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(TCI-P) Transportation and Climate Initiative Program FAQs

 

Click on a FAQ category below:

Overview of TCI-P

Environmental Benefits of TCI-P
Community, Economic, and Health Benefits of TCI-P
 
What is TCI-P?  

TCI-P is a historic multi-jurisdictional program to reduce carbon emissions from cars, trucks, and other on-road motor vehicles and increase investments in an equitable, cleaner, and more resilient transportation system. In December 2020, Connecticut, Massachusetts, Rhode Island, and the District of Columbia signed a Memorandum of Understanding (MOU) committing to work to implement TCI-P in their jurisdictions.

TCI-P will “cap” or limit carbon dioxide emissions from gasoline and on-road diesel fuel and require fuel suppliers to purchase “allowances” for the amount of carbon emissions produced by fuel covered under the cap. The cap will decline over time, guaranteeing emissions reductions. Connecticut will reinvest the proceeds from allowance auctions in strategies to further reduce emissions and air pollution from transportation.

 

What are the goals of TCI-P?  

  

The goals of TCI-P include:

  •  Reducing carbon emissions from the transportation sector;

  • Improving air quality and public health, increasing resilience to the impacts of climate change, and providing more affordable access to clean transportation choices;

  •  Promoting local economic opportunity and creating high quality jobs;

  •  Maximizing the efficiency of the program to ensure greater benefits; 

  •  Advancing equity for communities overburdened by air pollution and underserved by the transportation system, such as rural communities

 

Why is Connecticut joining TCI-P?  

Taking immediate action to cut greenhouse gas emissions is imperative and, at 38 percent, transportation is the largest source of these emissions in the state. Climate change and pollution from transportation impose an increasingly serious burden on communities across the state. Without significant efforts to reduce emissions, climate change will have devastating effects on Connecticut’s economy, infrastructure, agriculture, natural resources, and public health. Connecticut also suffers from some of the worst air quality in the country, especially along heavily traveled transportation corridors where pollutants are most densely concentrated. Poor air quality exposure worsens acute and chronic respiratory problems such as asthma, Chronic Obstructive Pulmonary Disease, and increases the risk of premature death, cancer, cardiovascular damage, and developmental and reproductive harm. 

Many communities in the state have historically and disproportionately suffered the impacts of air pollution. Many communities are also underserved by the transportation system, while the existing options they depend on are facing significant budget shortfalls.TCI-P’s market-based strategy ensures progress is made at least cost to consumers and businesses, while also generating significant economic, public health and safety, and environmental benefits.

 

What is the process for implementing TCI-P in Connecticut?

First, Connecticut must pass legislation authorizing TCI-P and then enact regulations to implement the program. TCI-P is a multi-jurisdictional program consisting of individual programs adopted and implemented in participating jurisdiction, and facilitated by a non-profit administrative organization governed by participating jurisdictions. The model rule  will serve as the common framework for each participating jurisdiction’s implementing regulations.  Connecticut will adapt the model rule through a public process into state regulations through Connecticut’s eRegulation System.

 

Which states are joining TCI-P now, and will other states join?  

On December 21, 2020, Connecticut, Massachusetts, Rhode Island, and the District of Columbia signed a groundbreaking Memorandum of Understanding (MOU) to implement TCI-P in their jurisdictions. Those jurisdictions collaborated with many other Northeast, Mid-Atlantic, and Southeast states to develop TCI-P to provide flexibility for states to join based on their unique needs and what works best for them.

Each state has different legislative and regulatory timelines and circumstances that they must take into account when deciding whether and when to join a program like TCI-P. In a joint statement accompanying the release of the TCI-P MOU, 12 jurisdictions committed to continuing to work together on the development of the details of the program while pursuing state specific actions to reduce emissions and provide clean transportation solutions. As part of the Transportation and Climate Initiative (TCI), Delaware, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Vermont, and Virginia continue to actively participate in developing TCI-P and all states have the opportunity to join the program in the future.

