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Governor Touts Cap and Trade – Would Require Industry to Cut Greenhouse-Gas Emissions

Gov. Jay Inslee says he wants the state to consider enacting its own cap-and-trade policy.

Gov. Jay Inslee says he wants the state to consider enacting its own cap-and-trade policy.

OLYMPIA, Oct. 15.—Gov. Jay Inslee said Monday he wants the state to adopt rules that would force industry to cut greenhouse-gas emissions – and at last the game is afoot.

The governor’s comments, delivered at a meeting of a legislative task force considering climate-change policy and amplified with remarks to reporters after the meeting, signal the beginning of another battle over environmental mandates of uncertain benefit that could drive up the cost of living and working in the state of Washington. Inslee says he wants a “cap and trade” system, under which the state would impose carbon-footprint limits on individual companies. Those that manage to exceed their goals would be allowed to sell credits to other firms.

Washington needs “a belt and suspenders economy-wide approach to capping emissions in this state,” Inslee said. “It is clear to me that there is no silver bullet to solving this problem. There is green buckshot, if you will.”

The governor’s announcement marks the opening of a fourth battlefront in the brave green war his administration has waged since taking office in January. The Inslee Administration hopes to do its part in preventing the melting of the polar icecaps – a rather small part, if it can do anything at all, as the Evergreen State contributes about three-tenths of one percent of global greenhouse emissions. At the same time, the state is pressing ahead with stringent new water-quality regulations, defending costly renewable-energy purchasing requirements that aim to promote a windpower industry, and is using environmental-permitting rules in a broad and unprecedented way to block the exportation of Wyoming and Montana coal from Washington shores to the ports of the Far East.

Any environmental benefit aside, the policies tend to impose new costs on the private sector, and critics say they want to know exactly how much. Taken together, they say the new green mandates could send industry fleeing to other states. “The governor has some lofty goals, but we haven’t seen the price tag for it yet,” said state Sen. Doug Ericksen. “I think it is important that the Legislature doesn’t trade a Boeing job today for a carbon reduction in 2050.”

Dramatic Expansion of State Policy

Climate Legislative and Executive Workgroup meets Monday in Olympia. From right, top row, Rep. Joe Fitzgibbon, D-Burien, Sen. Doug Ericksen, R-Ferndale, Gov. Jay Inslee, Rep. Shelley Short, R-Addy. In front, Jake Fey, D-Tacoma.

Climate Legislative and Executive Workgroup meets Monday in Olympia. From right, top row, Rep. Joe Fitzgibbon, D-Burien, Sen. Doug Ericksen, R-Ferndale, Gov. Jay Inslee, Rep. Shelley Short, R-Addy. In front, Jake Fey, D-Tacoma.

Inslee’s announcement settles one question. It has been clear for months that he would pursue some sort of big-picture climate-change policy; he said as much when he convinced lawmakers to create the Climate Legislative and Executive Workgroup this year. The only question was whether he would seek a cap-and-trade system, as the state of California launched this year, or a carbon tax as has been imposed in British Columbia. Each idea has enormous implications for business, and it has made the CLEW committee one of the most closely watched policy panels in state government this season.

The workgroup aims to devise a plan to implement a state greenhouse-gas policypassed by the Legislature in 2008. Washington was supposed to reduce carbon dioxide emissions to 1990 levels by 2020, cut them by 25 percent in 2035, and in half by 2050.

But until this point, those goals have been nothing more than that – there has been no enforcement to back them up. At the time they were adopted by the Legislature there was an effort to create a cap-and-trade zone in the western states and provinces, but that plan fell apart after recession hit. What this state has on the books with regard to climate change is a bit of a hodge-podge. There are a few rules affecting the public sector — fleet-vehicle purchasing rules, fuel standards and so on. Other rules have been imposed on the private sector and have had an effect on greenhouse-gas emissions, but they have been adopted for other reasons, like the state’s energy-efficiency building code standards and the renewable-energy purchasing requirements imposed on utilities by Initiative 937.

