[vc_row][vc_column][vc_column_text]The road to making Washington climate polluters pay has been long, full of trial-and-error for climate warriors. Many recall recent efforts backed by Governor Jay Inslee in 2014 and 2018, and grassroots activists put an initiative, I-732, on the November 2016 ballot.
So far many have tried, none have succeeded.
This year, a broad coalition crafted Initiative 1631 for the fall ballot and it may present the best chance of success yet.
So what is different about this proposal? And will it matter come Election Day?[/vc_column_text][vc_column_text]
I-1631 and its backers
I-1631, known as the Clean Air, Clean Energy Initiative, aims to: “reduc[e] pollution by investing in clean air, clean energy, clean water, healthy forests, and healthy communities by imposing a fee on large emitters based on their pollution.” The measure would charge large polluters a fee for every ton of greenhouse gases they emit and invest the revenue in clean air, clean energy, clean water, and healthy forests in Washington.
A coalition of businesses, labor, tribes, environmentalists, social justice, health and faith groups, including support from the backers of I-732, is campaigning for I-1631. (However, the co-chairs of the I-732 campaign have raised some concerns about I-1631, here).[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Revenue positive
In its early years, I-1631 would generate close to a billion dollars a year.
Most significantly I-1631 is revenue positive, meaning money raised from the carbon fee on large polluters would be invested in clean energy projects. Among the uses: reducing pollution, boosting energy efficiency, producing clean energy and fuels, creating rural and urban jobs in Washington and providing transition assistance to workers and communities.
I-732 was revenue neutral—money raised from the carbon tax would have been returned via tax cuts and credits to people and businesses. Many environmental, labor and social justice organizations objected to I-732, which only garnered 42 percent approval. Those same groups support this year’s initiative.
In its early years, I-1631 would generate close to a billion dollars a year. The ballot requires that revenue is invested in the following buckets:
- 70 percent must be used for “clean air and clean energy” investments that reduce greenhouse gases and provide worker retraining. This could include investments in energy efficiency, solar and wind, and electric vehicles. At least 15 percent of these funds must “directly reduce the energy burden of people with lower incomes.” Another slice of this fund must to worker support—short-term payments for those in the fossil fuel sector who are displaced in the new clean energy economy. Over the course of the first four years, $50 million must be dedicated to this purpose—about $12.5 million per year in early years—and it must be annually replenished as needed.
- 25 percent must be used in “clean water and healthy forest” investments that “increase the resiliency of the state’s waters and forests to the impacts of climate change.” For water, this may include restoration and protection of estuaries, marine shorelines, and fisheries, as well as restoration of natural floodplain/reducing flood risk, groundwater mapping, and green stormwater infrastructure. For forests, it includes improving forest health and reducing forest fire vulnerability, changes in hydrology and insect infestation, and supporting cross-laminated timber and other mass timber technologies.
- 5 percent must be used for healthy community investments, to include anything that helps “prepare communities for challenges caused by climate change.” Among uses: responding to wildfires, relocating communities on tribal lands impacted by sea level rise and developing and implementing educational programs in public schools. Twenty percent of this fund must be reserved to help communities in “pollution and health action areas.” Rural communities must be able to participate in the rulemakings about investments.
The initiative also requires that, across all buckets, 35 percent of investments must benefit “pollution and health action areas.” These areas are yet to be designated by the Department of Health, but will be specific geographical communities with high concentrations of pollution and vulnerable populations, and Tribal Reservations. At least 10 percent of the investments must fund programs or projects located within the geographical boundaries of the pollution and health action areas and at least 10 percent of the investments must be used for programs or projects formally supported by a resolution from an Indian Tribe. These two 10 percent requirements can count towards the 35 percent but can not overlap with each other.
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A fee, not a tax
Washingtonians have been historically reluctant to pass tax increases but are more supportive of fees on pollution, so the all-important wording of I-1631 also sets it apart from I-732. The ballot title makes no reference to a new “tax.” It says only that it is an act relating to “reducing pollution by investing in clean air, clean energy, clean water, healthy forests, and healthy communities by imposing a fee on large emitters based on their pollution.”
This ballot language might be more acceptable than I-732’s ballot title to “impose a carbon emission tax on certain fossil fuels and fossil-fuel-generated electricity.” As Sightline’s own Anna Fahey pointed out, a 2016 poll showed 67 percent of Washington voters want to put a price on carbon pollution. Now that the US President and Congress aren’t attempting to combat climate change—and are actually offering to prop up the fossil fuel industry with more subsidies—that percentage might be increasing.
A 2016 poll showed 67 percent of Washington voters want to put a price on carbon pollution.
Opponents will predictably try to convince voters this is a tax, but it will be a harder road given the ballot title. What’s more, the opposition already challenged the ballot title and state Attorney General Bob Ferguson legally certified it as a fee. The money from the fee, Ferguson explained, must be spent towards solving climate change. If it were a tax, the revenue could be spent on any general fund purpose. [/vc_column_text][vc_column_text]
Slightly lower near-term price
A third difference is that I-1631 is slightly less ambitious than I-732 when it comes to the pollution price in the 2020s. I-1631 starts at $15 per ton of CO2 pollution in 2020 and rises $2 per year (plus inflation) until 2035. Assuming inflation is 2 percent a year, that puts the price at $55 per ton of CO2. The price will be in the $20s to $30s for much of the 2020s.