 

How can people participate in the TCI-P process? 

A transparent and inclusive process is critical to the success of TCI-P. There are several opportunities to engage  in Connecticut’s regulation-making process.Individuals and organizations are encouraged to review and provide feedback on the Draft Framework for Public Engagement (Guiding Principles), Draft TCI-P Model Implementation Plan, and Draft Proposed Strategies for Regional Collaboration through the public input portal by August 13, 2021.TCI-P is also designed to ensure that the public has regular opportunities to weigh in on the implementation of TCI-P for as long as the program exists, through periodic program reviews and resulting regulatory processes, annual reporting, and the Equity and Environmental Justice Advisory Board.Please visit the Department of Energy and Environmental Protection’s TCI-P webpage for program updates and announcements of upcoming events, and to sign up for email updates. 

 

Environmental Benefits of TCI-P

 

What are Connecticut's climate and air quality goals? 

Connecticut has established overall greenhouse gas emissions reduction targets of at least 45 percent below 2001 levels by 2030, and 80 percent below 2001 levels by 2050.Beginning on January 1, 2030, at least 50 percent of all cars and light-duty trucks and 30 percent of all buses purchased or leased by the state must be zero emission vehicles (ZEVs). The state also has near-term commitments under several multi-jurisdictional agreements to rapidly accelerate the deployment of light-duty, medium-duty, and heavy-duty ZEVs. Connecticut also persistently fails to attain the National Ambient Air Quality Standards for harmful ground-level ozone (smog). 

 

How much will TCI-P reduce carbon emissions?  

The TCI-P cap on carbon emissions will decline over time, guaranteeing at least a 26 percent reduction in carbon pollution from transportation from 2023 to 2032. 

 

How does TCI-P reduce emissions?

“Cap-and-trade,” “cap-and-reduce,” and “cap-and-invest” all refer to market-based policy tools used in the United States and around the world to reduce harmful pollution at the lowest cost for consumers and businesses, as the market finds the most cost-effective ways to reduce emissions. TCI-P is a cap-and-invest program in which participating jurisdictions auction emissions “allowances” and invest the proceeds in projects and programs that further reduce pollution.

TCI-P will “cap” carbon emissions from gasoline and on-road diesel fuel sold in Connecticut and will require wholesale fuel suppliers to hold allowances to cover these emissions from the combustion of that fuel. Under TCI-P, each allowance represents one metric ton of carbon dioxide. Fuel suppliers can purchase emissions allowances at regular auctions and trade allowances with other market participants. Proceeds from allowance auctions go back to participating jurisdictions to reinvest in clean transportation projects and programs.

TCI-P will guarantee emissions reductions in two ways. First, the number of allowances available at auction will decline over time. Second, investments with auction proceeds will give consumers better choices that make it easier to consume less fuel through improved public transit, better telework and telehealth options, and more fuel-efficient or electric vehicles. TCI-P proceeds would support investments in cleaner transportation options, further reducing emissions and offering people and businesses more transportation choices for getting around at the lowest cost.

 

 

Community, Economic, and Health Benefits of TCI-P

 

What are the health and safety benefits of TCI-P? 

Poor air quality causes or worsens acute and chronic respiratory problems such as asthma and, Chronic Obstructive Pulmonary Disease, and increases the risk of premature death, cancer, cardiovascular damage, and developmental and reproductive harm. TCI-P will re-invest program proceeds to support and expand clean and modern transportation projects and programs that will reduce emissions and pollution, reduce the impacts of climate change, improve public health and resilience, and lead to equitable economic development in those areas most in need and throughout Connecticut.

 

How can TCI-P benefit Connecticut’s rural communities?

