Businesses, analysts: carbon initiative will raise gas prices

Businesses, analysts: carbon initiative will raise gas prices
Proponents of a carbon reduction initiative this week filed the necessary signatures with the Secretary of State’s Office to place it on the November ballot. Photo:

Proponents of a carbon reduction initiative this week filed the necessary signatures with the Secretary of State’s Office to place it on the November ballot. However, the success or failure of I-1631 this fall depends on whether voters perceive it as a fee on larger companies to reduce carbon emissions or a de facto gas tax increase that will mostly impact the average Washingtonian.

Passage of I-1631 would make Washington the first state in the nation to place a “fee” on carbon emitters, though critics say the way the initiative is written places the financial burden on drivers due to the many industry exemptions. The fee would start in 2020, at $15 per metric ton of carbon and later increase annually by $2 plus inflation until 2035 when the fee would reach $40 per ton in today’s dollars. It would either remain or increase if the state hasn’t met greenhouse gas targets created by the state legislature.

However, that arrangement doesn’t create incentives for the state to reduce carbon emissions, says Washington Policy Center Environmental Director Todd Myers.

He told Lens that “There might be a disincentive to be successful. In fact, there is incentive to fail, because they are guaranteed a percentage of revenue.”

In contrast to I-732, which received mixed support in the environmental community and was overwhelming defeated in 2016, the I-1631 coalition has backing from groups such as Audubon Washington, Carbon Washington, Conservation Northwest, Futurewise, Transit Riders Union and Transportation Choices Coalition. So far, the campaign has raised $2.3 million, according to the Public Disclosure Commission.

In a statement, the Washington Audubon Society said if passed the initiative would be “the nation’s strongest climate policy on the books” and would “improve forest health and reduce vulnerability to changes in hydrology, insect infestation, wildfires, and drought.”

Another key difference with the new initiative is that I-732 was revenue-neutral by reducing the state sales tax, whereas I-1631 is expected to generate $250 million annually in new revenue that would be deposited into a fund to clean up pollution.

Although the initiative text spells out ways for that money to be spent and how much of it must be allocated for those purposes, the ultimate decision is left to a board consisting of 15 voting members and six co-chairs including the commissioner of public lands and the directors of the state Departments of Commerce, Ecology and the Recreation and Conservation Office.

The Nature Conservancy said in a statement that the initiative is a “practical first step to ensure clean air and clean water for everyone in Washington” and will “create good jobs and invest in clean energy like wind and solar, healthy forests, and clean water with a fee on pollution paid by the state’s biggest polluters.”

The initiative also lists among funding opportunities: “Reduce vehicle miles traveled or increase public transportation, including investing in public transit, transportation demand management, nonmotorized transportation, affordable transit-oriented housing, and high-speed rural broadband to facilitate telecommuting options such as telemedicine or online job training.”

Advocates say the initiative will lead to a carbon reduction of 50 million metric tons by 2050. Roughly half of the state’s carbon emissions come from the transportation. According to a 2016 state Department of Ecology report, Washington’s 2013 total carbon emissions were 94.4 million metric tons, an eight-percent decrease from 2007’s 101.6 MMT. The state’s goal is to reduce emissions by 2020 to the 1990 level of 88.4 MMT.

Currently, Washington’s emissions represent 1.4 percent of total U.S. carbon emissions and .021 percent of global emissions.

Opposing I-1631 is a coalition of industry members sponsored by the Western States Petroleum Association that include British Petroleum, Shell, Phillips 66 and Andeavor. According to the PDC, they’ve raised $9,000 but received $250,000 in pledged donations.

Campaign spokesperson Mark Funk told Lens that it’s “a very poorly written initiative that “takes regressive taxes and makes them even more regressive.”

He points to the many exemptions for different industries included in the initiative, which are intended to prevent certain companies from moving out of state. Although there are fewer exemptions than was included in a carbon tax bill introduced this year’s legislative session via SB 6203, “it’s a pretty broad swath, and it narrows who ends up paying the cost for this,” Funk said. “It’s pretty clear that it’s going to increase the price of gasoline, whether it’s a tax or whether it’s a fee. It’s going to force almost all of the tax increase on the middle and lower middle class people who buy gasoline.”

An analysis of the initiative by Carbon Washington when it was first filed in March noted that having I-1631 levy a fee has the “political benefit of avoiding the dreaded ‘t’ word — tax. However, from a pricing perspective, the difference between a fee and tax is not so important.”

Opponents also take issue with how the board charged with overseeing the funds is set up, Funk said. “When you look at the bureaucratic structure, the government structure that it’s proposing it almost takes elected officials out of the ball game” in terms of how the money is spent.

“We need to engage all of the state’s voters in a fairly robust dialogue on this initiative,” he added. “When we do we’re going to find there are a lot of questions about various aspects of this initiative from its governance structure to its system of fees to the companies that are actually exempted.”

However, Myers also criticizes a clause at the end of I-1631’s text that says if the initiative is declared invalid, then the state Department of Ecology is called to enforce Governor Jay Inslee’s carbon cap policy that was eventually declared struck down in Thurston County Superior Court late last year on the grounds that Ecology lacked statutory authority.

“Rather than take the Governor’s cap-and-trade rule directly to the voters or the legislature, as the judge said was required, they simply throw it in at the end of I-1631,” Meyers writes.


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