How To Reinvest Carbon Fee Revenue?
As Sens. John Kerry, D-Mass.; Lindsey Graham, R-S.C.; and Joe Lieberman, I/D-Conn., work toward their goal of introducing climate change legislation by Earth Day (April 22), transportation groups are petitioning the trio to invest revenues raised from a carbon fee that would increase the cost of gas and diesel fuel back into transportation.
A coalition of 27 groups led by the American Association of State Highway and Transportation Officials, the American Public Transportation Association, and the American Road and Transportation Builders Association, wrote in their April 1 letter, "New fees placed on transportation fuels should be dedicated to the Highway Trust Fund and invested along with other surface transportation funds under a multi-year highway and transit authorization bill." They warned that enacting a reauthorization bill "will be very difficult, if not impossible, should Congress approve legislation that diverts revenue from carbon-based fees from motor fuels away from the transportation investment." The signatories also included unions and groups representing engineers, local governments and cyclists.
Transportation for America, a coalition of alternative transportation, public health, housing and environmental groups, spearheaded a second letter to the senators that was signed by 40 organizations, including passenger and high-speed rail interests, planning groups and cycling advocates. The April 5 letter expressed "deep concerns about proposals to deposit funds from sales of carbon permits in the Highway Trust Fund without additional policies to direct those funds towards transportation projects that advance our climate and energy goals." They also called for the eventual bill to include requirements to ensure that states and regions develop transportation plans that reduce oil use and greenhouse gas emissions from transportation.
Which approach do you favor? How do you think revenues raised from a carbon fee on transportation fuels -- which, although it would raise the price of gas and diesel at the pump, would not be an excise tax on motor fuel per se -- should be allocated?

April 16, 2010 7:28 PM
A Sense of Entitlement?
By Keith Laughlin
President, Rails-to-Trails Conservancy
After closely reading his response, I can say with confidence that Mr. Burnley has not provided a logical rebuttal to the fact that, from a public policy standpoint, a carbon fee is NOT a user fee.
Rather, the core of his argument seems to be the dubious claim that highway funding is an entitlement program that, once created in 1956, cannot be altered by any subsequent act of Congress.
I submit that this sense of entitlement on the part of the highway lobby is one reason why the reauthorization of the program is at a stalemate. Mr. Burnley and his colleagues seem to have no discernable interest in building a broader coalition in support of a new source of revenue for an insolvent trust fund.
April 16, 2010 3:12 PM
History Says We Need Fresh Ideas
By Deron Lovaas
Federal Transportation Policy Director, Natural Resources Defense Council
Just wanted to point fellow bloggers, if you don't already read her stuff, to the great reporting Ilana Schor has done this week on the challenging past and present faced by those interested in raising revenue from gasoline sales.
I find it ironic that some fellow bloggers embracing higher revenues neither admit the difficulty nor suggest ways to bridge the political chasm.
On the other hand, I agree with those on this blog and elsewhere who think that breaking out of this box requires innovative - not musty - arguments, policy concepts and coalition-building.
April 16, 2010 1:11 PM
Hands Off Highway User Fees!
By Jim Burnley
Partner, Venable LLP
John Horsley has done an excellent job of stating the arguments and relevant facts in support of preserving and strengthening the Highway Trust Fund, so I will not reprise them in my comment.
But make no mistake: what is going on here is an attempt at a gigantic shell game. Like the sap at the carnival, highway users (and those who speak for them) expect the "pea" (i.e., fuel taxes paid by them") to be under the correct shell. In this instance, that's the Highway Trust Fund. But like the shill who goes home when the carnival closes for the night, those who equate parents driving their kids to school and truckers delivering food to grocery stores with cigarette smokers have a different shell in mind. They believe that somehow greenhouse gases will be reduced by ever greater traffic congestion, and they intend to divert fuel taxes to more politically correct uses.
This would be amusing, if the consequences weren't so sinister. Beginning in 1956, the federal government has promised those who burn fossil fuels on our roads that the taxes they pay w...
John Horsley has done an excellent job of stating the arguments and relevant facts in support of preserving and strengthening the Highway Trust Fund, so I will not reprise them in my comment.
But make no mistake: what is going on here is an attempt at a gigantic shell game. Like the sap at the carnival, highway users (and those who speak for them) expect the "pea" (i.e., fuel taxes paid by them") to be under the correct shell. In this instance, that's the Highway Trust Fund. But like the shill who goes home when the carnival closes for the night, those who equate parents driving their kids to school and truckers delivering food to grocery stores with cigarette smokers have a different shell in mind. They believe that somehow greenhouse gases will be reduced by ever greater traffic congestion, and they intend to divert fuel taxes to more politically correct uses.
This would be amusing, if the consequences weren't so sinister. Beginning in 1956, the federal government has promised those who burn fossil fuels on our roads that the taxes they pay will be used to expand and maintain an intricate system of highways. That promise has been renewed with each reauthorization of federal surface transportation programs. But now there are powerful political forces that want to shatter that promise, despite the facts set out by Mr. Horsley about the critical needs we face as a country.