TCI-P can provide significant benefits to Connecticut’s rural communities, many of which are underserved by the transportation system and lack access to clean mobility options. For example, TCI-P proceeds could be used to provide incentives to help people transition to lower emitting cars and trucks; expand broadband access to enable telecommuting, telehealth, and job growth; build safer and cleaner roadway intersections; and improve and expand clean transportation options like micro-transit, ride sharing, bus, bike, and pedestrian access.

 

How will TCI-P impact Connecticut’s economy? 

TCI-P is projected to be a net economic benefit for Connecticut. Transportation is the backbone of the state’s economy, and TCI-P is projected to raise over $1 billion in funding between 2023 and 2032 to invest in transportation options that will create jobs and contribute to increased economic activity in Connecticut communities. Increased access to transportation and broadband will expand companies’ hiring pools and provide individuals with increased job opportunities. Modeling indicates that over time TCI-P investments will generate significant annual increases in gross domestic product, disposable personal income, and employment. 

TCI-P is a net benefit for the CT economy. These benefits include investments in communities across the state, creating jobs and other benefits including*:

  • Increasing employment levels in Connecticut by 126 job-years in 2032 and 303 jobs years in 2040. Between 2023 and 2040, TCI would increase job-years every year by an average of 133 per year. 

  • Increasing GDP in Connecticut by $29 million in 2032 and $61 million in 2040. Between 2023 and 2040, TCI would increase GDP by an average of $30 million per year. 

  • Increasing disposable personal income in Connecticut by $21 million in 2032 and $56 million in 2040. Between 2023 and 2040, TCI would increase disposable personal income by an average of $24 million per year*TCI REMI Model Results

 

TCI-P Investment Process

 

How much funding will TCI-P make available for investments?

TCI-P is projected to raise up to $89 million in 2023, increasing up to $117 million in 2032. Connecticut will reinvest those funds in clean transportation options and infrastructure. The program is also expected to generate significant economic, public health, and safety benefits.

Equity and environmental justice are at the core of TCI-P investments. Signatory jurisdictions have pledged to invest at least 35 percent of annual program proceeds to ensure that communities overburdened by air pollution and underserved by the transportation system benefit from transportation projects and policies that reduce emissions from transportation sources. Connecticut has pledged a minimum of 50% of the TCI-P allowances will be invested in the communities. Connecticut’s commitment is expected to result in a minimum of $44.5 million in investments in the first year of the program and over $500 million between 2023 and 2032 in these communities.

 

What will Connecticut do with its TCI-P proceeds?

Auction proceeds will be deposited into a restricted account called the Transportation and Climate Account within the Transportation Grants and Restricted Accounts Fund, to invest in measures that further reduce emissions and air pollution from transportation. Connecticut can use its TCI-P funds to support a broad range of initiatives to modernize and enhance transportation in the state, while reducing emissions, including: supporting and expanding public transit, converting buses and diesel trucks to electric, bus stop shelters and features, bicycle lanes and sidewalk improvements, pedestrian safety improvements, electric vehicle (EV) charging infrastructure and rebates for EV purchases, greenways and trail improvements, intersection roundabout conversions, traffic signal modernization and synchronization, railroad system improvements, expanding access to broadband Internet, ride sharing and more.

 

Who will decide how TCI-P proceeds are invested? 

Connecticut will have sole discretion to decide how to invest its TCI-P auction proceeds to meet our unique needs and circumstances. Other states, participating jurisdictions, and the administrative organization that facilitates the program, will have no role in how Connecticut invests its proceeds.

 

How will TCI-P ensure the proceeds are spent equitably? 

The Department of Energy and Environmental Protection (DEEP) and the Department of Transportation (DOT) will establish an Equity and Environmental Justice Advisory Board (EEJAB) composed of community residents and other stakeholders to gather input and advise on decision making and equitable outcomes for the program. The EEJAB will advise on how best to invest a minimum of 50% of the allowance proceeds to benefit communities overburdened by air pollution and communities underserved by the transportation system. DEEP and DOT will publish an annual report of the proceeds and investments of the program.

