US: Washington carbon bill to face familiar opposition

Washington state’s ambitious plan to start a cap-and-trade programme by 2016 will likely depend on whether state officials can convince Republicans, the public and businesses that pricing carbon will not adversely affect the state’s economy.

Washington Governor Jay Inslee announced in December that he planned to create a cap-and-trade programme by July 2016 (see EDCM 17 December 2014). The programme would include the power, industrial and refinery sectors, including fuel supplied to consumers.

Inslee’s proposal would have to win support from the state legislature which previously voted against a cap-and-trade plan in 2009. The bill failed to gain traction in the state legislature because of concerns over its impact on the economy.

Washington was supposed to be part of a regional carbon programme including California and several other western states. But the plan never materialised because of the US recession. California eventually created its own carbon programme which has been operating since late 2012.

Since the 2009 cap-and-trade bill, Washington’s state legislature has become more Republican with the state’s senate now controlled by a slim Republican margin. Democrats still control the state’s house of representatives, but Republicans, generally against cap-and-trade, have gained more control there.

Revenues key to approval

Anthony Eggert, executive director of the Policy Institute for Energy, Environment and the Economy at University of California at Davis, said Inslee’s proposal will likely benefit from the success of California’s programme and a relatively small impact on the state economy. That tangible result could soothe some concerns.

“It helps that you have a programme that is operating and the sky hasn’t fallen yet,” Eggert said. “It can help that they can see that which could further empower them.”

Analysis by Washington’s Carbon Emissions Reduction Taskforce (CERT) found that pricing carbon would likely have a minimum impact on jobs in the state, price of commodities and a variety of other metrics.

Eggert said Inslee also wisely tied the carbon proposal to critical needs in the state, specifically road construction. The use of those revenues could help win support for the bill in the state legislature and could gain support among the general public, which has been in favour of additional funding for infrastructure.

Cascadia partner Rodney Brown, who co-chaired the CERT, said the revenues could help win support in the Republican-led senate. But the plan’s approval will still be difficult to achieve.

“It is at least possible that this might be a way to fund critical issues for the state while also dealing with carbon emissions,” Brown said. “Republicans have to take it seriously, but it is still going to be hard.”

Fuel suppliers will fight proposal

However, a carbon advisor said any proposal in Washington would likely see significant opposition from the fuel sector which would argue the programme will increase gasoline prices for consumers.

Fuel suppliers have launched unsuccessful attempts over the past year to delay the sector’s entrance into the California market – fuel and natural gas suppliers joined California’s carbon programme in January.

The advisor said it may be difficult for Inslee to get strong support in the state legislature for his proposal, because businesses, specifically refineries, would not support the plan.

“[Inslee] would be better off waiting for the EPA’s announcement in June,” the advisor added.

The EPA is expected to finalise emission standards for new, existing and modified power plants this summer. The rules for existing power plants are expected to give states, such as Washington, an incentive to join a regional programme.

By waiting, the advisor said Washington would have more momentum to regulate at least some of the state’s emissions. Dan X. McGraw