Whether fuel taxes are collected through the current mechanism or a huge new floating excise tax, as contemplated in the cap and trade schemes, they are still fuel taxes paid by highway users. The basic idea of a trust fund is that revenues are collected from users to be spent on facilities that serve their needs. I have long believed that transit projects that meet strict cost/benefit criteria fit within the category of programs that reduce highway congestion and faciltate safe, efficient surface travel. I also believe that we need creative programs to leverage our limited public capital to attract private capital to our surface transportation needs.
But the diversion of taxes paid by highway users to programs other than highway or transit programs destroys the "trust" in the Highway Trust Fund, to which all such taxes should be deposited. If the bikers and other proponents of "active transportation" (there's the shell game again) want to support dedicated taxes on bicycles, bike tire, air pumps, helmets and bright spandex outfits, all to be deposited in an Active Transportation Trust Fund, I, for one, won't stand in their way. They should pay their own way, just as highway users do.
Read More
April 15, 2010 12:39 PM
Success Means Working Together
By Patrick J. Natale, P.E.
P.E., Executive Director, American Society of Civil Engineers
ASCE has signed-on to the April 1 coalition letter recommending that revenues from fees on transportation fuels should be deposited into the Highway Trust Fund. We applaud the efforts of Senators Kerry, Graham and Lieberman to improve environmental quality and reduce the nation’s dependency on fossil fuels, but given that the transportation sector is one of the main contributors to CO2 emissions, it would be foolish to divert precious resources away from improving the crumbling and congested system.
All indicators show that the current funding strategy and policy framework for surface transportation is inadequate and unsustainable. The federal motor fuels tax is a mere shadow of its former purchasing power and as vehicles become less dependent upon fossil fuels, the revenues will dry up completely. Meanwhile, millions of people sit in traffic, their cars spewing emissions because there are no viable transportation alternatives. New revenues from a climate change initiative would be a real opportunity to address these problems.
Some advocates for th...
ASCE has signed-on to the April 1 coalition letter recommending that revenues from fees on transportation fuels should be deposited into the Highway Trust Fund. We applaud the efforts of Senators Kerry, Graham and Lieberman to improve environmental quality and reduce the nation’s dependency on fossil fuels, but given that the transportation sector is one of the main contributors to CO2 emissions, it would be foolish to divert precious resources away from improving the crumbling and congested system.
All indicators show that the current funding strategy and policy framework for surface transportation is inadequate and unsustainable. The federal motor fuels tax is a mere shadow of its former purchasing power and as vehicles become less dependent upon fossil fuels, the revenues will dry up completely. Meanwhile, millions of people sit in traffic, their cars spewing emissions because there are no viable transportation alternatives. New revenues from a climate change initiative would be a real opportunity to address these problems.
Some advocates for the environment worry that dedicating carbon tax revenues to transportation just means continuing the status quo. We must advocate for a significant expansion in surface transportation that, we, too want major changes, even to those who are skeptical. The current program is not designed to meet the nation’s needs now or in the future. As we move toward the authorization of a new bill, we need to focus on mobility and safety, as well as improving and protecting the environment. By aligning the goals of federal programs, we can get a much better product in the end.
Cooperation between all stakeholders is especially important as we face the biggest hurdle of all--the political process. Achieving a significant climate change policy that increases the consumer’s cost of travel will not be easier, politically, than increasing the motor fuels user fee. These will both be protracted and bruising fights--however, it makes more sense to work together to find a common solution to common problems than addressing them as split issues and perhaps not gain anything.
Read More
April 14, 2010 6:59 AM
Old School to New School
By Steve Van Beek
Chief of Policy and Strategy and Director, LeighFisher
In certain situations walking, biking, transit and rail certainly offer the prospect of enhancing mobility at a lower level of GHG emissions than do modes such as highways and air. Likewise, in certain situations, rail offers the prospect of moving more goods at a lower level of GHG emissions than does trucking.
But if we are to have a systemic approach to mobility, energy use and GHG emissions we should not assume any one mode is better than any other, nor should we preclude one mode from receiving revenue generated from a tax or fee. Similarly, often our task will be to figure out new ways of connecting the modes and enhancing the flows of people and goods through multimodal systems rather than through modal stovepipes. Addressing the "last mile" problem in transportation, so discouraged by our current modally centered policies, should be tackled with vigor.
What we really need is inclusive planning, real alternatives analysis, life-cycle approaches to cost and GHG emissions and a federal government, states, and MPOs that make decisions less o...
In certain situations walking, biking, transit and rail certainly offer the prospect of enhancing mobility at a lower level of GHG emissions than do modes such as highways and air. Likewise, in certain situations, rail offers the prospect of moving more goods at a lower level of GHG emissions than does trucking.
