OTF Voices

Where TCI came from and where it can take us

VTDigger, Vermont

By Tom Hughes

This spring, Gov. Phil Scott will have the opportunity to strengthen the economy, promote equity, and protect the environment by joining the Transportation and Climate Initiative. If he refuses to join our neighbors in the fight against climate pollution, it is very likely that Vermonters will pay higher prices for fossil fuels without receiving any of TCI’s investment benefits.

In 2008, Scott, then a state senator, voted to authorize Vermont’s governor to advocate for a regional carbon trading program for transportation fuels. 

In the decade since, a bipartisan group of officials from Maine to Virginia have been designing a cap-and-invest program for transportation fuels modeled on the Regional Greenhouse Gas Initiative.

RGGI was developed as a collaboration between states to reduce climate pollution from coal-fired electric plants. Gov. Jim Douglas led the RGGI negotiations and signed Vermont onto the initiative, and it’s working. In the decade since its launch, CO2 emissions from power plants in the RGGI states have fallen 90% faster than in the rest of the country, while economic growth in the region has outpaced the rest of the country by 31%. 

Since taking office, Scott has maintained Vermont’s seat at the TCI negotiating table. In fact, up to this point, the governor and his team have been the only Vermonters at the table. 

The draft TCI proposal released late last year proposes: a) limiting the flow of fossil fuels into the region, b) requiring fossil fuel companies to purchase allowances for the pollution they cause, and c) using the proceeds to modernize the region’s transportation systems. Their program outline makes clear that governors will establish the limits for fuel distributors, and then individual state legislatures will craft the benefits that best meet their state’s needs.

What are those benefits?

Vermont will receive back more from TCI than Vermonters put in.

Much like hotel stays and restaurant meals, out-of-state travelers purchase a significant share of the transportation fuels sold in Vermont. The Agency of Commerce and Community Development estimates that 25% of transportation fuels are sold to out-of-staters.

If – as is currently contemplated – TCI funds are returned to the state in proportion to the gallons of fuel sold, for every dollar Vermonters pay in pollution allowances the state will receive as much as $1.33 for investments.

Even better, according to TCI researchers, the more aggressive the governors are at limiting fossil fuels, the more our economy will grow.

On the flip side, there is economic risk if Scott refuses to join TCI. Like RGGI, most of the facilities that will purchase allowances are located outside of Vermont and, according to Vermont’s lead TCI negotiator, it is “possible and very likely” that these companies will pass on their compliance costs to Vermonters whether or not the state participates. So, to take advantage of TCI’s economic benefits and avoid a situation where Vermonters are paying for infrastructure improvements in other states but not here, Scott must join the program. 

TCI will reduce pollution – and that will save lives and money.

The Vermont Department of Health recently analyzed what meeting the transportation goals of the Comprehensive Energy Plan would mean by 2050. The benefits include:

  • 2,000 lives saved due to cleaner air and safer roads and other benefits; and
  • $1.1 billion in costs avoided from reduced health care costs and increased productivity.

A critical component of TCI is that it provides resources to address inequities in Vermonters’ energy burdens. 

Low-income and rural Vermonters pay a higher percentage of their incomes on transportation than their wealthier, more urban neighbors.The state can and should address some of this inequity by targeting TCI benefits to low-income and rural Vermonters.

Investments can take the form of infrastructure and public transit improvements: things like rural van lines that cover more territory and travel more frequently, expanded park and ride lots, EV charging, bike lanes, sidewalks, and commuter rail.

Other options are incentives, rebates, and targeted tax credits. Think free bus passes, expanding the Energy Assistance Program, tiered incentives for electric vehicles so that those with the least get the most help, or an increase in the Earned Income Tax Credit. In British Columbia, a Canadian province that has been pricing carbon pollution for more than a decade, rural citizens qualify for additional tax breaks.

TCI revenues could also be used for cash-back payments that go directly to households based on need. 

Of course, policymakers could mix and match proceeds. Some could be used for infrastructure, some for incentives, and some for direct payments to low-income households.

The economic, equity, and environmental benefits of TCI far outweigh its costs. In fact, refusing to join TCI means Vermonters will likely pay its costs without receiving any of its benefits. 

Scott should honor his commitments to reduce climate pollution, join TCI, and help modernize Vermont’s transportation systems.


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