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Spin Control: Senate committee airs out a cap-and-trade proposal for Washington

March 24, 2019

State law calls for Washington to reduce carbon pollution in the coming decades. It sets standards for how much, and how soon. It doesn’t say how though.

To fill in that blank, lawmakers this session have what might be described as a shotgun approach to pollution reduction. They have introduced an array of proposals for new fuel standards, incentives, taxes or fees.

Into this mix, the Senate Environment, Energy and Technology Committee last week considered a “cap-and-trade” system that would set up requirements for some large businesses and utilities to limit and gradually reduce their carbon emissions with new technologies or programs, or to pay others for the reductions they’ve achieved.

If that sounds vaguely familiar, it’s probably because versions of a cap-and-trade system have been introduced in previous years, but never passed. The hearing showed it remains controversial.

One common complaint is that it’s complicated. The Association of Washington Business questioned whether there was enough time left in the legislative session, scheduled to end April 28, for an in-depth discussion on the cap-and-trade proposal, spokesman Peter Godlewski said. Maybe lawmakers should study it after the session ended, and come back next year, he suggested.

One of the group’s concerns was higher costs to businesses could lead to “leakage” – moving jobs to other states to avoid those costs, he said.

The Legislature worked on a carbon tax bill for two years that tried to address the leakage issue, Sen. Guy Palumbo, D-Maltby, said. Did the AWB support that bill when it was introduced?

Before his time with the organization, Godlewski said. He’d have to check.

“I’ll answer it for you. They didn’t,” Palumbo said. Legislators, it should be noted, have long memories for people who vote against things they like.

Kaiser Aluminum also worried about leakage of jobs from its Spokane Valley rolling mill to places outside Washington where aluminum is processed. It could support a cap-and-trade system if the mill was granted an allowance as an operation that has large emissions, but faces foreign competition, something known as EITE for emissions intensive trade-exposed, spokesman Kyle England said. Aluminum mills aren’t specifically mentioned as EITEs in the bill, and there’s a lack of clarity on the allowances, he added.

Dan Wilson, of the United Steelworkers, which represents 900 Kaiser workers in the Valley, also made a pitch for a permanent EITE designation. The mill makes products with a lower “carbon footprint” than plants elsewhere, he added, so leaking those jobs to other mills would be bad for the environment.

Committee Chairman Reuven Carlyle, D-Seattle, said the bill doesn’t name companies but sets up a process for the Ecology Department to determine EITE. “It’s not that we’re not including you,” he said, they’re trying to do it in “a responsible policy way.”

The oil industry was divided on the proposal.

It lacks transparency, consumer protections and certainty for business, said Dan Coyne, a spokesman for Phillips 66, which has a refinery in Ferndale. If the Legislature does pass a plan to limit carbon pollution, the company favors a well-designed carbon tax over cap-and-trade, he said. It would be more transparent, provide certainty to businesses, and keep revenue in the state.

“I think we’re all impressed with Phillips 66’s new religion on carbon tax,” Carlyle said.

Last year, Phillips 66 gave $7.2 million to the $31.5 million campaign against Initiative 1631, which opponents denounced as a carbon tax.

Oil producer BP, another major donor to the campaign against I-1631, supports the cap-and-trade bill. Bob Allendorfer, the manager of its Cherry Point refinery, said the company believes it could bring an effective carbon-pricing program to the state, reducing emissions and be applied consistently across the state, he said.

The Washington Farm Bureau is against just about any type of carbon-pricing mechanism, spokesman Tom Davis said. Buses and Priuses are fine for people in Seattle, he said, but you need a pickup truck on the farm, and raising the price of gasoline or diesel is going to raise the price of production.

Sen. Phil Fortunato, R-Auburn, said he was worried the Legislature has so many carbon reduction ideas that several will pass and add so many taxes and fees on fuel, that will raise the cost of everything that needs fuel to be made, powered or transported.

What about the higher cost of health care and a degraded environment if they don’t reduce carbon pollution, countered Sen. Joe Nguyen, D-White Center.

The committee has yet to vote on the proposal but the hearing showed one thing about carbon is as true in politics as chemistry: It can be a great source of heat.