But if we are to have a systemic approach to mobility, energy use and GHG emissions we should not assume any one mode is better than any other, nor should we preclude one mode from receiving revenue generated from a tax or fee. Similarly, often our task will be to figure out new ways of connecting the modes and enhancing the flows of people and goods through multimodal systems rather than through modal stovepipes. Addressing the "last mile" problem in transportation, so discouraged by our current modally centered policies, should be tackled with vigor.
What we really need is inclusive planning, real alternatives analysis, life-cycle approaches to cost and GHG emissions and a federal government, states, and MPOs that make decisions less on faith (i.e., walking is better than driving or rail is better than air) and more on analysis. I suspect in many cases investments in highways to reduce congestion would be productive and superior from a mobility, energy and GHG emissions standpoint so investing the proceeds from a carbon tax or fee would be entirely appropriate. And, let us not forget that just about every intermodal good that moves on rail also moves on a truck (or trucks).
The beauty of a cost-based carbon fee or tax is that it internalizes the externalities into the every day decisions such as choice of transportation mode, where we choose to live, and where businesses locate ("look Mom no hands").
Together with the type of policy and funding reforms we have previously discussed, these are sounder and more "ecumenical" ways to approach the task of reforming transportation and addressing our goals. They are also more likely to be successful politically.
Read More
April 13, 2010 6:35 PM
Let's Be Clear on Definition of "Fee"
By Keith Laughlin
President, Rails-to-Trails Conservancy
Contrary to the claim of Mr. Graves, a “carbon fee” is not a “user fee.” The National Park Service charges a “user fee” to camp in our national parks. The purpose of the fee is to require those who enjoy the experience to contribute to the cost of providing it.
However, the federal tax on cigarettes is not a “user fee” designed to provide a service to those who smoke. Rather, it is a fee that seeks to increase the cost of a pack of cigarettes so that it reflects the true costs of smoking on society.
The user fee on camping is intended to support camping, not discourage it; while the federal cigarette tax is intended to discourage smoking, not to support it.
The carbon fee is like the cigarette tax, not like the camping permit. It is designed to send a market signal to discourage the use of fossil fuels by reflecting the true cost of climate change on society.
Because the carbon fee is not a user fee, Mr. Graves’s claim that the revenues from it should automatically be dedicated to America’s...
Contrary to the claim of Mr. Graves, a “carbon fee” is not a “user fee.” The National Park Service charges a “user fee” to camp in our national parks. The purpose of the fee is to require those who enjoy the experience to contribute to the cost of providing it.
However, the federal tax on cigarettes is not a “user fee” designed to provide a service to those who smoke. Rather, it is a fee that seeks to increase the cost of a pack of cigarettes so that it reflects the true costs of smoking on society.
The user fee on camping is intended to support camping, not discourage it; while the federal cigarette tax is intended to discourage smoking, not to support it.
The carbon fee is like the cigarette tax, not like the camping permit. It is designed to send a market signal to discourage the use of fossil fuels by reflecting the true cost of climate change on society.
Because the carbon fee is not a user fee, Mr. Graves’s claim that the revenues from it should automatically be dedicated to America’s highways is without merit. Rather, for highways to be eligible for such funding, it must be clearly demonstrated that such investments will provide the maximum return in terms of reductions of greenhouse gases when compared with competing investments in walking, biking, transit and rail.
Read More
April 13, 2010 4:28 PM
Dedicate Revenue to America's Highways
By Bill Graves
President and CEO, American Trucking Associations
Highway user fees have supported the Highway Trust Fund (HTF) since 1956 and continue to be the best method for financing our nation’s highway infrastructure projects. The American Trucking Associations (ATA) proudly signed the recent letter urging Sens. Kerry, Graham, and Lieberman to develop a proposal for climate and energy legislation that dedicates carbon fee revenues derived from transportation fuels to improving the nation’s highways.
We cannot afford a policy that overlooks the need to improve the highway infrastructure and alleviate critical bottlenecks. As I’ve mentioned previously, economists expect a tremendous freight boom over the next 10 years, and predict overall freight tonnage will increase by more than 26 percent, with the modal share moved by truck increasing to 71 percent. In addition to the obvious economic benefits, relieving highway congestion is an important strategy for reducing carbon emissions.
Like the federal fuel tax, any new user fees placed on transportation fuels sho...
Highway user fees have supported the Highway Trust Fund (HTF) since 1956 and continue to be the best method for financing our nation’s highway infrastructure projects. The American Trucking Associations (ATA) proudly signed the recent letter urging Sens. Kerry, Graham, and Lieberman to develop a proposal for climate and energy legislation that dedicates carbon fee revenues derived from transportation fuels to improving the nation’s highways.
We cannot afford a policy that overlooks the need to improve the highway infrastructure and alleviate critical bottlenecks. As I’ve mentioned previously, economists expect a tremendous freight boom over the next 10 years, and predict overall freight tonnage will increase by more than 26 percent, with the modal share moved by truck increasing to 71 percent. In addition to the obvious economic benefits, relieving highway congestion is an important strategy for reducing carbon emissions.
