The Past, Present, and Future of Carbon Pricing in #Washington State #ActOnClimate

Fog rolls in below snow-dusted peaks on Washington’s Olympic Peninsula. In relatively humid places like the Pacific Northwest, more water melts from the snowpack during the wintertime than in more arid regions. Brooke Warren/High Country News

From the Union of Concerned Scientists blog (Adrienne Alvord):

Despite what’s shaping up to be a summer of uncertainty in DC, with President Trump’s EPA attempting to dismantle a generation’s worth of science-backed environmental protection and climate progress, momentum is building in Washington state to move forward on innovative climate policy.

Washington has a lot at stake. Climate change impacts including increased wildfires, drought, flooding, sea level rise, ocean acidification, and changes to agriculture threaten the state today, and will get much worse unless we take action.

To prevent the worst impacts of climate change, Washington voters and legislators in recent years have considered – but not approved — binding carbon pollution limits and a price on carbon pollution. This year, a proposed ballot initiative measure, Initiative 1631 would create a fee for carbon polluters. It is sure to add to a robust and healthy nationwide discussion about what are the best policies to reduce carbon and prevent the worst impacts from climate change.

Carbon pricing is a way to help incentivize reducing climate pollution while providing revenue to invest in clean energy and fuels and provide transition assistance to workers and communities. The initiative could show how state-level action can be a potent antidote to retrograde motion in DC.

Past progress and approaches to pricing

Washington state, like the entire West Coast, is a leader on forward-thinking climate policy with legislative targets for emission reductions, a greenhouse gas inventory of major emitters, and a Clean Air Rule adopted by the Inslee Administration. The state has not yet instituted an economy-wide carbon price but has considered two approaches previously.

In 2016, Washington debated ballot initiative I732, a carbon tax measure that would have instituted a carbon tax offset by a 1 percent cut in sales tax, a cut to manufacturing taxes, and a low-income tax credit. I732 was intended to be revenue-neutral and to provide a progressive tax rebate. However, the initiative failed decisively at the polls after drafting errors came to light, and other controversies divided climate action supporters . (UCS was neutral on the measure, for reasons we described here.)

In 2017, the legislature considered a measure backed by Governor Jay Inslee, SB 6203 (Carlyle et al) that would have instituted price on fossil fuels that would rise gradually until 2035. The funds were to be used for carbon reduction measures, forestry, water improvements, low-income assistance, community investment, rural economic development, and utility rebates. The bill also exempted so-called “energy intensive, trade exposed” (EITE) industries that could be economic disadvantaged by competition from out-of-state entities not subject to a carbon fee. Despite diverse support from Washington business, labor, environmental, and social justice groups (and thanks to opposition from some industrial, business, and agricultural entities) the bill didn’t advance to a floor vote, in part because 2017 was a short, two-month session that didn’t allow sufficient time to consider the complexity of the measure.

And now a unified proposal from a broad coalition

While the other measures were being debated, a coalition of environmental, environmental justice, business, labor, tribal, public health, faith and other groups under the banner of the Alliance for Jobs and Clean Energy, has been hard at work finding common ground on climate policy. Now, the group has introduced initiative 1631 that incorporates both a polluter-pays carbon fee starting at $15 per ton of CO2 in 2020 and an investment plan for clean energy, forests, water, and healthy communities.

The initiative provides exemptions for certain EITEs and provides rebates to utilities while investing heavily in job assistance for displaced fossil fuel workers and also in tribal and low-income areas. The fee is increased at a rate of $2 per year plus inflation to an estimated level of about $55 and stays at that level if the state is on track to meet its 2035 emissions reduction target of 25 percent below 1990 levels.

The unique design of this carbon fee was arrived at after intensive consultation among many Washington communities, businesses, and groups. It differs from California’s cap and trade program, British Columbia’s carbon tax, and Oregon’s proposed carbon cap and invest policy (similar to California’s, to be taken up in the 2019 legislative session.)

The fact that different jurisdictions are looking at different approaches towards carbon pricing shows that there is latitude among pricing design to meet local needs and conditions. Some programs, like California’s that is linked to Ontario and Quebec, are designed to encourage participation from other jurisdictions, in part to lower costs. Washington’s program would not link out of state, but would provide a level of price certainty in the fee structure that other programs do not have.

For our future, the most expensive thing we can do is nothing

Despite the hard work of a large group of interests who have found a common vision for carbon pricing in Washington, I 1631 is certain to generate intense opposition from the fossil fuel industry and their allies. They will invoke the usual pieties about how yes, climate change is real, but this approach is all wrong. They will say that it’s bad for the economy. Of course oil producers and other fossil fuel interests do not want to help the state transition away from their products and the harm they cause. The fact is that carbon prices are features of several state and national economies, including British Columbia and California, that are thriving.

While carbon pricing is not the only approach to reducing emissions, it does start to internalize the costs of climate pollution and make the needed investments for a safer, healthier future. UCS has long supported carbon pricing and we recognize that there are different advantages to different approaches, along with numerous economic benefits. The greater threats to our economy, not to mention our well-being, are climate change-related impacts that are already costing billions of dollars, devastation of property and the environment, and loss of life. In fact, the most expensive thing we can do is nothing.

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