House panel discusses Inslee’s carbon cap-and-trade proposal

OLYMPIA – Gov. Jay Inslee’s plan to charge some of the state’s largest businesses for carbon pollution their operations generate drew praise and criticism Thursday in its debut before a legislative committee.

It will cost jobs in energy, manufacturing and farming and raise energy bills, critics told the House Appropriations Committee. It will provide new opportunities in alternative energy while improving the environment, supporters said.

But state officials who have studied the plan said they believe it won’t have a huge negative or positive impact on Washington’s economy. It will have a modest impact on prices, personal income and employment, said Marc Baldwin, assistant director of forecasting for the Office of Financial Management.

The plan places a charge – some call it a tax – on high amounts of carbon emissions, eight different greenhouse gases thought to contribute to climate change, for about 100 large businesses, which include electric and natural gas utilities, oil refineries and factories. Over the next 35 years, the amount of emissions the state will allow would be reduced, and businesses would have to find ways to reduce pollution or buy “allowances” at an auction.

Because those businesses are expected to pass at least some of those costs on to customers, some of that charge would eventually be paid by the general public when they drive cars or heat and light their homes.

The money from the fees and the allowances would be used for a combination of transportation projects, education and other state programs.

The system is marginally regressive, meaning a slightly higher percentage of a poor family’s income would be used for those higher costs than a rich family’s, Baldwin said.

But higher energy prices are a concern, said Rep. Kevin Parker, R-Spokane, because they are a key factor in consumer confidence. “That’s not something I think we should be playing with,” he said.

Vehicle exhausts are a major source of carbon emissions, and the proposed system focuses on big businesses without directly tackling them, said Rep. Chad Magendanz, R-Issaquah. “Why not use an existing tax we already have, the gas tax … without introducing a whole new system of taxation?”

But the carbon pollution system does address vehicle exhausts through the required reduction of carbon pollution at the refineries, and provides more certainty of reducing total emissions, members of the governor’s staff said. The fees would add an estimated 12 cents to a gallon of gasoline, about the same as Senate Republicans have proposed for a major transportation package, but that’s probably not enough to persuade people to drive less. The price of gasoline would rise about 3.5 percent, a fluctuation that has happened, up or down, 14 times in the last year.

Inslee said Thursday he’s open to other plans but believes this is the best to accomplish the twin goals the public has to decrease pollution and increase money for education.

“I feel really good about the prospect of the people’s will to be followed,” he said when asked to judge the prospect for his carbon reduction system.

The Appropriations Committee is considering the carbon charge system for possible inclusion in the state’s 2015-17 budget. They are expected to vote on it in the coming weeks.