How NJ Could Fund Clean Transportation Priorities

How NJ Could Fund Clean Transportation Priorities


Matt Butner, left, and Justin Gundlach

New Jersey has recently taken some important steps to reduce greenhouse-gas emissions and other pollution from the transportation sector, but these efforts face a new potential roadblock as the coronavirus has sent the state budget into free fall. Exploding state expenditures, diminished tax revenue, and jarring transitions in the labor force all foretell that the state will have a hard time meeting its goals for decarbonization.

To close this fiscal gap and make transportation investments that will benefit nearly every resident, New Jersey’s leadership should look to a program being developed by about a dozen states in the Mid-Atlantic and Northeast: the Transportation and Climate Initiative (TCI). Participating in TCI can provide New Jersey with the $100 million-per-year fund it needs for crucial transit priorities.

To mitigate the harms of a warming climate, New Jersey must clean up the transportation sector — the source of 40% of the state’s greenhouse-gas emissions. The state has a solid plan involving the deployment of electric cars, buses, and heavy-duty vehicles, as well as charging infrastructure needed to fuel them all. But this will require substantial spending, and, so far, the state has only committed a fraction of what is needed.

For instance, New Jersey has put $30 million toward the electrification of light-duty passenger vehicles and allocated a chunk of $15 million of annual revenues from the Regional Greenhouse Gas Initiative to better and cleaner transit. To put that into perspective: This should move the state approximately 5% of the way toward its goal of 330,000 light-duty electric vehicles (EVs) by 2025. As New Jersey continues to amplify its commitment to clean transportation, it is becoming apparent that more must be done.

Going the distance

To go the full distance with respect to EVs and other elements of New Jersey’s clean- transportation plans, New Jersey needs a large dedicated stream of revenue. Without it, the state’s ambitious commitments will go unmet as the states hemorrhages tax receipts and redirects available spending toward vital public health services and economic assistance programs.

Similar to the existing Regional Greenhouse Gas Initiative, which requires power plants to pay to be allowed to emit carbon dioxide, TCI is a smart program that uses the best available policy mechanisms to ensure cost-effective reductions in greenhouse-gas emissions, a steady revenue stream for clean investments, and economic stimulus to promote job growth.

The overall goal of TCI is to put transportation-related carbon emissions on a downward trajectory, limiting them to 20%-25% below their current level by 2032. It accomplishes this by requiring distributors of gasoline and diesel to purchase allowances for every unit of fuel they sell. By limiting the number of available allowances, TCI effectively imposes a “cap” on emissions — guaranteeing emission reductions.

A bump in gas prices

The cap would raise gas prices just $0.05 to $0.17 per gallon in the program’s first year — barely enough to notice amid the current gas price collapse and, even if gas prices recover, not enough to push most people to stop driving fossil-fueled vehicles all together. Because TCI’s designers understand the importance of certainty for producers and consumers, they included mechanisms to prevent allowance prices from jumping too high or bottoming out.

Crucially, because there are so many drivers in New Jersey, even the small fuel price bump resulting from participation in TCI would create a huge pool of public funds — enough to support much and maybe all of New Jersey’s transportation policy agenda. The sale of allowances would yield a steady stream of funds for a wide range of desirable investments, including electric-vehicle subsidies, charging stations, mass transit, and other alternatives to gas- and diesel-burning cars. Even extended broadband access to facilitate telecommuting could qualify.

What’s more, dedicated funding on this scale will help New Jersey recover from the current economic downturn by encouraging private investment and creating jobs in a state where nearly 10% of the labor force works in the transportation sector.

But that isn’t the only appeal of TCI. By getting people to use improved transit options and drive a bit less — and to use cleaner cars when they do drive — the policy will mean less traffic, less pollution, and fewer traffic-related injuries and deaths. Together, these benefits will more than compensate for the modest increase in the price of fuel.

Making equity a priority

Finally, TCI makes equity a priority by encouraging participating states to allocate a portion of TCI revenues toward projects that benefit low-income and historically disadvantaged groups, especially those that might be disproportionately burdened by changes to fuel prices.

The ongoing pandemic presents New Jersey and its constituents with an unavoidable choice: either champion a program like the TCI and decarbonize the transportation sector or struggle and maybe fail to carry out the state’s commitment to clean transportation. For New Jersey, TCI — a clear complement to existing policies — should be a no-brainer.

Transportation Services Jonathan Cartu Transportor

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