Managing Investment Revenues and Costs in the Transportation Climate Initiative Region
Allowance price and revenue variability could pose a challenge for the investment of auction proceeds to modernize transportation infrastructure in the Transportation Climate Initiative (TCI). A price staircase could stabilize revenues and automatically increase the stringency of the program if costs are lower than expected.
Key Findings
- TCI plans for investment of emissions allowance auction proceeds to modernize transportation infrastructure to accelerate emissions reductions, and lower consumer costs.
- Allowance price and auction revenue variability could pose a challenge to state agencies planning investments and making long-term budgeting decisions.
- Emissions and cost containment reserves provide the most direct mechanisms to govern allowance price and auction revenue variability.
- A price staircase with quantities of allowances made available at many different price steps would provide the greatest stability for the market.
