State officials, tasked with lowering greenhouse gas (GHG) emissions from vehicles, are drafting a plan to impose a new fee on the sale of some transportation fuels.
For several years, states from Maine to Virginia have been collaborating on a joint solution to reduce GHG emissions from automobiles, light trucks and other modes of transportation.
Through the Transportation and Climate Initiative (TCI), the states are finalizing a draft framework that would set an initial cap on transportation emissions. That cap would decline every year at rates chosen by the states to meet their emission-reduction targets. The plan could go into effect as early as 2022.
Entities that sell on-road fuels would be required to purchase allowances through a regional auction in order to sell that fuel. As emissions caps are reduced, the number of fuel allowances will decrease and the price will increase, discouraging fuel consumption and lowering emissions.
According to TCI estimates, the auctions would generate $50 billion over 15 years. Each state would receive a portion of the auction proceeds to spend on strategies that reduce driving, encourage use of biofuels, accelerate shifts to electric and hydrogen vehicles or increase transit use.
For many years, Maryland has participated in the Regional Greenhouse Gas Initiative which caps emissions from power plants and spends proceeds from the sale of emissions credits on initiatives that reduce demand for electricity. Applying that approach to transportation through TCI is a key strategy in Maryland’s 2019 Draft Greenhouse Gas Reduction Act plan to reduce overall emissions 40 percent by 2030.