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Washington state is moving to cap carbon emissions

The Climate 202

Good morning and welcome to The Climate 202! Today we’re playing On the Record, a new Washington Post quiz on the week’s top news stories. It’s our new favorite way to procrastinate instead of writing this newsletter. 😂

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In today’s edition, we’ll cover the backlash against Republicans’ efforts to boycott “woke” banks and a new bill that aims to address the climate-change-fueled Western drought. But first:

Washington state will hold its first carbon “allowance” auction today

Prospects for federal climate legislation are dim this year, now that Republicans control the U.S. House. So we’re also monitoring climate action at the state level, including Minnesota’s recent adoption of a law requiring 100 percent clean electricity by 2040. 

Today, let’s look at a key development in Washington state, where Gov. Jay Inslee (D) has made climate change a centerpiece of his agenda.

In 2021, after mounting a climate-centric presidential campaign, Inslee signed into law the Climate Commitment Act, which established an ambitious program to cap the state’s carbon emissions. The “cap-and-invest” program took effect in January, and today, the state will take a key step toward implementing it.

Cap-and-invest programs can seem complicated, but their main function is simple: They make it expensive to emit climate pollution. At the moment, companies don’t have to pay any federal fines for emitting carbon pollution in most of the country, since Congress has never approved a carbon tax or another mechanism for pricing carbon.

  • Washington’s program sets a limit, or “cap,” on overall greenhouse gas emissions in the state and requires businesses to buy “allowances” for their emissions that will become increasingly expensive.
  • Businesses that emit more than 25,000 metric tons of carbon dioxide per year must purchase allowances at auctions held by the Washington Department of Ecology or on the secondary market. The department will hold its first auction today.
  • The state legislature will eventually invest the revenue from the sale of allowances — an estimated $1.7 billion over the next two years — in efforts to further reduce greenhouse gas emissions. 

California became the first state to launch a cap-and-trade program in 2013, while Oregon established one last year. But until now, a similar program hasn’t existed in Washington, which has an aggressive goal of cutting emissions 95 percent below 1990 levels by 2050.

“The Washington legislature has never had the opportunity to invest this amount of money in climate and clean energy,” Kelly Hall, Washington state director at the environmental group Climate Solutions, told The Climate 202. “So this is a really exciting opportunity.”

Environmental justice

Washington policymakers designed the Climate Commitment Act to not only prioritize combating climate change, but also helping communities that have been disproportionately affected by pollution.

  • In addition to addressing greenhouse gases, the law directs the Washington Department of Ecology to reduce harmful air pollutants — such as ozone and fine particles — in communities that have breathed dirty air for decades. 
  • The law also requires the department to invest at least 35 percent of the revenue in projects that reduce emissions in disadvantaged communities, while another 10 percent must go toward projects that benefit Native American tribes.
  • The department must also consult with an environmental justice council when deciding how to spend the revenue.

Pam Kiely, associate vice president for U.S. climate at the Environmental Defense Fund, said Washington’s program is the “gold standard” in terms of incorporating environmental justice considerations.

“This program, while crafted to drive reductions in greenhouse gas emissions, has also given the Washington Department of Ecology a dual mandate to ensure local air pollution improvements in communities that have been on the front lines of environmental harms,” Kiely said.

Washington’s approach comes after the California Environmental Justice Alliance, a coalition of grass-roots organizations, criticized California’s cap-and-trade program for doing too little to help racial minority groups. Some studies have found that since the program launched in 2013, pollution has actually increased in Black and Latino communities in the Golden State.

Legal battles

Some legal uncertainty surrounds Washington’s program after a power company challenged it in court, although many environmental lawyers expect the state to prevail.

  • The lawsuit from Invenergy, which owns the Grays Harbor natural-gas-fired power plant in Washington, alleges that the Climate Commitment Act illegally discriminates against independent power-generation companies.
  • The law allows utility companies that own power plants in the state to receive free allowances. The goal is to prevent the utilities from significantly increasing customers’ bills.
  • But independent power-generation companies, which don’t serve customers, are not eligible for free allowances. As a result, Invenergy has said it expects to spend tens of millions of dollars on allowances this year.