Like the federal fuel tax, any new user fees placed on transportation fuels should be dedicated solely to the HTF and invested with other funds under a multi-year highway authorization bill. Every time we sign a short-term extension, states lose out on the opportunity to advance much-needed highway projects that require predictable, multi-year funding.
As our nation’s lawmakers proceed with carbon tax legislation, ATA hopes they will work to develop climate and energy legislation that benefits the environment and the economy. It is important to fully understand the effects the tax will have on all sectors of the economy and address policies that could unintentionally hinder our nation’s growth.
Read More
April 13, 2010 2:14 PM
Use Fee for Electric Vehicle Deployment
By Lisa Caruso
Sabrina Howell, a senior policy analyst with Securing America's Energy Future (SAFE), a nonpartisan, not-for-profit organization dedicated to reducing America's dependence on oil and improving U.S. energy security, submitted the following guest post:
Any new fees on gasoline or diesel, whether via a carbon levy or a hike in existing fuel taxes, should be directed toward reducing oil dependence in transportation, especially through supporting electric vehicle deployment.
It is abundantly clear that the current user fee system funding transportation infrastructure is failing. Direct user fees, particularly congestion pricing, as well as innovative financing mechanisms that leverage private sector capital, must be aggressively employed at the federal, state and local levels.
A politically feasible fuel tax – that is to say, something less than $1.50 – is a double edged sword. On the one hand, a tax increase (or carbon fee) that adds, say, 8.9 cents to the price of gasoline will have essentially no impact on fuel consump...
Sabrina Howell, a senior policy analyst with Securing America's Energy Future (SAFE), a nonpartisan, not-for-profit organization dedicated to reducing America's dependence on oil and improving U.S. energy security, submitted the following guest post:
Any new fees on gasoline or diesel, whether via a carbon levy or a hike in existing fuel taxes, should be directed toward reducing oil dependence in transportation, especially through supporting electric vehicle deployment.
It is abundantly clear that the current user fee system funding transportation infrastructure is failing. Direct user fees, particularly congestion pricing, as well as innovative financing mechanisms that leverage private sector capital, must be aggressively employed at the federal, state and local levels.
A politically feasible fuel tax – that is to say, something less than $1.50 – is a double edged sword. On the one hand, a tax increase (or carbon fee) that adds, say, 8.9 cents to the price of gasoline will have essentially no impact on fuel consumption. Our elasticity of demand is simply too low. For anecdotal evidence, see here, and for more rigorous analysis, see here and here. The American driver will not even notice much less respond to an 8.9 cent increase.
On the other hand, an 8.9 cent increase is precisely what it takes to bring the purchasing power of the gasoline tax back to where it was in 1993, the last time it was raised. An added 11.8 cents to the diesel tax would do the same for that fuel. The EIA expects gasoline consumption in 2011 to be 139.5 billion gallons, so such an increase would raise an additional $12.4 billion in gasoline tax revenues and $4.3 billion in diesel tax revenues.
The exigencies of energy and climate security require policies that will reduce oil consumption in light-duty transport. Yet any fuel price increase that is seriously under consideration, such as the Kerry-Graham-Lieberman carbon fees, will not go far towards incentivizing motorists to drive less or in more fuel efficient vehicles. Yet they do have considerable revenue-generation capability. It is vital that we put the revenues to the best possible use.
The unfortunate reality of transit and heavy rail initiatives is that because they make up such a tiny share of trips, improving those services (often at very high capital cost) does not have a demonstrable impact on national fuel consumption. Further, because the load factor of so many transit services, like buses in suburban areas, is so low, the emissions and fuel consumption wind up being greater than if the riders had driven a single-occupancy vehicle.
Carbon fees should be directed towards the deployment of a technology with the greatest potential for reducing oil consumption and emissions in transport, while retaining the personal mobility that most Americans require. That technology is the electric vehicle. By the end of next year, consumers will have around 8 options to choose from, such as the Chevy Volt and the Nissan LEAF.
Even powered by a conventional coal plant, electric vehicles are considerably cleaner than gasoline-engine vehicles. According to a joint EPRI-NRDC report, whereas a conventional gasoline vehicle would be responsible for emissions, on average, of 450 grams of CO2 per mile, an electric vehicle that was charged with power generated at an old coal plant would be responsible for emissions of about 325 grams of CO2 per mile, a reduction of about 25 percent. Emissions attributable to the vehicle could be reduced to as low as 150 grams of CO2 per mile if the exogenous power was generated at a plant without carbon emissions and ranged between 200 and 300 grams of CO2 per mile if the power used was generated using other fossil fuel generation technologies. In a recent report, the IEA assessed the make-up of U.S. new passenger vehicle sales that would be required to meet a global emissions stabilization target of 440 ppm CO2-eq. The analysis found that by 2030, more than 60 percent of new vehicle sales would need to be based on some form of electrification, ranging from traditional hybrids to pure electric vehicles.
