Politics & Government

Gov. Inslee proposes a carbon-pollution cap and trade system to raise $1 billion a year

Gov. Jay Inslee proposed a cap and price on carbon emissions Wednesday that he says could raise about $1 billion a year in fees by auctioning pollution credits to greenhouse-gas emitting industries.

The Democrat’s cap-and-trade climate package includes plans to spend $380 million of that new revenue on K-12 public schools. Another $400 million would pay for transportation projects rather than relying on a gas tax increase, and about $163.5 million is earmarked to assist low-income families and energy-intensive industries that are hurt by higher fuel costs.

“We’re here today to announce a plan to take action against carbon pollution,” Inslee said in a press conference at REI’s flagship store in Seattle. “It’s the smart thing to do because we can make our air cleaner for our children. Our businesses can lead the world in the development of clean energy technologies, and we will bring good-paying jobs to the state of Washington.”

The governor campaigned in 2012 on boosting clean energy industries in Washington. His climate plan includes asking the Legislature to extend an expiring tax credit for electric car purchases and to make other legal changes to promote alternative fuels. He is also proposing to start — with lawmakers’ involvement — a rule-making process at the Department of Ecology to create a clean fuel standard that requires the use of biofuels in gasoline and diesel.

But his plans all face skepticism from Republicans who won a stronger majority in the Senate and shrank Democrats’ majority in the House while insisting that tax increases should be a last resort, if at all. Inslee said his cap-and-trade plan could raise gas prices by as much as 12 cents over 12 years, in the worst case that all costs were passed on to consumers.

“It seems to me Gov. Inslee is proposing a very large energy tax in Washington,” said Sen. Doug Ericksen, the Ferndale Republican who chairs the Senate’s energy committee. He warned it would hit family pocketbooks, limit family vacations and boost home heating bills. “I guess I prefer candidate Inslee, who was opposed to tax increases, to Gov. Inslee, who seems to not get enough tax increases. ... An energy tax is really a tax on mobility and a tax on freedom.”

Ericksen said lawmakers were still waiting to learn more details of the carbon cap proposal, which Inslee is calling a Carbon Pollution Accountability Act, and the clean fuel standard proposal. Ericksen also said he expected to give hearings to Inslee’s proposals when they are submitted as bills, along with other ideas the GOP and legislative Democrats may be proposing on energy.

“There’s lots of things we can do going forward. But the big rub going forward is if the governor insists on a big energy tax. That’s going to be a hard one,” Ericksen said. But he said Washington is positioned due to its history and geography to become a leader in new energy technologies, including small nuclear facilities and aviation biofuels, and he said the state could become an exporter.

Democrats can be expected to back some of Inslee’s agenda, at least in the House, where they are in control. Rep. Joe Fitzgibbon, D-Burien, who chairs the environment committee, and House Appropriations chairman Ross Hunter, D-Medina, were among lawmakers who stood with Inslee at his Wednesday event — along with Seattle Mayor Ed Murray and representatives of health care organizations, community groups, advocates for minorities and the Washington State Labor Council.

Becky Kelley, president of the Washington Environmental Council, said in a statement, “Climate action is fundamentally a matter of fairness. Washingtonians do their best to do right by our state, and now it’s time for polluters to show the same level of responsibility.”

California and British Columbia already have cap-and-trade programs. Kelley said that by previously joining California, Oregon and British Columbia in the Pacific Coast Collaborative to work on regional climate issues, “Washington joins a group that represents the equivalent of the fifth largest economy in the world taking action on climate change. We have a chance to really spark action and shape the way others react to climate change.”

Inslee aides said the cap-and-trade fees would apply to only those polluters emitting more than 25,000 metric tons of greenhouse gases such as carbon dioxide yearly. About 130 businesses including refineries could be affected based on past state data, and auctions of pollution permits could begin as soon as 2016 under the plan. Without action, Inslee says the state won’t meet emissions-reductions targets for 2020, 2035 and 2050, which were written into state law in 2008.

Several business groups and advocates of limited government panned the proposals. Patrick Connor, state director for the National Federation of Independent Business, said he was glad to see that Inslee said in a letter to lawmakers that his proposals are “intended as the start of a conversation,” but he disputed Inslee’s claim “gasoline costs might rise by two cents per gallon by 2020” because of his proposed fuel standard.

“We can appreciate the governor’s responsibility to comply with the law limiting carbon pollution, but we have serious disagreement with his estimates that the cost of a gallon of gas will only rise by two cents and that the economic effects to jobs are ‘not significant,’ ” Connor said in a statement.

Todd Myers, an environmental policy expert with the right-of-center Washington Policy Center, said Inslee’s proposal is flawed in two ways.

“Simply it’s not one that’s going to get passed,” he said, “and (it) hasn’t successfully cut emissions elsewhere.” Myers prefers a carbon tax that is offset by cuts in sales or business taxes.

Also on Wednesday, the Association of Washington Business, Washington Farm Bureau and other groups from agriculture and the oil industry announced they formed their own “climate collaborative” to promote other approaches — including more research and development. The group said on its website that Inslee has “proposed a complicated and costly government-run program that regulates carbon emissions by penalizing Washingtonians rather than collaborating with them.”

On the other side, more than 150 businesses including REI signed a business climate declaration that expressed support for Inslee’s effort, according to climate-action advocates.