US: Washington moving forward with carbon proposal

Washington state is still working towards creating a carbon programme by 2017, and state officials expect a new set of draft regulations to be released in mid-to-late May.

Washington Governor Jay Inslee directed the Department of Ecology to develop a carbon market in July 2015, and the Department of Ecology released a draft plan in January. The draft plan was withdrawn after stakeholders questioned numerous elements of the proposed plan.

A Washington official said the state plans to release a new draft rule in mid-to-late May with hearings following its release.

“We are still aiming for late summer [approval],” the official said.

The state may also hold a webinar in April that would either be used to gather further stakeholder comments or to get feedback on possible design options. The state has not scheduled any meetings yet.

The plan proposed in January would have regulated entities from the power, fuel and industrial sectors who emitted more than 100,000tCO2e per year. Those entities would be given an emissions limit and would have to buy surplus credits from other entities if they were above their max.

The state would not auction off any carbon allowances like a typical cap-and-trade market.

Washington also floated the idea of allowing compliance entities to surrender credits from California’s cap-and-trade programme or the Regional Greenhouse Gas Initiative(RGGI) programme. Both of those markets said they would evaluate the proposal.

The plan was criticised by market participants for a variety of reasons, including whether some entities would be disadvantaged in the global marketplace because of the regulations. Entities also questioned the use of credits from other cap-and-trade programmes.

Those criticisms forced the state to withdraw its proposal in February. An official said the decision was based in part due to procedural requirements in order to fix parts of the proposed plan.

State officials also said the initial rules were withdrawn to clarify compliance options, transparency in the credits system and considerations for Washington manufacturers whose products are sensitive to global pricing.

The revised rules could alter the possibility of Washington joining a larger carbon programme depending on what route Washington officials plan to go. Inslee had previously hoped to link Washington’s programme with California.

California has been open to linking with other states on the west coast, because it would easy issues with regulating imported power. California has also been speaking with other states about how to comply with the Environmental Protection Agency’s Clean Power Plan.

The Clean Power Plan is currently on hold pending a legal challenge in the US District Court of Appeals DC Circuit. dan.mcgraw@icis.com