And as we move toward a cleaner power sector, delinking the transportation sector from liquid fuels and hooking it to dynamic and diverse power sources is the best option for long-term emissions reductions – ultimately, to zero.
Setting the stage for wide scale electric vehicle adoption, however, will require government support for infrastructure and batteries. In November, 2009, the Electrification Coalition, a group of business leaders representing the electrification value chain, released The Electrification Roadmap, which described electric vehicles’ potential and the challenges facing their deployment. It also set forth a series of policy proposals for overcoming those challenges, with the goal that by 2040, 75 percent of the light-duty vehicle miles traveled (VMT) in the United States should be electric miles.
In a long-term macroeconomic analysis released last week, David Crane, President CEO of NRG Energy and a member of the Electrification Coalition, speaking at the National Press Club, reported that those policy proposals would create 1.9 million jobs by 2030, reduce the federal deficit by $336 billion, and raise the typical household’s income by $2,763. Most importantly, we would import 11.9 billion fewer barrels of oil between now and 2030. Using the EPA conversion metric, that means reducing on-road emissions by 5.2 billion metric tons of CO2. Including the carbon emissions from power generation, emissions in the transportation sector would be reduced from around 1,806 million metric tons today to 601 million tons with today’s generation mix, and 525 million tons with a generation mix that derived 40 percent of its power from nuclear and renewable sources. And that reduction includes expected VMT growth.
If we enact a carbon fee on liquid fuels with the goal of improving energy security and reducing emissions, we should put our money where our mouth is and direct the funds toward electrification of light-duty transport.
Read More
April 13, 2010 8:10 AM
A Formula for Success
By Steve Van Beek
Chief of Policy and Strategy and Director, LeighFisher
This week’s question and the initial responses start with the shared goal of having proceeds from a transportation-related carbon or fuels tax reinvested in transportation infrastructure. Such a policy would be positive for several reasons: (1) transportation is the largest emitter of GHG emissions, (2) the climate and transportation debates to this point have been largely disconnected despite the fact that the policy goals of each are interdependent, (3) the proceeds of such a tax, if not reinvested in transportation, will displace some or all of the tax increase the industry is counting on to make the trust funds solvent and therefore capable of addressing future needs.
Realizing this shared goal will be challenging for a number of reasons including the reluctance to impose taxes or user fees on a broad group of taxpayers or users; the growing concern about the nation’s debt which will increase the pressure to dedicate any new taxes imposed to deficit reduction; and the always difficult job of convincing policymakers that long-term goals and public goods,...
This week’s question and the initial responses start with the shared goal of having proceeds from a transportation-related carbon or fuels tax reinvested in transportation infrastructure. Such a policy would be positive for several reasons: (1) transportation is the largest emitter of GHG emissions, (2) the climate and transportation debates to this point have been largely disconnected despite the fact that the policy goals of each are interdependent, (3) the proceeds of such a tax, if not reinvested in transportation, will displace some or all of the tax increase the industry is counting on to make the trust funds solvent and therefore capable of addressing future needs.
Realizing this shared goal will be challenging for a number of reasons including the reluctance to impose taxes or user fees on a broad group of taxpayers or users; the growing concern about the nation’s debt which will increase the pressure to dedicate any new taxes imposed to deficit reduction; and the always difficult job of convincing policymakers that long-term goals and public goods, like transportation, are worth planning and paying for today.
Better joining transportation and climate policy should not mean either simply reinvesting tax proceeds back into any transportation project or using the proceeds solely to reduce GHG emissions. Because we need to join transportation and climate goals, not address them in isolation, the task should be to invest the proceeds in sustainable transportation projects that improve the nation’s mobility and lower the sector’s carbon footprint.
The question is how do we reconcile what appear from the letters and posts to be irreconcilable goals? From my understanding of the two letters and the positions they represent, the following five principles could serve as the basis to unite the approaches. Taken together, they reinvigorate the trust funds and adapt the transportation program to meet today’s challenges.
1. Fix the Trust Funds: Because the Highway Trust Fund and Mass Transit Account (and the Airport and Airway Trust Fund) normally provide a stable and predictable mechanism for states and local agencies to plan and invest in transportation projects, the structure needs to be retained and strengthened. If critics do not like the structure, they should propose an alternative that provides the stability and level of investments are current trust funds do.
2. Reform Planning and Program Criteria: States and localities should practice more inclusive planning and alternatives analysis that include life-cycle GHG emission inventories as core parts of their responsibilities. This means a real consideration of alternatives earlier in the project review process. USDOT discretionary dollars should help fund innovative planning processes and projects from around the nation.
3. Enhance Flexibility: Building upon the goals of ISTEA, the national government, states and localities should receive flexibility to invest in a wider array or projects including air, rail, maritime, highways, transit, biking and pedestrian projects. This is good policy and, just as important, good politics. Although national goals are critical, these will not be realized unless states, regions, and localities have a large say in how goals such as mobility and GHG emission reduction are addressed. The beauty of a carbon tax, of course, is that it provides an economic incentive for all users and providers to do the right thing notwithstanding their choices.
