The Washington PostDemocracy Dies in Darkness

Washington governor proposes billion-dollar carbon emissions cap-and-trade plan

Washington Gov. Jay Inslee (D) proposed a cap-and-trade plan that would raise nearly $1 billion for a state struggling with a big budget shortfall (Photo: Elaine Thompson/Associated Press)
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Washington could become the second state to place a firm cap on carbon emissions under an aggressive proposal offered this week by Gov. Jay Inslee (D), one of the leading proponents of assertive action to prevent and reverse climate change.

Major industries would have to purchase the right to emit carbon under the Carbon Pollution Accountability Act, which Inslee introduced at an event in Seattle. The plan would apply to firms that emit more than 25,000 metric tons of carbon emissions per year, which Inslee’s office estimated would cover about 85 percent of the state’s total greenhouse gases.

Those emitters range from oil refineries north of Seattle to paper plants and fuel distributors, which would have to purchase credits for gas and diesel they sell to consumers. Inslee’s office estimated the auction system would net the state $947 million in 2017, the first year in which companies would have to compete for credit.

“Everyone knows it’s time to act. They know it in Yakima, where farmers are experiencing the challenges of reduced water supplies,” Inslee said Wednesday. “They know it in Anacortes, in Chehalis, and here in King County, where local leaders are already taking action to mitigate and adapt to rising sea levels and increased flood levels.”

The limit on the amount of carbon emitted by the biggest polluters, to be set by the state Department of Ecology in 2016, would decrease gradually over time, by about 1.5 percent per year, according to Chris Davis, an Inslee policy advisor. That decrease would help the state meet goals of reducing carbon emissions to set levels by 2020, 2035 and 2050, limits the legislature passed in 2008.

Inslee’s plan also includes tax breaks for electric and zero-emission cars and investments in clean energy like solar and hydro power.

Critics said the cap and trade plan would amount to an energy tax that industries would pass on to consumers. State Sen. Doug Ericksen (R), who represents Whatcom County, home to a major BP oil refinery, said the plan would dramatically increase gas prices.

“The centerpiece of [Inslee’s] idea is a massive energy tax on the people of Washington State,” Ericksen told the Bellingham Herald. “It’s basically a tax on freedom.”

Inslee’s office acknowledged the proposal would drive up gas prices, but by a modest 7 to 15 percent by 2035.

“There will be alarmist attacks directed toward this plan, and we should not be surprised by them,” Inslee said Wednesday, according to prepared remarks. “Corporate polluters have launched aggressive campaigns against similar efforts in other states and have already begun to do the same here in Washington.”

The proposal faces a difficult road ahead in a divided legislature. While Democrats control the state House by a wide margin, Republicans took full control of the state Senate in this year’s midterm elections. Ericksen chairs the Senate Energy, Environment and Telecommunications Committee, which would have jurisdiction over legislation Inslee eventually produces.

Even if Democrats held full control, Inslee’s proposal would face a difficult road ahead. Former Gov. Christine Gregoire (D) failed to advance a more modest carbon pricing plan in 2009, when her party controlled all three levers of the executive and legislative branches.

Washington would join British Columbia and California, which already have cap-and-trade plans on the books.

Inslee’s cap and trade plan is one facet of a $39 billion two-year budget he proposed over several days this week. On Thursday, Inslee proposed raising taxes and other revenues by $1.5 billion, mostly through a new capital gains tax, the Seattle Times reported. The new revenue will help close an estimated $2.3 billion budget shortfall, caused in part by court orders requiring the state to pay for adequate school and mental health funding.

The capital gains tax would impose a 7 percent charge on income from stock and bond sales over $25,000 for individuals and $50,000 for couples, which would raise an estimated $798 million in Fiscal Year 2017.