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Cap-and-trade bill gets overhaul

Cap-and-trade bill gets overhaul

Among the climate action-related legislation introduced this session is SB 5126 sponsored by Senate Committee on Environment, Energy & Technology Chair Reuven Carlyle (D-36) which would create a cap-and-trade program in Washington. Concerns about the proposed program conveyed at a Jan. 19 public hearing prompted a follow-up work session on Feb. 19 to examine a variety of revisions to the bill before a scheduled committee vote later this week.

Under the original bill, the governor would have to create a Climate Commitment Task Force, while the state Department of Ecology (DOE) would have to implement the cap-and-trade program by 2023, with the first emission baseline compliance period between 2017-2021. Entities subject to the program that want to go beyond those baselines would have to purchase allowances through four auctions operated by DOE.  Entities classified as energy-intensive and trade-exposed (EITE) would be able to receive allowances at no cost.

The proposed substitute changes aspects of the bill, including:

  • Moves the first baseline compliance period to 2015-2019;
  • Requires DOE to complete a program evaluation by the end of 2028, rather than 2035;
  • Delays the inclusion of landfill and waste emissions in the program until the second compliance period;
  • Prohibits local governments from enacting a tax “based exclusively” on emissions;
  • Exempts aviation fuels as well as biomass or biofuels that meet certain emission levels;
  • Adds bill language stating legislative intent to provide allowances to all consumer-owned and investor-owned utilities; and
  • Removes bill language giving DOE the authority to regulate indirect emissions

As with other climate action bills such as a low carbon fuel standard, one of the challenges for SB 5126 is balancing it with an expected transportation package. That package all but guarantees to increase the state gas tax in order to fund not only new projects but also maintenance and preservation, as well as replacing fish culverts subject to a court injunction. Under the proposed substitute, the revenue from allowances would go into the Climate Investment Account to fund a variety of specific projects including stormwater infrastructure, wildfire resiliency, and fish habitats.

 However, Senate Transportation Chair Steve Hobbs (D-44)  told Carlyle during the Feb. 19 work session that “You recogniz(e) the linkage between climate change, carbon pricing, and transportation. You recognize the issues in the transportation budget and the culvert issue and fixing these fish barriers so that salmon can return to the Pacific Northwest in numbers that it should be.”

He added that if both SB 5126 and the transportation package clear the legislature, it will “probably be the largest infrastructure and environmental package that the state has ever seen.”

However, the bill drew scrutiny from other committee members including Sen. Doug Ericksen (R-41), who noted that terms like “low-income” are not defined. While DOE Director Stu Clark spoke in favor of the legislation, Ericksen questioned whether it would accomplish its intended goal of reducing carbon emissions under new goals set by the legislature last year.

When questioned by Ericksen whether the legislation would ensure the state meets those goals, Clark replied that bill provides “the setup to achieve that goal. I think it has the structure that should allow us to do that. I wouldn’t give an absolute guarantee that we’ll meet those limits exactly on the timeline that the legislature set up, but I think we’ll hit pretty close with the legislation as structured.”

Some have also questioned the environmental impact even if the state were to achieve those goals. Washington emits roughly 1.4 percent of U.S. greenhouse gases, while the nation composes just 15 percent of all global emissions.

Clark noted that “obviously climate change is a global problem. Our part of that is relatively small. But it’s important that we take action.” He also said that the environmental benefits are unknown. “The bill isn’t implemented yet, so we’d have to look at the results down the road.”

Under the proposed substitute, if DOE’s evaluations show no reduction in emissions in “overburdened communities,” the state agency must “prioritize” the adoption of local air quality standards and emission limitations in those areas.

Of concern to many industry members is what counts as EITE. Under the bill, employers that would fall under that category include metal, paper, and aerospace manufacturers such as:

  • Iron and steel milling;
  • Smelting;
  • Refining,
  • Pulp mills;
  • Paper mills;
  • Paperboard milling; and
  • Aerospace product and parts manufacturing

While, DOE is also authorized to develop specific criteria, Ericksen noted that oil refineries are not currently included. He warned that the state could lose industry as it did with the Green Apple Renewable Diesel Plant initially planned for Cherry Point but was ultimately located in Louisiana.

“Refined product is shipped all over the world every single day,” Ericksen said. “It is very easy to refine a product in Taiwan or India or China, put it on a tanker ship, send it to a port, take it off a ship and put it into the pipeline.”

Carlyle responded that while Washington refineries tend to distribute fuel in the state or region, “it is a legitimate policy question. It’s not a religious or ideological issue. I think it does warrant additional consideration.”

SB 5126 is scheduled for executive action on Feb. 25.

TJ Martinell is a native Washingtonian and award-winning journalist. Born and raised in Bellevue, he’s been involved in the news industry since working at his high school newspaper.

His investigative reporting for various community newspapers in the Puget Sound region has been recognized by the Washington Newspaper Publishers Association and the Society for Professional Journalists.

A graduate of Eastern Washington University, he has a B.A. in journalism and was the news editor of EWU’s student university newspaper.

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