T4America Blog

The half-promise of the Carbon Reduction Program

The Carbon Reduction Program (CRP), a new formula program released by the Federal Highway Administration (FHWA), provides states with $6.4 billion over 5 years for projects and strategies to reduce carbon emissions. However, thanks to a costly loophole, the program could end up making emissions worse.

The $6.4 billion Carbon Reduction Program (CRP), created under the new infrastructure law, is a substantial investment in carbon reduction. Under the program, each state must create detailed plans for how they will reduce transportation emissions. The money must be used to create and expand systems for public transit, active transportation (walking, biking, and rolling), congestion pricing, and other strategies to reduce emissions.

The CRP presents states with an opportunity to have a real impact on limiting greenhouse gas emissions. However, it’s important to note that this is just a small pile of cash compared to the other major funding streams in the infrastructure law, many of which states have traditionally used to make emissions worse. To effectively deliver on climate, states will have to move away from the status quo approach of building more and more roadways that increase emissions. That means they will need to make proper use of CRP funds and other federal dollars at their disposal.

Unfortunately, as we’ll cover below, there is little accountability to ensure states follow through, which means the FHWA will have a lot of work to do if it wants to get the most out of the CRP.

A high-emissions loophole

The CRP allows states to avoid using program funds for their intended purpose. State DOTs can flex up to 50 percent of CRP funds to other transportation projects including ones like highway expansions that increase emissions, as long as they records a reduction in carbon emissions.

Unfortunately, state reductions don’t have to be linked to any particular target. The FHWA is still developing their methodology for what emissions reductions will qualify for flexing funding out of the CRP, but all signs point to leniency. In other words, states that see reductions in their greenhouse gas emissions will be able to use carbon reduction funds to increase emissions. At the moment, the FHWA has not stated a specific level of carbon reduction required prior to flexing funds, which means states can start flexing funds to high-emissions projects after recording minuscule emissions reductions.

States are already spending their CRP dollars despite the fact that carbon reduction strategies (CRS), the plans they should be using to appropriately utilize CRP funding, are not due to the FHWA until November 15, 2023, nearly halfway through the infrastructure law’s funding timeline. These strategies can take up to 90 days to review and could still take rounds of adjustment before they are accepted by the FHWA. States without a reviewed CRS cannot adequately plan CRP spending, so there are no guarantees that the program will be able to meet its goal of reducing emissions.

A complimentary tool for transparency and accountability

The FHWA might be able to leverage a proposed regulation it rolled out for comment on July 15 to get the most out of the CRP. The proposed greenhouse gas (GHG) emissions measure would require states to measure the total amount of GHG emissions produced by transportation and reduce them to half of 2005 levels by 2030 and reach net-zero emissions by 2050. Because of these declining targets, the new rule might incentivize states to use their CRP money to reduce emissions. However, that depends on how closely states adhere to the emissions measure guidance. 

So far, climate-unfriendly states have not been too keen on listening to the FHWA. Enforcement of the GHG emissions measure will take diligent administrative action, which is uncertain even in administrations friendly to climate action like the Biden administration. Congress could ensure the success of the CRP by holding states accountable for failing to meet GHG emissions measure targets.

The bottom line: FHWA must add some chutzpah to the CRP

In order to make this program consequential for reducing transportation emissions, the FHWA needs to make changes. We won’t be able to reach our nation’s carbon reduction goals if even the programs aimed at reducing emissions are making our emissions worse. To start, they must require CRP funds to be used solely for the purpose of carbon reduction until states have hit benchmarks similar to those in the GHG emissions measure. 

After states hit the target level of carbon reduction (based on emission per capita and per economic unit), states should only flex funds into projects which will not counteract those reductions (e.g. transit and rail). Congress can also nudge the FHWA towards this by clarifying the intention of the program as only allowing states to flex money out if they are making real progress on transportation emissions.

The FHWA must also outline an adequate timeline for the completion of carbon reduction strategies, requiring states to demonstrate how they plan to use their funds and that they have reached the benchmark prior to flexing to other programs. Climate change is an ever-growing problem, and half measures will not help us reach our goals. The FHWA must provide more structure to this program, or else billions of dollars in climate funding could be spent in vain.

Transportation for America members have access to exclusive resources that provide further detail on this topic. To view memos and other members-only resources, visit the Member Hub located at t4america.org/members. (Search “Member Hub” in your inbox for the password, or new members can reach out to chris.rall@t4america.org for login details.) Learn more about membership at t4america.org/membership.