1. Funding Transportation through Carbon-Based Revenue Sources. What Works? What Doesn't? And Why? Ella Claney, Associate Consultant WSP | Parsons Brinckerhoff Washington, D.C.
APTA Sustainability & Public Transportation Workshop
July 25, 2016

2. Overview Introduction
Why consider carbon based revenues for transportation?
Cap & Trade v. Carbon Tax
What's the difference and what do we use?
U.S. Examples: How they operate and do they work?
California Cap and Trade
Regional Green House Gas Initiative (RGGI)

3. U.S. Carbon Based Revenues For Transportation
As of 2014, Transportation made up 26 percent of all U.S. GHG emissions
American Clean Energy and Security Act (ACES) 2009
Called for a regulated national cap and trade system – dedicating 3% of proceeds to transportation
Passed through the House in 2009 but was killed in 2010 by the Senate
Opposition
Political concerns regarding negative impacts on consumers from taxing big business

4. One Objective, Two Mechanisms
Cap and Trade
Carbon Tax
Allows you to set the limit “cap” on emissions that is estimated to lower global temperatures
Requires an entity to oversee auctions
Price of CO2 emissions adjusts in real time with the market
Does not guarantee the amount of proceeds a program will generate
Current examples
RGGI
California
Quebec, Canada
Assumes the carbon tax will incentive polluters to reduce emission, but you cannot confidently predict an outcome
Is collected like any other tax
The tax rate is subject to any administrative procedures required to raise or lower the rate as per any other tax
Allows you to estimate amount of proceeds based on historical emission data
Current examples
British Columbia, Canada
Mexico
Portugal

5. Cap and Trade – How it Works
Limits amount of GHG that can be released by certain sources or industry sectors.
“Allowances” (typically 1 metric ton of CO2 equivalent) are distributed/auctioned by the state to polluters until the cap is reached.
The cap is gradually lowered each year to continually reduced statewide emissions.
Companies are incentivized to use less than their allowance through new clean technologies, giving them the opportunity to trade, sell, or bank unused allowances.
Companies that need additional allowances must purchase additional allowances.
Policy makers determine the uses of revenues from allowance auctions.

6. Cap and Trade in Action Topic California RGGI Boundaries
9 Northeast States: CT, DE ,ME ,MD, MA, NH, NY, RI, VT
GHGs Covered
CO2, CH4, N2O, SF6), PFCs, Nitrogen NF3, and other GHGs
CO2 Only
Sectors Covered
Electricity generation, industrial sources, distributors of transportation fuel, natural gas, and other fuel (85% of all California GHG emissions)
Large Power Plants
Year Established
2006
2005
Year Auctions Began
2012
2008
Cap Levels
Set in 2013 at 2% below 2012 levels, decreases annually by 2% in 2014, and 3% per year until 2020
15% below 2013 levels by 2020
Total Revenue Generated
$3.5 billion
$2.4 billion ($895 million for New York)
Share for Transportation
Over 60%
Varies among states (0.04% for New York)
Price Floor in 2015
$12.10 per metric ton
$2.05 per ton

7. California Cap and Trade
Benefits for Transportation
Prior to the program, transportation was responsible for 38% of all GHGs in California
60% of revenues dedicated to transportation
The Air Resources Board has held 13 auctions since 2012 totaling $3.5 billion in revenues
Issued free allowances to electric utilities, industrial facilities, and natural gas distributers up to 90% (decreasing annually) of emission to keep consumer cost low
BREAKDOWN OF CAP AND TRADE REVENUES
TO FUND TRANSPORATION

8. California Cap and Trade
Sample Project Winners in 2015
Low Carbon Transit Operations Program
$120,000 to Kings County Area Public Transit Agency for solar panels to power its transit center
$1.2 million to Golden Gate Bridge HTD for electric buses
Housing and Sustainable Communities Program
$9.2 million for the Westside Infill Transit Oriented Development
Transit and Intercity Rail Capital Program:
$24 million to Antelope Valley Transit Authority for the Regional Transit Interconnectivity & Environmental Sustainability Project

9. California Cap and Trade
The Future of the Program
Program uncertainty
Last auction raised $2.5 million instead of the anticipated $150 million
Allowances were sold at the price floor
Arguments that it is too similar to a tax
Continued commitment to the program
Lawmakers looking toward a 2030 program extension

10. Regional Greenhouse Gas Initiative (RGGI)
Ten northeastern and mid-Atlantic states have set a GHG cap and aim to reduce CO2 emissions by 10% in 2018
New Jersey was a founding member but opted out of the program in 2011
Raised $2.4 billion to date
No set asides for transportation
New York is single largest recipient of proceeds over the life of the program ($895 million)

11. Thank You Ella Claney, Associate Consultant claneyec@pbworld.com
WSP | Parsons Brinckerhoff
Washington D.C.