The price of a carbon tax

The price of a carbon tax
While proponents of Initiative 1631 say the $15 per-ton carbon tax will reduce pollution, opponents argue that the initiative’s many exemptions will shift the financial burden onto ratepayers and small businesses.

As the November election approaches, the state’s business association composed of 7,000 members representing 700,000 employees has come out against a proposed carbon tax via Initiative 1631, arguing that the move would indirectly raise energy costs on ratepayers and hamper ongoing private sector efforts to reduce carbon emissions.

In a July statement, Association of Washington Business President Kris Johnson highlighted Washington’s position as one of the lowest carbon emitting states in the country. Washington’s emissions make up 1.4 percent of total U.S. carbon emissions and .021 percent of total global emissions.

“This initiative will do little to reduce global carbon emissions while placing Washington employers, especially small businesses, at a competitive disadvantage with other states and regions that won’t have to pay the higher energy costs,” Johnson wrote.

“The voters need to look at this as best they can and say ‘will it really reduce carbon emissions?’”  AWB Vice President of Government Affairs Gary Chandler said. He added that it will increase the price of gasoline, already inflated by the state and federal gas tax. “When those taxes are drawn at the pump, they’re going to road construction. This will have nothing to do with road construction, and at the same time your electrical bills and gas bills will go up.”

Chandler is a former state legislator first elected in 1990 who co-chaired the House Agriculture and Ecology Committee. He now runs a UPS Store in Central Washington.

If passed, the initiative would at first place a $15 per metric ton “fee” on certain carbon emitters, starting in 2020. A fiscal impact statement by the state Office of Financial Management estimates it would generate $2.2 billion over five years. To offset the increased energy costs, the initiative provides credits for certain businesses for investments made through clean energy investment plans approved by the state Utility Trade Commission for public utilities or the Department of Commerce for private utilities.

Some of AWB’s opposition is related to the creation of the 15-member public oversight board to determine how the revenue would be spent. The board would consist of several state agency heads and appointees selected by the governor.

Although the initiative offers certain requirements on where the money from the tax must be spent, Chandler says it would create “a whole new governance that really isn’t accountable to anybody. Business representation on it is pretty slim. One could look at this and think that the legislature is pretty well marked out of any decision making if this was to be passed.”

He added that any changes to the initiative within two years of its passage would require a supermajority vote by the legislature, which he believes is unlikely to happen.

No On I-1631 Spokesperson Dana Bieber told Lens that “there’s no consequence if they (public oversight board members) don’t reach their goals, and there’s no requirements for success. If we’re going to spend billions of dollars, we should be able to get some guarantees. There are no guarantees in I-1631.”

The initiative text says the fee will increase by $2 annually plus inflation until the state’s 2035 greenhouse gas reduction goal is met “and the state’s emissions are on a trajectory that indicates that compliance with the state’s 2050 goal is likely, as those goals exist or are subsequently amended, as determined by the board.”

I-1631 advocates, however, argue that the initiative is needed to help Washington reduce greenhouse gas emission per goals set by the legislature in 2008. Currently, the state is not on track to meet the objective set to reach 88.4 million metric tons (MMT) by 2020. Proponents say I-1631 will reduce carbon emissions by 50 MMT by 2050.

Between 1990-2012, state carbon emissions decreased slightly, though it has since gone up. At the same time, the state population has grown since 1990 from 4.4 to 7.4 million. The added vehicles on the roads could perhaps explain why the transportation sector makes up half of Washington’s carbon emissions; Department of Licensing reports that there are roughly 7.5 million registered vehicles.

While some who favor I-1631 argue the initiative would add an estimated 40,000 jobs to the economy and aid fossil-fuel workers transitioning from those industries, critics warn those gains will be offset when employers either reduce their presence in Washington or leave altogether.

To prevent those businesses who produce more emissions than others from leaving the state, the initiative includes a provision exempting “Energy Intensive Trade Exposed” industries (EITE) as defined by state law. That list includes paper and pulp mills, iron, aluminum, and steel producers, as well as coal plants scheduled for closure in 2025.

It’s “disingenuous” to say the fee will hit large polluters, Bieber said. “Who will pay it are small business and consumers in the form of higher energy costs.”

Chandler says that even if the fee isn’t imposed on these employers directly, “your transportation costs for products to and from your facility will go up.”

Chandler points to ongoing efforts by industry to reduce emissions independent of state involvement. In May, the Port of Seattle announced collaboration with 13 airline companies to ensure access at the Seattle-Tacoma International Airport to low-carbon aviation fuel and biofuel alternatives. In 2016, Alaska Airlines made its first flight using alternative jet fuel produced from Pacific Northwest forest materials. That same year, Seattle-based Blue North christened a new vessel that uses less energy to operate. Seattle-based Nucor Steel has zero visible emissions and one of the cleanest steel mills in the world.

“Every time you try to ask for another tax out of them, then it’s going to take money away from what they would be using to reduce their carbon footprint,” he said.

So far, the NO ON 1631 campaign has raised almost $2 million in contributions or pledges, while the Yes campaign has raised $3.7 million.

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