4. Codify a National Program: With the precedent of TIGER and the proposed infrastructure bank (or I-Fund), the President and Secretary LaHood have shown credible national policies and processes that should be a significant part of the transportation program—one that includes all modes and one that is focused on the passengers and shippers that use the system. Dedicating 10 to 15% of the new program to national priorities would be an important innovation.
5. All Dollars on Deck: We need to examine not just a carbon tax or the existing taxes and fees paid by users, but ways of leveraging more dollars from the private sector, from states and localities, and from an array of tolling, congestion management strategies, and other user fees. If the recent rejection of Pennsylvania’s I-80 initiative told us anything, it is that USDOT and the Congress need to clarify roles and responsibilities for both public and private entities (the agency bobbing and weaving on this issue has been extraordinary). We know what the answer cannot be: no VMT, no fuels tax, no carbon tax, no tolling of interstates providing dedicated revenues to sponsor priorities AND a big transportation program.
The European Union has used the term co-modality to sum up where transportation and the related issues of energy and environment need to go for the future. Co- modality is defined as “the use of different modes on their own and in combination with the aim of obtaining an optimal and sustainable utilization of resources.” I like this formulation because it necessarily includes mobility and the impacts of mobility. It also points to the ultimate need to internalize externalities such as congestion and GHG emissions in the ways we plan, build and use transportation infrastructure.
Fundamentally reforming our transportation policy architecture and funding future needs will be challenging and difficult under the best circumstances (and we hardly have those). It will continue to be impossible if advocates play to their constituencies and hold out for a bill that meets all of their goals. The people I know in the industry are better than that and smart enough to succeed.
Read More
April 13, 2010 8:06 AM
Carbon fees should fund green options
By Parris N. Glendening
President, Smart Growth Leadership Institute, Former Governor of Maryland, and NSI Senior Advisor
The carbon fee on transportation fuel will encourage drivers to reduce their vehicle miles traveled and invest in more fuel-efficient automobiles. What we do with revenue from the carbon fee, however, is what will make or break the initiative’s success. It must be thoughtfully invested in our transportation system to maximize emissions reductions.
Carbon fees should not be dedicated to the Highway Trust Fund without specific requirements that the funds be spent on transportation modes that will reduce greenhouse gas emissions. Our highway infrastructure is in need of significant investment, as AASHTO and others point out. It is inappropriate, however, to devote this funding stream to the highway system. Doing so will lead to increased automobile emissions with a fee that was designed to reduce them.
Green transportation modes, including transit, bicycling, and pedestrian infrastructure, should be the beneficiaries of carbon fee revenue. These investments will not only complement but also will enhance the objectives of the fee. They provide alternatives to carb...
The carbon fee on transportation fuel will encourage drivers to reduce their vehicle miles traveled and invest in more fuel-efficient automobiles. What we do with revenue from the carbon fee, however, is what will make or break the initiative’s success. It must be thoughtfully invested in our transportation system to maximize emissions reductions.
Carbon fees should not be dedicated to the Highway Trust Fund without specific requirements that the funds be spent on transportation modes that will reduce greenhouse gas emissions. Our highway infrastructure is in need of significant investment, as AASHTO and others point out. It is inappropriate, however, to devote this funding stream to the highway system. Doing so will lead to increased automobile emissions with a fee that was designed to reduce them.
Green transportation modes, including transit, bicycling, and pedestrian infrastructure, should be the beneficiaries of carbon fee revenue. These investments will not only complement but also will enhance the objectives of the fee. They provide alternatives to carbon-intensive driving. This will move us forward toward a comprehensive, green transportation system, rather than reinforce the habits that have driven us to this environmentally-precarious point.
Lastly, as AASHTO notes, transportation solutions should accelerate job creation. Ideally, carbon fees should support transportation investments that create the most jobs per dollar spent. Fortunately, the green choice will do just that. A study by Smart Growth America shows, for example, that ARRA stimulus dollars invested in public transportation generated twice as many jobs per dollar spent as highway work (http://stimulus.smartgrowthamerica.org).
Carbon fee revenues must not be directed to the Highway Trust Fund unless policies are in place to ensure that they will directly support a green transportation system.
Read More
April 12, 2010 3:44 PM
The Facts About a Carbon Tax
By John Horsley
Executive Director, American Association of State Highway and Transportation Officials
This is not an academic debate for state transportation departments represented by the American Association of State Highway and Transportation Officials, and transit agencies represented by the American Public Transportation Association. What is at stake is the survival of the federal highway and transit programs the national economy depends on. This is also far more important than the differences between the letter signed by our Associations and the one signed by a coalition of environmental groups. Let me outline why this issue is so crucial.
