BOSTON – Massachusetts is one of a dozen states working on a new cap-and-trade program to reduce vehicle emissions, but critics say the plan could be a boon for New Hampshire and other border states that don't go along with it.
The Transportation Climate Initiative, put together by a dozen Northeast and Mid-Atlantic states working on reducing pollution, is focusing on gasoline and diesel which account for more than 80% of regional carbon emissions. It could lead to a new wholesale tax on fossil fuel suppliers to pay for regional transportation projects.
Under the plan, suppliers who transport fuel across state lines would be required to pay a tax on excess carbon emissions based on caps that still must be set.
Still, it's not clear if New Hampshire and Vermont, where skeptical Republican governors have expressed concerns about the plans, will buy into the initiative. If they don't, critics say Massachusetts' motorists could be saddled with higher prices at the pumps than neighboring states, as wholesalers pass along costs to consumers.
"It would give people yet another reason to take their business across the border to New Hampshire, which puts the state and my district at a competitive disadvantage," said Rep. Lenny Mirra, R-West Newbury, who opposes the regional plan. "But more importantly, this would be a regressive tax that would hurt working people who drive to work."
Christopher Carlozzi, Massachusetts state director of the National Federation of Independent Businesses, said the plan will hurt businesses and others who can't afford higher gas prices.
"It's a gas tax by another name," he told reporters at briefing Wednesday. "TCI will unfairly tax every small business, commuter and working family in Massachusetts."
Gov. Charlie Baker, a Republican, committed the state to joining the program last year as part of an effort to reduce traffic congestion and tackle climate change.
Modeled on the Regional Greenhouse Gas Initiative, which seeks to reduce emissions from power plants, TCI states are working on a cap-and-invest program to drive down emissions from cars and trucks. Details are still being worked out, but a plan is expected to be unveiled by the end of the year.
The cap-and-trade program would to get underway in 2022.
Speaking to a gathering of business and environmental leaders in Boston on Wednesday, Baker didn't address concerns about who will pay for the initiative but stressed the importance of regional cooperation.
He said the regional cap-and-trade program on power plants has reduced emissions and generated revenue for other climate change initiatives.
"The bottom line is that this is probably one of the best ways to get an extraordinary large number of people rowing in the same direction on a program model that has proven to be effective," Baker said.
While TCI states haven't decided on a regional cap, proponents say the overall goal is to ratchet down vehicle emissions each year.
The Baker administration says Massachusetts could reel in up to $500 million a year for clean transportation programs from the sale of carbon allowances through the program.
"It's a sin tax that would punish ordinary people for doing a task the government believes is wrong by artificially increasing the cost," said Paul Craney, a spokesman for the the Massachusetts Fiscal Alliance, which also opposes the plan. "It's bad economics and morally wrong."
Lawmakers are also considering proposals to increase the state's 24-cent per-gallon gas tax, which was last hiked in 2013, amid a renewed push by transit advocates.
Baker opposes an increase in the gas tax, arguing the move is unnecessary and would unfairly burden low-income families and small business owners.
Transportation Secretary Stephanie Pollack has acknowledged that TCI will probably lead to higher gas prices, but pushed back against those who are calling it a tax.
"It is not a gas tax," she told lawmakers during an October hearing before the Legislature's Joint Transportation Committee. "It is a cap-and-invest program."
Massachusetts drivers pay a total of 44.9 cents per gallon in gasoline taxes, including state and federal taxes and other fees, according to the American Petroleum Institute.
In New Hampshire, which has a 22.2 cent state gas tax, drivers pay 42.23 cents per gallon in total taxes and fees, according to API. In Vermont, the total is 49.34 cents.
Nancy Kyle, president and CEO of the New Hampshire Retail Association, welcomes the idea of more Massachusetts consumers flocking to the Granite State to shop and fill up the tank.
"They're already coming up here to shop because of the lack of a sales tax," she said. "So maybe while they're here, they'll stop at a gas station to fill up before heading home."
Environmental groups and transit advocates say the TCI initiative is key for the state to meet its dual goals of reducing emissions and alleviating congestion.
Proponents expect higher prices at the pumps will lead people to use their vehicles less frequently or rely on public transit to get to work.
Meanwhile, a new poll by MassINC Polling found at least 66% of respondents in Massachusetts and seven other states supported the regional approach to addressing climate change.
But the survey of nearly 7,000 voters didn't ask if they supported new taxes and fees to implement the program, and critics pounced on the omission.
"People may be in favor of TCI but do they know the costs?" Carlozzi said Wednesday. "The poll didn't explain that the costs would be passed along to consumers at the gas pumps."
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at firstname.lastname@example.org.