An Invenergy spokesman said in an email that while the company “fully supports Washington’s leadership to combat climate change,” the law “unfairly burdens out-of-state-owned, independent clean energy producers.”

Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School noted that similar challenges to other states’ clean-energy laws have failed in recent years.

“It’s very rare that opponents of clean energy laws win,” he said. “States have a pretty good track record here.”

Pressure points

The conservative battle against ‘woke’ banks is backfiring

Over the past two years, Republican state officials have sought to blacklist banks that factor climate change into their investment decisions, saying the firms are engaging in “woke” capitalism. 

But in several Republican-led states, lawmakers have recently defeated proposals to boycott financial institutions that have adopted ESG — environmental, social and governance — goals and policies, The Washington Post’s Steven Mufson reports.

In North Dakota, lawmakers this month soundly rejected a pair of the proposals, with one losing by a 90-3 vote. Some Republican lawmakers argued that the measures contradicted the long-held conservative belief that the government shouldn’t tell businesses how to operate.

“Our biggest concern is the idea of somebody telling our banks who to do business with or who not to do business with,” said Rick Clayburgh, chief executive of the North Dakota Bankers Association.

Republican lawmakers in Congress are nonetheless forging ahead. The House will vote Tuesday on a resolution from Rep. Garland “Andy” Barr (R-Ky.) to repeal a Labor Department rule that gives money managers greater freedom to consider ESG factors when selecting investments. (President Biden can veto the resolution under the Congressional Review Act if it passes the Senate and reaches his desk.)

On the Hill

House Republicans probe EPA response to Ohio train derailment

Republicans on the House Transportation and Infrastructure Committee on Monday intensified their probe of the Environmental Protection Agency’s response to the toxic train derailment in East Palestine, Ohio.

In a letter, the lawmakers asked EPA Administrator Michael Regan to provide documents and communications outlining the agency’s response to the disaster, including its efforts to protect the surrounding community from the toxic chemical leak.

Despite the EPA’s assurances that the air and water in the area are safe, “East Palestine residents continue to report noxious odors, pollutants in the water and soil,” the lawmakers wrote. “Accordingly, we seek clarification about the decision-making process employed by the EPA to address the accident and resulting damages.”

The EPA has until March 13 to respond to the letter, which was led by Committee Chair Sam Graves (R-Mo.) and Rep. Troy E. Nehls (R-Tex.), who chairs the Subcommittee on Railroads, Pipelines and Hazardous Materials.

The EPA did not immediately respond to a request for comment on the letter. 

The request comes as committees in both chambers launch their own investigations into the incident and officials’ response to it. On Monday, Senate Minority Leader Mitch McConnell (Ky.) joined in the GOP criticism of Transportation Secretary Pete Buttigieg’s handling of the derailment, saying on the Senate floor that Buttigieg is instead prioritizing “woke initiatives and climate nonsense.” 

Sen. Bennet eyes farm bill to tackle Western drought

Sen. Michael F. Bennet (D-Colo.), who chairs the Senate Agriculture Subcommittee on Conservation, Climate, Forestry and Natural Resources, will introduce a bill today aimed at protecting forests and watersheds across the American West from a climate-change-fueled megadrought.

Bennet plans to push for the Protect the West Act to be included in the 2023 farm bill, spokeswoman Rachel Skaar said in an email to The Climate 202.

The measure would establish a $60 billion Outdoor Restoration Fund to support local efforts to restore forests and watersheds, reduce wildfire risk and improve wildlife habitat. At least $20 billion would be used for projects on federal land.

The Senate Agriculture Committee will hold a hearing Wednesday on the conservation and forestry title of the farm bill. Many Democrats say the farm bill, a five-year reauthorization of hundreds of billions of dollars in agriculture and food programs, should contain robust climate provisions.

In the atmosphere


A beary cute video to brighten your Tuesday: 😍

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