As AASHTO, and the 26 other national transportation organizations which signed the April 1, letter to Senators Kerry, Lieberman, and Graham made clear, if their Climate Change Bill imposes a carbon tax on transportation fuels, the revenues generated should be directed to the Highway Trust Fund. We were pleased to see seven Senators join Senator Tom Carper of Delaware in sending a letter April 5, to the authors of the bipartisan Climate Change Bill making the same point. The Senators stated, “Investment of $30 bil...
This is not an academic debate for state transportation departments represented by the American Association of State Highway and Transportation Officials, and transit agencies represented by the American Public Transportation Association. What is at stake is the survival of the federal highway and transit programs the national economy depends on. This is also far more important than the differences between the letter signed by our Associations and the one signed by a coalition of environmental groups. Let me outline why this issue is so crucial.
As AASHTO, and the 26 other national transportation organizations which signed the April 1, letter to Senators Kerry, Lieberman, and Graham made clear, if their Climate Change Bill imposes a carbon tax on transportation fuels, the revenues generated should be directed to the Highway Trust Fund. We were pleased to see seven Senators join Senator Tom Carper of Delaware in sending a letter April 5, to the authors of the bipartisan Climate Change Bill making the same point. The Senators stated, “Investment of $30 billion per year is needed to simply maintain our highways, bridges and transit systems… Improving our infrastructure will require an additional investment of $75 billion… If your legislation raises revenue from the transportation sector but does not reinvest funds into infrastructure, our efforts to enact a surface transportation authorization bill in the future will be constrained.”
The only exception we would take to that excellent statement is the word “constrained.” To us the more accurate term would be “preempted.” It would be difficult to enact a tax on trucks and cars right now whether it is called a carbon tax or a gas tax. But if Congress voted to do so in a Climate Change Bill, it would be inconceivable that they would later be able to enact a separate increase to fund highways and transit.
Right now expenditures from the combined federal highway and transit programs are running at about $54 billion a year, while about $36 billion in revenues are flowing into the Highway Trust Fund. For the time being a transfer of funds from the General Fund is keeping the program solvent. Once that runs out, unless new revenues are injected into the Highway Trust Fund, the highway program will have to be cut to around $21 billion, and the $10.7 billion transit program cut to around $5 billion. Just to sustain the highway and transit programs at their current levels will require a fuel tax increase in the range of 7 cents per gallon.
Travel on the U.S. highway system in 2009 climbed to almost three trillion miles. Over the next 50 years, the population of the U.S. will grow by more than 100 million people, greatly intensifying the demand for transportation services. Funding of highway and transit programs somewhere in the $450 billion range proposed by Chairman James Oberstar in the House will be needed to keep pace with the demand. These investments will be used to maintain and modernize highways, bridges and transit systems and create hundreds of thousands of jobs. It will require a further increase in fuel tax revenues. The two Commissions appointed by Congress to study future funding for highways and transit both concluded that for the next 12 years, the only viable source to fund it is the gas tax.
Once you do the math, it will take every cent it is conceivable that the Congress would add in the form of Carbon Tax or Gas Tax just to fund core transportation programs. The good news is that those programs can be used to fund exactly the improvements needed to start us down the path to real Climate Change Solutions: reducing congestion, increasing system efficiency, improving land use, and shifting trips to transit, biking and walking. If revenues from Climate Change legislation is directed to the Highway Trust Fund, we see a potential “win, win” solution which could help generate the support the measure needs to pass, and fund a transportation bill. If it does not, we fear this will mean a lengthy set back for both proposals.
Read More
April 12, 2010 3:16 PM
A smarter transportation future
By James Corless
Campaign Director, Transportation for America
Transportation for America was proud to join with more than 40 organizations to call for directing so-called “linked fee” revenues in the emerging climate legislation sponsored by Senators Graham, Lieberman and Kerry towards clean transportation investments that reduce both transportation-related emissions and our dependence on oil. Let’s not forget that the transportation sector accounts for 70 percent of oil consumption and more than 30 percent of greenhouse gas emissions in the United States. The broader transportation community must recognize that many of solutions proposed for a more 21st century transportation system – congestion pricing, ITS, system operations, building housing closer to jobs to reduce commute times, shifting shorter trips to bicycling and walking and vehicle electrification -- are the same solutions that will have the biggest impact on reducing emissions and oil consumption. The path to a cleaner transportation future is also the path to a smarter transportation future. If we can find true common ground on goals and vision, we can find the political support for more revenues.
April 12, 2010 12:56 PM
Aligning Investment & Policy Objectives
By Keith Laughlin
President, Rails-to-Trails Conservancy
I hope there is one basic principle on which all contributors to this conversation can agree: some portion of carbon fee revenues derived from the transportation sector should be reinvested in building and maintaining transportation infrastructure.
I hope we also have consensus on a second principle that is just as important as the first: such investments must be consistent with performance-based criteria focused on cost effective ways to enhance the movement of people and goods while simultaneously producing significant reductions in greenhouse gas emissions.
