The Vermont Climate Council is considering the option of having the state join the Western Climate Initiative (WCI) as an alternative to its plan to reduce transportation sector emissions through the Transportation and Climate Initiative Program (TCI-P).

Joining WCI for transportation only could help fill an emission reduction gap in the council’s initial Climate Action Plan that was left when TCI-P destabilized in November. (See Vt. Climate Council Adjusts Course on TCI-P.)

The council released its plan in December without a clear alternative to TCI-P, instead including language that further studying other options is needed this year. Without the multistate cap-and-invest program, the plan has a 26% gap — equivalent to 0.9 million metric tons of carbon dioxide equivalent (MMTCO₂e) — in emission reductions needed by 2030, according to a transportation task group of the council’s Cross-Sector Mitigation Subcommittee.

Under the 2020 Global Warming Solutions Act, transportation sector emissions must decline by 0.5 MMTCO₂e by 2025 and an additional 1.38 MMTCO₂e by 2030.

WCI is one of two options that the task group supports as needing further exploration because of their ability to reduce emissions equitably and cost-effectively, according to a memo the group shared with the council Monday. The WCI price per ton in November was $28.60, while the projected price per ton for TCI-P was $6.60 starting in 2023. Vermont already participates in the Regional Greenhouse Gas Initiative, which saw its highest auction price in December at $13/ton.

Under WCI, which California and Quebec participate in to cap and reduce emissions economy-wide, Vermont could tailor its program requirements for transportation to meet unique economic and environmental circumstances, the memo said.

As a complement to WCI, the task group recommended exploring a low-carbon fuel standard (LCFS) similar to programs already adopted in California, Oregon and Washington. Vermont has reduced emissions significantly in its electricity sector with a clean energy standard, and the council recommended in its initial plan that the state adopt a clean heat standard to reduce emissions in the buildings sector.

An LCFS, the memo said, could come at a higher cost than a cap-and-invest program. The latest program prices in California and Oregon were $147/ton and $126/ton, respectively. Vermont, however, could act independently to implement an LCFS without relying on the interstate collaboration necessary for other options, like TCI-P and WCI, to work, according to the memo.

Secondary to a cap-and-invest strategy in the council’s initial plan was a recommendation for Vermont to adopt California’s pending Advanced Clean Cars II (ACCII) regulation. ACCII, as proposed, would reduce emissions from new light- and medium-duty vehicles, while increasing zero-emission vehicles sales between 2026 and 2035.

The regulations could help Vermont achieve 11% of the 26% emission reductions needed in transportation by 2030, according to the memo, but the task group said that ACCII is not “sufficient on its own.” Additional policies and actions are needed to increase public investment in charging infrastructure and an expansion of electric vehicle purchase incentives.

The Agency of Natural Resources is already preparing to initiate a rulemaking for ACCII and California’s Advanced Clean Trucks regulation, as recommended in the council’s plan. However, a final rulemaking package for ACCII by the California Air Resources Board is not expected until June.

Members of the transportation task group will continue with an analysis of TCI-P alternatives and deliver a final recommendation to the council by May, and the council expects to adopt a final recommendation by June.

With the Vermont legislature scheduled to adjourn in May, any meaningful legislative action on a TCI-P alternative potentially could not happen until 2023. The council, however, expects the state can make short-term progress on transportation emissions with funding from the American Rescue Plan Act and the Infrastructure Investment and Jobs Act.

Gov. Phil Scott introduced his recommended fiscal year 2023 budget Jan. 18, with transportation funding of $40 million from ARPA. In addition, the state expects to receive $1.7 billion in IIJA funding over five years for transportation.

Those resources come with timing and funding matching requirements that limit how they can benefit long-term emission reductions, so they would not be available when the state needs to scale its efforts “massively” to meet 2030 requirements, the memo said.

The task group cautioned that, absent a framework for medium- and long-term emissions reductions combined with a dedicated funding mechanism, transportation sector investments from ARPA and IIJA will “fall off a cliff in 2027.”