Connecticut’s Emissions Reduction Opportunity

Connecticut’s transportation system – the network of highways, trains, public transit, and walking and biking corridors – is vital to the state’s economy as it facilitates movement of goods and connects people to jobs and opportunities.  However, the system needs critical updates to continue to support the state.  

At the same time, the transportation system is the largest source (41%) of Connecticut’s greenhouse gas emissions (“GHGs”), which must be reduced for the state to meet its climate commitments.   

These two challenges of improving the transportation system and reducing GHGs can be addressed by applying a policy model that has been successfully used to clean up electricity generation and raise funds through emissions reductions.  

The Cap and Invest Model

The Regional Greenhouse Gas Initiative (“RGGI”) established in 2009 put a price on carbon emissions from electricity generation and used the proceeds to invest in renewable energy and energy efficiency. Since the program began: 

• CO2 emissions in the region have dropped by 50%
• $4 billion of economic activity has been generated
• Tens of thousands of jobs have been created.¹

Connecticut was a founding member of this regional cap-and-invest program, and as of 2017 had spent about $201 million of RGGI proceeds on clean energy projects. As of 2014, the latest figures available, RGGI expenditures added about $245 million to Connecticut’s economy, created 2,200 job-years, and helped avoid $13 million in health impacts.²

A similar regional cap-and-invest program could be applied to transportation to raise revenues, reduce emissions, and stimulate the economy.  To better understand this opportunity, Acadia Center looked at a scenario that reduced Connecticut’s transportation GHGs 4%, or nearly 4 million metric tons of CO2, by 2030 compared to the baseline scenario from EnergyVision 2030.³ This level of emissions reductions is aligned with Georgetown Climate Center’s estimate for market-based policy compared to existing Federal policies.⁴

Revenue and Reinvestment Strategies

Based on a $15/ton carbon price,⁵ the state could generate about $2.5 billion in revenue between 2019-2030 by capping emissions. Connecticut could allocate these funds in many ways to improve transportation and reduce GHGs. For example:

• Maximizing transportation GHG reductions by designating 100% of the program proceeds to emissions reduction measures, such as transit expansion, consumer electric vehicle and charging infrastructure rebates, and electrification of medium and heavy-duty vehicles like transit or school buses.
• Designating funding for infrastructure maintenance and transit operations, which could also reduce GHGs (by reducing traffic congestion, for example) as an ancillary benefit.

To provide an example of the revenue that could be generated by a cap-and-invest program, Acadia Center examined a 50/50 portfolio, with half of the program proceeds going to maintenance of infrastructure and half going to specific GHG reduction measures (Table 1). This portfolio is only provided as a point of reference, not a recommendation, and it does not include the full suite of activities that could be funded with proceeds.

Table 1: Simplified Reinvestment Portfolio for Connecticut’s Proceeds from Transportation Climate Policy

Benefits from Reinvestment

By examining the benefits of similar transportation expenditures in Connecticut and the U.S., Acadia Center has estimated some of the economic activity and other monetary benefits a 50/50 portfolio could generate (Figure 1). The total benefits from both tracks of spending are estimated at:

• $10.3 billion in economic output.
• $4.3 billion in added personal income.
• $11.6 billion in other benefits including fewer hours spent in traffic (not including the value of reduced GHG emissions).
• Over 3,000 long-term jobs created (i.e. not temporary construction jobs).
• $86 million in savings from avoided GHG emissions⁷ avoided costs.

Figure 1: Increased Economic Activity and Other Benefits from Reinvesting Transportation Climate Policy Revenues⁸

For more information:

Emily Lewis, Policy Analyst
elewis@acadiacenter.org, 860-246-7121 x207

¹See: Analysis Group’s “The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States: Review of RGGI’s Third Three-Year Compliance Period (2015-2017)

²See: Acadia Center’s Clean Energy Investments at Stake in Connecticut

³See Acadia Center’s EnergyVision 2030 Technical Appendix for modeling details. The Baseline scenario includes existing EPA/DOT fuel efficiency standards for medium and heavy-duty vehicles, as well as the existing Corporate Average Fuel Economy standards through 2025.

⁴See: Georgetown Climate Center’s  Technical Appendix Emission Reduction Strategy Analysis from “Reducing Greenhouse Gas Emissions from Transportation: Opportunities in the Northeast and Mid-Atlantic”

⁵Georgetown Climate Center’s analysis estimates a carbon price for market-based transportation climate policy between $5-$30/ton CO2.

⁶See: Economic Analysis Reports for the 1-84 Viaduct, the I-84/Route 8 Mixmaster in Waterbury, and the New Haven Rail Line, available in the November 2015 Briefing for the Transportation Finance Panel, and NREL’s National Economic Value Assessment of Plug-In Electric Vehicles.

⁷See: EPA’s Social Cost of Carbon methodology

⁸Other benefits calculated as present value. Output and income are cumulative totals over the project lifespans.