In contrast, I-732 would have started at $25 a ton, been in the $30s to $40s for most of the 2020s, and reached $62 nominal dollars in 2035.
If the state meets its 2035 greenhouse gas reduction goals and is on track to reach its 2050 mark, the I-1631 price locks in at $55. So, on the one hand, polluters would never be slapped as heavily under I-1631 as I-732 but, happily, the state would still be reducing pollution and surpassing its goals. But what if that doesn’t happen? Today, Washington is not on track to meet its 2035 goals. If that stays the case, I-1631 would surpass I-732’s mid-century penalties—$75 inflation-adjusted, or $110 in nominal dollars.[/vc_column_text][vc_column_text]
electricity, natural gas, and transportation fuels
Major greenhouse gas polluters in Washington—energy producers and suppliers—will have to pay the fee. That includes electric utilities, natural gas utilities, petroleum refiners, and oil and gas companies.
Manufacturers and other industrial sources, on the other hand, will not directly pay the fee, though they may pay increased energy costs if they burn dirty fuels. To safeguard the state economy and keep certain businesses from moving out of Washington, the bill protects some industries from increased energy costs from the fee. Electricity and fuel providers would be exempt from paying the fee on the energy they sell to protected businesses. A “protected business” may use a lot of energy but also faces competition from out-of-state–termed “Energy Intensive Trade Exposed” (EITE) industries. These industries are listed in WAC 173-442-020(1)(m). Among others, they include:
- Paper and pulp mills
- Glass manufacturers
- Certain food and juice producers
- Iron
- Aluminum
- Steel producers
- Cement refineries
- Semiconductor and related device manufacturers
- Aircraft and related aircraft part manufacturers
These exceptions have been used in other jurisdictions that have adopted some form of carbon pollution pricing to ensure these industries don’t leave the state for places without carbon pollution pricing. I-1631 authorizes the state Department of Commerce to designate additional Energy Intensive Trade Exposed businesses as it deems necessary.
In addition to the EITEs, I-1631 exempts oil that is refined in-state but sold out of state, aircraft and maritime fuels, diesel and airplane fuel used in the agricultural sector, and coal-power electricity from power plants that already are contracted to shut down by the end of 2025: Centralia and Colstrip Units 1 and 2
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Creates new oversight bodies
I-1631 creates several new oversight bodies, and tasks existing agencies with oversight duties. Most importantly, the initiative creates a new “Public Oversight Board” within the Governor’s Office. The board would be composed of fifteen voting members appointed by the Governor.
The bill also creates three, nine-member investment advisory panels, tasked with recommending investments, rules, and processes to the Public Oversight Board. The Governor appoints all panel members and aims to represent interested groups, including business, environmental, labor, tribal and polluted communities.
- Clean Air and Clean Energy Panel
- Clean Water and Healthy Forest Panel
- Environmental and Economic Justice Panel
Four existing agencies will play important roles in overseeing the program’s continued success.
The Department of Commerce will develop an overall greenhouse gas reduction plan and update it every four years to achieve economy-wide reductions of 20-million metric tons by 2035 and 50 million metric tons by 2050. The Department will also produce an “Effectiveness Review and Pollution Mapping” report every four years.
The Department of Ecology will adopt rules specifying the basis for the carbon content of fossil fuels and electricity.
The Department of Natural Resources will develop a program and plan to sequester greenhouse gas emissions through new “blue carbon projects.”
The Department of Agriculture will develop a plan to sequester emissions in the soil (for example, no-till agriculture).[/vc_column_text][vc_column_text]
This could be the year
After years of trying and failing to pass comprehensive climate change policy in Washington state both in the Legislature and at the ballot box (eg: SB 5735, a 2009 Cap and Trade Legislative Proposal; SB 5283, a 2015 Cap and Trade Legislative Proposal; I-732 from 2016; and SB 6203, a 2017 Carbon Tax Legislative Proposal), this year’s effort may have the highest likelihood of success.
The advocates have a favorable ballot title and appear to have a groundswell of support. On July 2, they turned in around 375,000 signatures to the Secretary of State’s Office. The Secretary of State will need to certify that there are at least 260,000 valid signatures to formally certify the initiative for the ballot in November, but given the large cushion in signatures, it is very likely the initiative will be certified.
Once the initiative qualifies for the ballot, Big Oil will likely start spending Big Money against the proposal. The Western States Petroleum Association (WSPA) has hired a big Washington, DC, public relations firm that has long ties to the oil and gas industry to develop and finance an opposition campaign and messaging. It’s also gathered pledges already approaching $1 million from member companies. The Association of Washington Businesses is officially opposing and has already challenged I-1631’s favorable ballot title.
The opposition to climate action, as always is activated and well-funded. Can Washington supporters’ “bigger tent” approach finally breach the wall of climate inaction? Time will tell.[/vc_column_text][/vc_column][/vc_row]
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