SEATTLE – Gov. Jay Inslee will try to convince lawmakers in the upcoming session to do something voters wouldn’t last month – approve a new tax on carbon emissions from fossil fuels.
The Democrat is proposing a tax of $25 per metric ton of carbon emissions starting in 2018 as part of a two-year budget plan that seeks more than $4 billion in new revenue, with a majority dedicated to education-related costs.
The tax would raise nearly $2 billion in the first year with half going to education and the rest to clean energy, transportation, forest health and other projects. Some money would offset taxes to business and help low-income families.
The proposal comes a month after Washington voters rejected a carbon tax ballot measure that Inslee and major environmental and labor groups did not support. Tax money from Initiative 732 would have been used to reduce the state sales tax, virtually eliminate business taxes for manufacturers and return a rebate to many working families.
“We’re starting a conversation that is going to be vigorous and robust. I welcome all new ideas,” Inslee said at a news conference Tuesday to unveil part of his budget. He added: “This is a bold proposal. It does call for legislators to do hard things.”
Inslee’s carbon tax would be imposed on any company that generates or imports electricity, natural gas or oil, such as power plants, refineries and fuel importers. If approved, the statewide carbon tax would be the first of its kind in the nation.
It’s certain to face opposition in the Republican-controlled Senate. Inslee’s previous plan to charge a fee for carbon pollution did not gain traction in the Legislature in 2015.
Senate Majority Leader Mark Schoesler of Ritzville said in a statement that Inslee’s budget proposal threatens the stability of the state’s economy and would undermine families. He has criticized the plan for relying, in part, on “a new and unproven tax on carbon.”
Brandon Houskeeper, with the Association of Washington Business, said he was disappointed but not surprised that Inslee proposed the carbon tax.
“He continues to push the same policy approach without bringing the stakeholders together,” Houskeeper said. “When it comes to carbon, specifically, we need an earnest discussion with all the stakeholders at the table.”
The association organized a committee that raised $1.4 million to help defeat I-732 with big donations from Kaiser Aluminum, the American Fuel and Petrochemical Manufacturers, and Puget Sound Energy.
Carbon Washington, the group behind the ballot measure, said in a statement that it was pleased to see the carbon tax as part of Inslee’s budget because there’s an urgent need to take action on climate change. It said it needed to see more details on his plan, but would be prepared to “support any and all effective, equitable, economically sound, and politically viable climate policies.”
Meanwhile, an alliance of environmental, social justice and labor groups that opposed I-732 has been working on its own carbon tax proposal and hopes to get a bill introduced in the Legislature next year, said Becky Kelley, president of the Washington Environmental Council.
Most of the tax money from the alliance’s plan would be invested in clean energy projects with other funds to protect forests and water. A chunk of investments would benefit low-income communities. The tax would be tied to how well the state is performing on its emissions targets.
“People are putting in different approaches,” Kelley said. “What I find positive is that there continues to be momentum for state level climate change, which is going to be particularly important because we’re going to see a lot of foot dragging and rollbacks from the federal level.”
When he did not pass his cap-and-trade plan in 2015, Inslee directed the Department of Ecology to write new rules limiting carbon emissions.
Those rules, adopted in September, require the state’s largest emitters to reduce carbon emissions by an average of 1.7 percent annually.
Four large natural gas utilities have challenged the rules in Thurston County Superior Court as well as federal court in Spokane. Avista Corp., Cascade Natural Gas Corp., NW Natural and Puget Sound Energy utilities say reducing greenhouse gas emissions must be addressed, but on a nationwide level.
Many of those covered by the state’s clean air rule would likely also be subject to the carbon tax.