposure across multiple regions, to more efficiently and cost-effectively plan and invest.


3. Investments and Equity
3A. Investment of Proceeds.
Proceeds from a pollution pricing program can play a dramatic role in supporting TCI jurisdictions’ climate mitigation actions over time. Other jurisdictions – in North America and internationally – earmark and disburse revenue from their pollution pricing programs to support clean technology, innovation, and emissions reductions initiatives. IETA is pleased to learn that the TCI is considering a range of options for investing auction proceeds, and encourages further examination of existing successful programs, including the New York Green Bank, the Australia ERF, and the UK Low-Carbon Innovation Fund (LCIF). In particular, we support investments made towards helping TCI jurisdictions reach their climate policy objectives while supporting regional businesses and consumers to transition to carbon constraints and economic decarbonization.

3B. Equity Shared Priority.
IETA strongly supports the goals of equity, environmental justice, and non-discrimination – and encourages TCI to continue to pursue these goals, including working with disadvantaged communities to assess the impacts of the program.


4. Regional Organization
IETA supports the proposed structure of the regional organization, including its functions, authorities and limits on authorities.


5. Addition or Withdrawal of Participating Jurisdictions
IETA supports the TCI’s approach to new participating jurisdictions and withdrawal from the TCI program. We are pleased to see that the participating jurisdictions will encourage other jurisdictions to the program with the goal of expanding the geographic reach of the regional program. IETA believes that the expansion of this program will benefit all participating jurisdictions by expanding the market. IETA also supports the approach to withdrawal, and that the program can be adjusted based on jurisdictions leaving and entering the program.


6. Program Monitoring and Review
IETA strongly supports continued monitoring of the progress of the program. We urge TCI to undertake ongoing and frequent reviews. Frequent reviews, which are clearly defined and communicated to all stakeholders, will ensure that program parameters remain relevant and reasonable within the context of changing industries, trade and broader macro-economic conditions.


CONCLUSION
Transportation stands out in the TCI region – not only because the sector is now the number one source of carbon emissions, but also because those emissions are increasing. Once again, we applaud the TCI for moving forward – in a cooperative, transparent manner – to harness the power of markets to tackle this challenge in practical and cost-effective manner.
IETA appreciates this opportunity to record our comments on the TCI’s MOU. Our community looks forward to close engagement with the TCI through 2020. If you have questions or follow-up regarding this submission, please contact Justin Johnson at johnson@ieta.org.

I recommend that Vermont join the Transportation Climate Initiative (TCI) that is being developed for states in this northeast region of our country.

We now know that climate emissions in Vermont have been increasing in the last two or three years despite a clear legislative and policy commitment to reduce these emissions. We also know that climate emissions from transportation account for the largest share of recent climate emission increases. We also know that transportation is an activity that may be addressed most effectively on multi-state, regional basis. And we have seen that the Regional Greenhouse Gas Initiative has proven to be an effective tool for reducing climate emissions from electricity generation.

I am a member of a church in South Burlington that sees the climate crisis as a moral crisis for all mankind and that we all have a responsibility to do what we can to reduce climate emissions. We have been at work for several years to walk our talk by reducing the climate emissions we contribute. Our church has with its own resources taken steps which, with help from Efficiency Vermont and Vermont Gas, enables us to reduce our carbon emissions associated with natural gas and electricity use by more than 50 percent. We want to address climate emissions from driving our personal vehicles but this requires support, just as Efficiency Vermont and Vermont Gas helped us with improving the energy performance of our church building and our individual home.

The TCI offers Vermont a potential source of revenues to support steps to reduce transportation emissions and to do so in way that will help most the people least able to afford newer, more fuel efficient, lower emission cars and trucks.

I ask that Vermont join in the emerging new TCI and to endorse actions by the TCI program that will help all Vermonters to reduce climate emissions resulting from our transportation activities.

It is now obvious that climate change is happening and causing very big impacts that include significant increases in annual rainfall in Vermont, warmer winters in Vermont which threaten the future of skiing in Vermont, accelerate the incidence of lime disease, and threaten the long term viability of our maple syrup industry. These impacts are the obvious ones that confront us in easy to observe ways. Scientists tell us that the Vermont forests, lakes, and wildlife communities are all being transformed by these changes in very negative ways.

It is also important to recognize that the TCI program can make big positive contributions to the State's economy. This has happened with energy efficiency activity, which is now a big Vermont employer, and the solar industry, which had until recently been a fast growing business in Vermont that provided jobs and produced income for Vermonters across the State. The Vermont Clean Energy Development Fund finances annual economic assessments of the clean energy sector and has with these annual studies has documented the large direct employment and income benefits of these clean energy businesses. The TCI can and should be harnessed to build upon this progress.

I urge that Vermont sign the TCI memorandum of understanding and commit the policy and program leadership needed to build an effective program. Such new programs require hard work to make them work and to avoid pitfalls. I plead for the Governor and the Legislature to do the hard work of negotiating an effective TCI program that will benefit Vermont and serve Vermont's stated commitment to achieving the Paris Climate Goals, which will benefit all mankind.

Thank you for this opportunity to comment.

Sam Swanson