So unless something changes, the state won’t hit the targets – not even close. Consultants to the Climate Legislative and Executive Workgroup say the state will miss the mark by about 10 percent in 2020, and by about 50 percent in 2050.

Inslee maintains the state has to do something about it – and if that means a cap and trade system that ends at the Washington border, so be it. “The bounty, the beauty, the resources we have are unparalleled in the world,” he said. “And all that is at risk if we do not succeed. Failure is simply not an option for this committee. It is not an option for this committee to fail to produce a plan to meet our legislatively mandated goals.”

Cap and trade makes more sense than a carbon tax, he told reporters after the meeting, because it allows companies to barter and buy their way toward meeting pollution goals, “market mechanisms that distribute the allocation of emissions.”

An Arbitrary Goal

Republican critics didn’t ask what might be called the global question – whether the state can do anything that will have an impact on world climate, even in an incremental fashion. But they did point out that the 2008 goals were essentially plucked from the air. Who says 1990 carbon emissions ought to be the target? “The goals that were set in 2008 weren’t really scientific in nature,” Ericksen said. “They were legislative and political in nature.”

At the very least, he said state officials ought to figure out what a cap and trade policy might cost the Washington economy before they ask the Legislature to impose one. Other states aren’t pursuing environmental policies as stringent as those in Washington, Ericksen said, and at a time when Boeing is trying to decide where to build its new 777X plant, it behooves Washington to know what sort of costs will be imposed on manufacturers, and how many jobs might be lost. “If you’re going to ask members of the Legislature to come in in January and vote on a policy that could theoretically reduce carbon emissions by 2050 but results in the Boeing Co. locating operations in a state that isn’t playing by the same rules and have a much larger carbon footprint that we do currently, then that is something Legislature needs to understand.”

If costs prove to be too high, critics say the state ought to rethink the goal. For instance, the state could set a per-capita goal based on 1990 figures, requiring per-person reductions but allowing overall emissions to increase somewhat as a function of population growth. State Rep. Shelley Short, R-Addy, noted that the state already has made great strides – emissions are down from 18 tons per person in 1990 to 14 today. And while measuring things on a per capita basis might be arbitrary, it is every bit as arbitrary as the state’s current goal. If Washington does it that way, the state already has hit its 2020 target and has almost achieved the goal for 2035.

Economic consequences could be deadly if Washington starts passing laws requiring industry to achieve a goal that was set too high in the first place, she said. Washington’s situation is unique in that it already is one of the cleanest states in the nation in terms of air pollution, because of the high preponderance of energy that comes from hydroelectric dams, roughly 70 percent. It’s easier for big coal-burning states to make big improvements, she said; in this state big improvements will cost considerably more. “We have a lot to lose if we substantially increase our electricity costs in this state,” she said — low electric bills are one thing that has kept Washington industry competitive.

Other Ideas

Though Inslee’s announcement was the big news of the meeting, the ostensible purpose of the Monday gathering was to collect suggestions from members of the workgroup regarding ideas they want to pursue regarding climate change. Noteworthy suggestions include:

Elimination of ‘coal-by-wire.’ Inslee and state Sen. Kevin Ranker, D-Bellingham, who could not attend but sent a letter outlining his thoughts, argued for a ban on out-of-state electricity production generated by coal. That has big implications for the Washington investor-owned utilities that currently purchase electricity from the Colstrip power plant, east of Billings, Montana.

I-937 changes. Short said she wants to see relaxation in the I-937 rules that restrict conservation investments by utilities and prevent them from “banking” renewable energy credits for more than three years. Both issues are likely to surface next session as the perennial battle over the initiative is renewed.

Clean fuel standards. Inslee and state Rep. Joe Fitzgibbon urged rules that would lower carbon content in motor vehicle fuel.

The Climate Legislative and Executive Workgroup will hold public hearings on its plans Wednesday in Spokane and Oct. 23 in Seattle.

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