Viewpoint: More states may join fuel CO2 program

New York and other northeast states have not closed the door on joining a regional cap-and-trade program designed to reduce CO2 emissions from the use of on-road fuels, a prospect that could greatly expand the proposed carbon market.

For some, a decision may just be a question of timing.

Last week, four jurisdictions — Connecticut, Massachusetts, Rhode Island and the District of Columbia — announced plans to lauch the Transportation and Climate Initiative Program (TCI-P) in 2022. The first year will serve as an emissions reporting period, with compliance to begin in 2023.

Another eight states balked, at least initially.

New York regulators say their decision will wait on the work of the state's Climate Action Council, which is developing a plan for meeting aggressive GHG-reduction targets put into law last year.

"While the Transportation and Climate Initiative-Program is one potential tool for helping us achieve our goals, to make a commitment of this nature before the council's work is complete would be premature. We believe this is the quickest path forward and we will continue to evaluate this program as the council completes its work," the state Department of Environmental Conservation said.

TCI-P already has support from some members of the Climate Action Council, but a final decision on New York's participation is months off. An advisory panel helping the council with transportation sector policies is scheduled to deliver its recommendations by March, while the council's overall draft plan is due by the start of 2022. At least some members of the council have voiced support for joining the new carbon market.

The addition of New York to the program would more than double the size of the market as currently envisioned with just the four founding members, which are planning to start the program with a CO2 budget of 42.1mn metric tonnnes in 2023. Emissions from the use of gasoline and diesel fuel in New York totaled about 60.5mn t in 2016, according to the state's most recent GHG inventory.

That would put the TCI-P market roughly on par with the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program for power plants in the US northeast. Next year, RGGI will have a CO2 budget of about 119.8mn short tons (108.7mn t.)

The size of the market will grow even more if other states in the broader Transportation and Climate Initiative (TCI) decide to join. The forum for developing regional transportation policies includes 12 states and the District of Columbia. All but New Hampshire have agreed to continue to work with the founding TCI-P members as they flesh out the details of the new program.

If all current TCI members joined the program, the resulting market would cover about 260mn t of CO2 emissions in 2023, according to program modeling data. That would nearly rival the size of California's cap-and-trade program in terms of covered emissions. California's cap in 2023 will be 294mn t.

The offices of New Jersey governor Phil Murphy (D) and Pennsylvania governor Tom Wolf (D) each said their administrations will continue to evaluate the program and its potential role in each state's climate strategy. Together, those states would add about 90mn t to the size of the market.

The Maryland Department of Environment also said it will track the program development, "while continuing our immediate focus on responding to the Covd-19 emergency." The state's gasoline and diesel emissions totaled 28.5mn t in 2017.

Virginia governor Ralph Northam's office did not respond to a request for comment.

By Michael Ball