After receiving a new report Monday, Gov. Jay Inslee is a step closer to unveiling his master plan to tackle Washington's carbon emissions. That's expected to be in December — roughly in conjunction with his 2015-2017 state budget proposal that will include how potential climate change-related taxes and fees will be recycled back into the state's economy.
In fact, the economic ripple effects and where any tax money might go both appeared to be the biggest concerns of a task force that provided feedback and advice to Inslee on Monday in a 96-page report.
The report is essentially a rundown of concerns, advice and ideas with no specific recommendations on how the state should tackle its carbon emissions problems. The emissions have been linked to harm to the shellfish industry, health problems and erratic water supplies for the state's farmers.
In 2008, Washington's Legislature set a legal target of reducing the state's greenhouse emissions to 1990 levels by 2020, and trimming emissions to 25 percent below the 1990 level by 2035. So far, nothing has happened. Inslee is using that law and the task force to set up his December legislative package on carbon emissions. The package is expected to meet significant Republican opposition, contending that Inslee's upcoming proposals would have economic backlashes for Washington's residents.
Inslee believes the existence of the currently unenforced 2008 law provides him with the executive power to take some actions if the Legislature stalls. But he has been mum about whether he wants to take that approach.
Inslee wants to push either a cap-and-trade program or a carbon emissions tax, but not both simultaneously. In a cap-and-trade program, Washington would have an overall annual limit to its carbon dioxide emissions. Firms would obtain rights for specific amounts of emissions in those areas and could trade their rights. A carbon tax is a levy on a firm's carbon dioxide emissions, which is supposed to inspire a business to decrease its emissions.
"They are similar, but not identical. ... There are a lot of design choices to make," said task force vice chair Rod Brown of the Cascadia Law Group.
A big component of any proposal that must still be designed is the economic piece. Task force members told Inslee that care is needed to prevent affected industries — such as oil refineries and aluminum plants — from being put at a disadvantage to their out-of-state competitors. And they stressed a key portion of any legislative package will be what is done with the revenue collected from carbon-related taxes and fees. For months, the task force looked at scenarios that would involve sending the revenue to provide family-related tax credits or to relief from business-and-occupation taxes.
"Recycling that revenue back into the economy is important," Brown said.
Inslee said: "We're going to have a very serious examination of the economics at stake."
It would be up to the Legislature to decide what should be done with any carbon emissions tax revenue. Besides working-family credits and business tax rebates, the Legislature could conceivably earmark the money to transportation construction or even to improving education in grades K-3 as mandated by the Washington Supreme Court's 2012 McCleary case ruling.
Task force members stressed that carbon emissions from vehicles are a huge chunk of Washington's pollution and global warming problems. "You really need to get your hands around the emissions from the transportation system," Brown told Inslee.
A push for low-carbon fuels will likely spark another Democrats-vs.-Republicans showdown in the 2015 session.
A late October study done for the Inslee administration tentatively concluded that gasoline prices would increase by 2 cents per gallon by 2020 and by 12 cents per gallon by 2026 if low-carbon fuel standards are installed in Washington. The Washington Office of Financial Management hired consultant Life Cycle Associates to do that report, which also predicted the same increase in diesel prices if the state institutes standards mandating lower levels of carbon in fuels.
That draft conclusion is dramatically different from a Republican suggestion that low-carbon fuel standards would increase gasoline prices by roughly a $1 a gallon.
Monday's report includes individual ideas and concerns from most of the task force's 21 members. Republicans and some business groups were unhappy from the start with the composition of the committee, which they saw as largely lined up with Inslee's ideas.
Task force member KC Golden of Climate Solutions, a liberal environmental organization, wrote, "Cue the elephant in the room — serious climate action is contrary to the interests of the fossil fuel industry, and they will fight with all their concentrated economic and political power to stop it. This is to be expected. Asking them to do otherwise would be like asking bees to get out of the honey business."
Energy Northwest recommends that nuclear power, including small modular reactors, be considered a major plank. A few members pushed for production of more bio-fuels. Significant questions and mixed messages surfaced on the effectiveness and economic ripple effects of both carbon emissions taxes and a cap-and-trade program — although no major opposition surfaced in the report against them. Several members recommended linking Washington's efforts with similar programs in other states, especially with any cap-and-trade system.
Task force member and King County Executive Dow Constantine said: "We not only should consider the impacts of these actions, but also the impacts of a failure to act."