 

Fuel Prices and Emissions Cap

 

What fuels are covered and who is regulated under TCI-P?  

TCI-P applies to the fossil fuel components of gasoline and on-road diesel fuel delivered for final sale or consumption in Connecticut. The program does not apply to other fuels. 

 

How will TCI-P affect gasoline prices? 

As with any environmental regulation, it’s reasonable to expect that fuel suppliers will incorporate the costs of complying with TCI in the retail price of their fuel. TCI program modeling projects that the impact to retail customers will be $0.05/gallon of gasoline in 2023, increasing up to $0.10/gallon by 2032 as the emissions cap declines. Because the program uses competitive auctions, rather than a fixed fee or tax, to set allowance prices, the actual impact could be a little more or less than modeled depending on market conditions. For this reason, TCI includes a cost containment mechanism to keep the retail price impact from exceeding $0.09/gallon in 2023, increasing over time. The health care costs of air pollution ($100 million/year in Connecticut for asthma care alone), and the costs of continuing inaction on climate change, far exceed the direct cost of TCI to consumers.

 
How is TCI-P different than a motor vehicle fuel tax?

TCI-P is fundamentally different from a motor vehicle fuel tax in several ways. First, TCI-P does not tax the end users of the fuel covered by the cap. More importantly, by setting a cap on emissions and auctioning a corresponding number of allowances, TCI-P can achieve a set environmental goal—reduced emissions from the transportation sector—and the cost of reaching that goal is determined by market-based mechanisms. In contrast, whether and by how much a fuel tax might reduce emissions cannot be predetermined or guaranteed, and emissions could increase with a fuel tax.Furthermore, the cost of purchasing allowances does not necessarily have to be passed along to the consumeras fuel suppliers can lower compliance costs by producing less-carbon intensive fuel which creates room for price competition.

 

Will the TCI cap-and-invest program result in limitations on the amount of fuel that can be sold in the state?

No, the program is designed to provide compliance flexibility and it includes design mechanisms that would avoid any limitations on fuel sales in participating states.

A modest emissions cap:

The cap is on emissions – not fuels – and is very modest relative to projected emissions trends.

 A flexible market-based program:

 The multi-state program provides greater flexibility by having a large market of emission allowances.

The program includes a “safety valve” mechanism (called a “cost-containment reserve”) to automatically increase the supply of allowances – by up to 10% of the cap per year – should demand exceed expectations. This potential 10% increase in allowances far exceeds the incremental reductions the program would seek to accomplish each year.

Compliance flexibility:

Fuel suppliers will not have any obligation to turn in allowances to cover emissions until more than three and a half years after the program starts. Over the course of the first 3 years of the program, states will be able to verify that the market demand for fuel relative to the cap on emissions is no greater than anticipated. In the event changes are needed, states can implement them.

Fuel suppliers can increase the biofuel portion of fuels sold in the state to reduce the need for allowances. Because the emission reductions required by the program are modest, biofuels blending is a viable way to help meet emission reduction goals.

Emission allowances can be banked and traded.

 

Will certain market participants be able to manipulate the market and price out other participants?

No. Market design and oversight will ensure that allowance markets are competitive. The TCI-P will draw on over a decade of experience with the Regional Greenhouse Gas Initiative (RGGI) auctions by utilizing some of the same mechanisms to ensure that a competitive market will be created and enforced. Quarterly auctions provide timely information about prices and a predictable source of new allowance supply. Auction design elements such as bid limits, sealed bidding, uniform pricing, and cost and emission containment reserves will make the allowance market competitive. A professional TCI-P market monitor, similar to the RGGI market monitor, will provide an additional layer of protection against any anticompetitive behavior. The monitor will evaluate the conduct of market participants in the TCI-P auctions and secondary markets to identify potential anti-competitive conduct or significant barriers to market participation, including but not limited to market manipulation, collusion, and the exercise of market power.

 

Content last updated June 2021