Massachusetts will join two other New England states and Washington, D.C., in a major effort to reduce transportation emissions, the nation’s largest source of greenhouse gases, officials said Monday.
The agreement marked the latest step in a long-considered plan to limit and put a price on carbon emissions and to invest in clean technology and infrastructure, but at the outset it will include far fewer states than initially expected.
Called the Transportation and Climate Initiative, the program will set a cap on vehicle pollution and require hundreds of fuel distributors to buy permits for any carbon dioxide they produce beyond the cap.
Companies are likely to pass those costs on to drivers, causing gas prices in Massachusetts, Rhode Island, and Connecticut to rise 5 to 9 cents a gallon when the rules take effect in 2023, the organizers estimated. The projection has shifted over time and depends on a number of variables. Organizers last year said prices could increase as much as 17 cents per gallon, while a recent Tufts University study estimated 13 to 24 cents.
The states will use an estimated $300 million in annual revenue to pay for low-carbon transportation initiatives, from increased investment in public transit and cycling infrastructure to subsidies for electric cars and charging stations. Massachusetts would receive more than $160 million a year.
Governor Charlie Baker has championed the plan during his second term as crucial to achieving transportation and environmental goals, which include effectively eliminating greenhouse gas emissions in Massachusetts by 2050. At a news conference Monday, Baker, a Republican, argued that plans to address climate change are fiscally prudent, because fixing infrastructure damaged by storms and other problems will be costly long-term.
“The price of doing nothing is very big,” Baker said.
The participating states and the nation’s capital “are committing to bold action to achieve our ambitious emissions reduction targets, while positioning the jurisdictions and the region to grow the clean transportation economy,” said Kathleen Theoharides, the Massachusetts secretary of energy and environmental affairs.
But several key Northeast and mid-Atlantic states that had considered joining the program, chiefly New York, New Jersey, and Pennsylvania, declined to participate, significantly restricting its scope.
A dozen states had participated in planning the program, though New Hampshire dropped out a year ago because of the expected gas price increases. If all 12 states had joined, the compact would have included more than 20 percent of the US population. As it stands, it represents less than 4 percent.
Several states said they remain interested, and Theoharides said she expects some to eventually join. In the meantime, it’s important for the southern New England states and the District of Columbia to get started, she said.
“We’re at a point on climate change where action right now is needed,” she said. “We feel very strongly in this region that the time to start the program is now, and that starting the program will make it easier for other states to join on.”
That view may be overly optimistic, said Senator Michael Barrett, who leads the state Senate’s climate initiatives. States won’t soon shed their doubts about the program, he predicted, given the economy’s struggles during the pandemic and the need for legislative approval in some cases.
If the agreement includes just four jurisdictions, it may be too small to reduce emissions substantially, he said. Given the low participation, he urged the Baker administration to consider joining California’s cap-and-trade program instead.
“I had high hopes for TCI,” Barrett said. “It has fallen short.”
Senate President Karen Spilka was more confident, saying the initiative could grow over time.
“I do believe that if we build it, others will come,” she said.
TCI is modeled on the Regional Greenhouse Gas Initiative, which in 2009 adopted a similar cap-and-trade system in the power sector that now helps fund energy-efficiency programs like MassSave. Seven states signed an initial agreement to launch the program; others, including Massachusetts, joined later.
TCI could lead to a 26 percent reduction in transportation emissions by 2032, planners estimate. The figure would likely be above 20 percent — and potentially as high as 25.7 percent — even without TCI, according to a planning document, depending on changes in travel behavior, fuel efficiency, federal policy, and electric vehicle sales.
Officials said the pact will require at least 35 percent of the proceeds to be invested in areas that have seen “disproportionately high levels of pollution,” typically lower-income neighborhoods with high percentages of Blacks and Latinos.
The pact was hailed by a range of transportation, environmental, and business interests that have backed the plan.
“This agreement demonstrates that climate change need not be a partisan issue nor a point of contention between the business and environmental communities,” said Elizabeth Turnbull Henry, president of the Environmental League of Massachusetts.
Political opposition has come from both ends of the political spectrum. Conservatives who traditionally resist tax increases have noted that drivers will face higher prices at the pump, while progressives who see carbon taxes and climate policies predicated on market mechanisms as unfair to the poor opposed TCI in other states.
Paul Diego Craney, spokesman for the conservative Massachusetts Fiscal Alliance, said Baker and Lieutenant Governor Karyn Polito may pay a hefty political price for “entering Massachusetts into the scheme.”
“I don’t see a path for either of them being able to win an election in 2022,” he said in a statement.
John Shaer, director of the New England Convenience Store and Energy Marketers Association, which represents fuel distributors and gas stations, said the group has offered “constructive criticism” of the plan that has gone largely ignored.
“We recognize that mobility is changing. Gas and diesel are out of favor for now,” he said. “But we also recognize that it’s going to be with us for quite some time.”
The agreement comes weeks before the start of the Biden-Harris administration, which has pledged to curb greenhouse gas pollution. It also represents the largest transportation revenue measure in Massachusetts in years, following years of debate over new measures and Baker’s usual resistance to them.
Just months ago, the Senate rebuffed a House proposal to raise the state gas tax by 5 cents, citing the economic fallout of the pandemic. Baker has walked a tightrope in recent years, opposing a gas tax increase while strongly supporting TCI, saying claiming TCI was preferable because of its region-wide impact.