Washington Businesses Slam Carbon Tax

Mar 14, 2017
Originally published on March 14, 2017 4:55 pm

During a public hearing Tuesday, businesses said on a proposed carbon tax in Washington state would cost jobs and hurt the state’s economy.

The measure would impose an escalating tax on greenhouse gas emissions from fossil fuels and electricity. A provision in the bill would set aside some of the money raised to help fossil fuel workers who lose their jobs.

Mary Catherine McAleer with the Association of Washington Business took issue with that.

“Legislatively planning for people to lose their jobs is deeply concerning to us, especially because most of our state’s counties are still above eight percent unemployment, primarily in rural areas,” she said.

But the sponsor of the bill, Democrat Joe Fitzgibbon, chair of the House Environment Committee, said he’s frustrated by a lack of action on climate change.

“We know that Washington’s emissions are lower than the national average because we’re blessed with abundant carbon free electricity,” he said. “We also know that Washington’s per capita emissions are still too high to guarantee a safe climate into the future.”

Fitzgibbon’s measure, backed by labor and environmental groups, would impose a $15 per metric ton tax on greenhouse gas emissions from fossil fuels and electricity starting in 2018. The tax rate would increase annually by 7 percent plus inflation until 2047. The Washington Department of Ecology could slow the escalation if it determines the state is on track to meet its greenhouse gas emission reduction requirements through 2050.

Not on target

Washington emits about 94 metric tons of carbon per year. The top sources of greenhouse gas emissions in the state are on-road gasoline, electricity from coal and natural gas.

A 2008 law requires Washington to reduce greenhouse gas emissions to 25 percent below 1990 levels by 2035, and 50 percent below 1990 by 2050. Projections show that the state is not on target to meet those reductions.

Fitzgibbon’s bill would enact much more aggressive reduction targets of 40 percent below 1990 levels in 2035 and 80 percent below 1990 levels by 2050.

Beginning in 2024, if Ecology determined that greenhouse gas emissions weren’t going down fast enough, the agency would be required to recommend to the legislature an adjustment of the greenhouse gas tax rate.

Several types of fuel would be exempt from the carbon tax, at least initially. They include aviation and maritime fuels, fuels used for agriculture and state-owned ferry and school bus fuel.

Industries that are deemed energy intensive and trade-exposed -- such as metal, glass, cement, and pulp and paper manufacturers -- would also be exempt from the carbon tax, although those industries say the exemption language is too vague.

A preliminary analysis showed the carbon tax would raise an estimated $1.1 billion in fiscal year 2020 and $1.4 billion by 2023.

Besides helping displaced workers, the proceeds would go to pay for administrative expenses and to fund clean energy, water and forest health projects.

The bill would also create two entities to oversee the implementation of the carbon tax. The Carbon Program Oversight Board would be established in the governor’s office. The Economic and Environmental Justice Oversight Panel would work to ensure that the proceeds from the tax help disproportionately impacted communities.

The governor’s plan

By contrast, a carbon tax proposal from Democratic Gov. Jay Inslee would start at $25 per metric ton and increase annually by 3.5 percent plus inflation. Inslee would dedicate 50 percent of the proceeds to K-12 education with the remainder going to fund a list of priorities including clean energy and water infrastructure projects.

Since his days as a member of Congress, Inslee has made combating carbon emissions and global climate change a signature issue. He even wrote a book about it titled “Apollo’s Fire: Igniting America’s Clean Energy Economy.”

In 2013, at Inslee’s request, the Washington Legislature created a Climate Legislative and Executive Workgroup to recommend ways the state could reduce greenhouse gas emissions. The workgroup broke along party lines with Democrats, including the governor and Fitzgibbon, recommending a cap on carbon emissions along with a market-based program to help polluters buy and sell emissions credits.

Republicans countered that Washington is already a low carbon emitting state and any steps to reduce greenhouse gas emissions to meet the targets in law “could have dramatic impacts on manufacturing jobs and energy prices in Washington.”

In December 2014, Inslee unveiled a “cap-and-trade” proposal designed to raise about $1 billion per year with nearly half the proceeds going to fund transportation projects. However, that proposal died in the 2015 legislature.

After that, Inslee asserted his executive authority and directed his Department of Ecology to write a rule that caps carbon emissions. That Clean Air Rule, which took effect in October, requires the state’s primary polluters to reduce their greenhouse gas emissions over time. Business groups have sued to overturn the rule.

Fitzgibbon has suggested that if Republicans, who control the Washington Senate, agree to impose a carbon tax, the Clean Air Rule could be repealed.

Last year, Washington voters rejected Initiative 732 which would have imposed a carbon tax while reducing the state sales tax and Business and Occupation tax. Environmentalists and labor interests opposed the measure, but have indicated they will sponsor their own carbon tax ballot measure, likely in 2018, if one doesn’t pass the legislature first.

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