Would anyone seriously argue that federal taxes on tobacco should be used to subsidize tobacco production or encourage smoking? Of course not. And the same principle applies here: fees levied to achieve a specific public policy outcome should only be reinvested in a manner that further supports – not undermines – that policy outcome. As a result, such funds should not be used for any purpose that cannot demonstrate significant reductions in greenhouse gases.
Such performance measures would l...
I hope there is one basic principle on which all contributors to this conversation can agree: some portion of carbon fee revenues derived from the transportation sector should be reinvested in building and maintaining transportation infrastructure.
I hope we also have consensus on a second principle that is just as important as the first: such investments must be consistent with performance-based criteria focused on cost effective ways to enhance the movement of people and goods while simultaneously producing significant reductions in greenhouse gas emissions.
Would anyone seriously argue that federal taxes on tobacco should be used to subsidize tobacco production or encourage smoking? Of course not. And the same principle applies here: fees levied to achieve a specific public policy outcome should only be reinvested in a manner that further supports – not undermines – that policy outcome. As a result, such funds should not be used for any purpose that cannot demonstrate significant reductions in greenhouse gases.
Such performance measures would likely support investments in new technologies to better manage travel demand on existing roads or enhancing mobility by encouraging low carbon alternatives to driving, such as walking, biking, transit and rail.
In closing, I would note that this debate provides further evidence of a shift away from the transportation financing system that has been in place since 1956. That system served the purpose of building the interstate highway system. But it’s now broken and beyond repair. It’s time to move past a financing system based upon funding a “Highway Trust Fund” with “user fees.” We now need a “Surface Transportation Trust Fund” that provides funding for a variety of 21st century transportation investments based not on the source of the revenues, but on the performance-based outcomes that such investments will produce for the nation.
Read More
April 12, 2010 7:34 AM
By Deron Lovaas
Federal Transportation Policy Director, Natural Resources Defense Council
The question isn’t whether funds should go into the highway trust fund. The question is whether transportation-related investments are a justifiable use of limited revenue from the sale of carbon pollution permits.
Let’s be clear – Congress is debating energy and climate legislation. This policy is a necessary complement to advances in energy legislation enacted in 2007 to reduce oil dependence as well as pollution that causes climate change. As Senator Lindsey Graham put it: “One of the issues that I think we have some common ground on is trying to come up with a rational energy independence policy married up with climate change policy that will clean up the air but make money doing it and create jobs in the process and looking at old problems anew.”
The U.S. Climate Action Partnership, a group of companies including Duke Energy, General ...
The question isn’t whether funds should go into the highway trust fund. The question is whether transportation-related investments are a justifiable use of limited revenue from the sale of carbon pollution permits.
Let’s be clear – Congress is debating energy and climate legislation. This policy is a necessary complement to advances in energy legislation enacted in 2007 to reduce oil dependence as well as pollution that causes climate change. As Senator Lindsey Graham put it: “One of the issues that I think we have some common ground on is trying to come up with a rational energy independence policy married up with climate change policy that will clean up the air but make money doing it and create jobs in the process and looking at old problems anew.”
The U.S. Climate Action Partnership, a group of companies including Duke Energy, General Electric and Shell Oil (as well as NRDC) formed a few years ago to advocate for such legislative action. The Blueprint for Legislative Action written by this diverse group is worth a read, since it includes several provisions for aligning energy and transportation policy including:
Looking at the entire picture, in order to put surface transportation on the right trajectory we need policy that helps: 1) accelerate improvements in vehicle fuel-efficiency, including incentives for transitioning to a pluggable fleet of light-duty vehicles; 2) shift to American-made energy sources such as advanced biofuels; and 3) provide more energy-efficient mobility options for consumers and companies. You can click here for a useful NRDC fact sheet about the transportation components of a clean energy economy. I also testified to the Environment and Public Works Committee about energy security and transportation a few weeks ago, covering some of the same ground while delving deeper into transportation infrastructure, end-user travel activity and mobility choices (or lack thereof).
Unfortunately the current transportation program that helps determine mobility options for consumers is not designed to boost energy security or reduce heat-trapping pollution. As a result our transportation policy and investments have instead exacerbated our energy dependence and pollution challenges over the years. This is not surprising, given that as the Bipartisan Policy Center notes, “…in the past, these concerns have largely been addressed outside of transportation policy, often through separate policies targeted to regulating vehicle or fuel characteristics…Broader energy- and environmental-policy objectives must be integrated in the development of comprehensive, performance based programs at the regional/corridor, state and local levels and should directly inform the choice of specific transportation strategies and investments.” If policymakers do finally shift to a performance-driven approach oriented toward achieving national priorities including energy and climate security, reauthorization of the program should be an easier sale with consumers.
In sum, while reauthorization is similar to the energy and climate issue in that it is a major national challenge, it is separate and apart. Reforms to line the program up with the goals of energy/climate policy, however, should help with successful enactment and implementation of both laws. And if the federal transportation program supports, rather than undermines, the goals of emerging energy and climate policy then we have a stronger case for more revenue, whatever the source. I look forward to working with my fellow bloggers towards such an alignment.
Read More