Energy Policy

Gas tax coming, and it won’t be used to repair highways

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Gasoline taxes may rise 17 cents a gallon and go up from there until everyone is driving an overpriced electric car. Delaware, Maine and nearly a dozen other northeast governments have participated in drawing up the plan, and will work to implement this tax with or without a legislative vote. 

It is modeled after a carbon dioxide tax on electric power that has been in place for a decade, raised electricity prices and didn’t reduce emissions. Even if it works, it will lower global temperatures by only one one-thousandth of a degree by 2100. Policy experts around the region have written a response to this awful plan.

The Georgetown Climate Center, a non-governmental group, released a draft Memorandum of Understanding for their proposed Transportation Climate Initiative (TCI). The proposal is to force fuel distributors to buy emission allowances for each ton of carbon dioxide emissions from gasoline and diesel fuel. The cost would show up at the pump. The program is similar to the decade old Regional Greenhouse Gas Initiative (RGGI) that forces electric generators to buy allowances. 

The documents released December 17 recognize existing federal requirements for more fuel efficient vehicles, and private interest in electric vehicles will likely reduce emissions 19 percent by 2032. The plan calls for an estimated tax of 5 to 17 cents per gallon to further reduce emissions 1 to 6 percent by primarily investing the tax revenue in electric vehicle subsidies and charging infrastructure. 

At 17 cents per gallon, or $225 per family per year, the tax is expected to raise $56 billion in revenue from 2022 to 2032. A maximum savings of 16 million tons of carbon dioxide emissions a year is expected. The cost per ton of savings would be $3,500.

For perspective, RGGI claims spending revenue of $2.7 billion from 2008 to 2017 on energy efficiency and saved 2.8 million tons of emissions, a 2 percent emission reduction, at $973 per ton. Research by the Caesar Rodney Institute and the Congressional Research Center determined RGGI didn’t actually save any emissions.

Like the RGGI plan, TCI emission reduction targets will be increased over time, and the tax will be raised until everyone is driving an electric vehicle, which currently costs about twice as much as a gasoline powered vehicle.  The U.S Energy Information Agency projects limited price reductions of electric vehicles over the next decade.

Governor Sununu announced the day after the TCI release that New Hampshire was dropping out over concerns the tax would cause too much harm. Progressive states like Washington, Oregon, and Vermont have failed at attempts to pass such a tax. Australia and several Canadian provinces have dropped similar taxes, and the yellow vest movement in France forced President Macron to withdraw a similar tax. 

Even the Delaware legislature attempted to pass a 10 cent increase in the fuel tax in 2016 for highway infrastructure, but withdrew the bill after very vocal protests by constituents.

About David Stevenson

David Stevenson is the director of the Center for Energy & Environmental Policy at the Caesar Rodney Institute in Delaware. Stevenson has published over 100 analytic studies including a major peer reviewed paper published in the Cato Journal this year titled "A Review of the Regional Greenhouse Gas Initiative." He has worked on issues such as the EPA Clean Power Plan, electric grid reliability, the public policy drivers of energy costs and climate change, and served on President Trump’s Environmental Protection Agency Transition Team.

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