Whatcom County industries are likely targets of Gov. Jay Inslee’s ambitious cap-and-trade proposal that would require the state’s largest polluters to pay for every ton of carbon they release.
Inslee on Wednesday, Dec. 17, announced the elements of a bill, not yet made public, that would generate an estimated $1 billion in its first year. The money would come from about 130 of the top polluters in Washington, which produce 85 percent of the state’s greenhouse gases.
That list of polluters is sure to include BP Cherry Point refinery, Phillips 66 Refinery and Alcoa Intalco Works. All three made the Environmental Protection Agency’s 2013 top-10 list of businesses in Washington that put carbon dioxide and other heat-trapping gases into the atmosphere. Together, the companies’ emissions totaled 4.5 million metric tons of carbon dioxide and other gases — the equivalent of about 1 million passenger vehicles, according to EPA statistics.
The EPA regulates carbon dioxide as a pollutant under the Clean Air Act. Scientists say this and other greenhouse gases are to blame for higher global temperatures, which is resulting in sea level rise, and more severe droughts and wildfire seasons.
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If Inslee’s legislation is to become law, it needs the approval of Sen. Doug Ericksen, R-Ferndale, chairman of the Energy, Environment and Telecommunications Committee. In two years as committee chair, Ericksen has blocked environmental legislation favored by Democrats. A self-described “climate agnostic,” Ericksen had climate-change denier Don Easterbrook speak to the committee in 2013, saying he wanted both sides of the issue to be heard.
So far, Inslee and Ericksen are not on the same page.
Ericksen began an interview on Wednesday by saying “(Inslee) hasn’t produced a bill yet to be for or against,” but he went on to speak against what Inslee has revealed so far.
“The centerpiece of his idea is a massive energy tax on the people of Washington state,” Ericksen said. “It’s basically a tax on freedom” — to be mobile and to have more money for items outside gasoline and home heating.
“People enjoy paying $2.40 on a gallon of gas because it gives them more money to spend on other areas of the economy,” Ericksen said.
Marc Baldwin of the state Office of Financial Management told media members Wednesday that fuel prices under cap-and-trade are expected to increase seven to 15 percent by 2035, although the latest forecast hasn’t been completed yet.
Despite likely resistance from Ericksen, Democrats and environmentalists said they thought the governor’s proposal could pass.
“After hearing (Inslee) today I’m optimistic,” said Crina Hoyer, executive director of RE Sources for Sustainable Communities in Bellingham. Hoyer attended the governor’s announcement Wednesday at REI’s flagship store.
“He believes that what he’s proposing is something that should be supported, that should get bipartisan support,” Hoyer said. “Every single person in the state Legislature is a potential ally for this because they’re going to be asked to pass the budget. This has got a significant revenue stream.”
Money raised by selling pollution allowances at quarterly auctions would pay for transportation projects, education-funding requirements imposed by the state Supreme Court, and assist low-income families and industries that are most affected by higher energy costs.
Sen. Kevin Ranker, D-Orcas Island, who also sits on the energy committee, said the Legislature will need to tap into some revenue sources to balance the 2015-17 budget. Ranker also will serve as the No. 2 budget negotiator in the Senate.
“There’s no way we can get out of there without finding some revenue,” Ranker said, citing a $4 billion budget shortfall for the two-year period. The cap-and-trade program would raise about half that.
“We have to start with a reality that leaves all options on the table,” Ranker said. “I hope none of us are dismissing any options before we look at what the options are and what is available to us.”
Inslee’s proposal followed work by a task force he convened in April to find ways to reduce carbon emissions. The 21-member group did not include representatives from the state’s refineries.
“It’s pretty difficult to comment on anything we haven’t seen yet,” BP spokesman Bill Kidd said. “Everybody will be looking at the proposal when it’s ready for prime time (during the legislative session).”
A Phillips 66 spokesman directed a reporter to the Western States Petroleum Association, which prompted a statement from an even larger umbrella group, Washington Consumers for Sound Fuel Policy. The statement says cap-and-trade and another Inslee proposal, a low-carbon fuel standard, have been tried elsewhere.
“Both impose significant increased costs on fuel producers that will likely be passed on to fuel users, representing hidden gas taxes. And both extract money from the transportation and energy sectors to use for other purposes,” the statement said.
Alcoa Intalco Works also prepared a statement:
“We have been engaged in constructive conversations with Inslee and his staff and will continue to do so,” Intalco Works said. “We’re committed to operating the plant in an environmentally responsible way, and we look forward to protecting the environment while keeping our smelters in Wenatchee and Ferndale competitive.”
Inslee’s proposal was part of a broader package that the Democrat said would help the state meet a 2008 mandate to drastically reduce greenhouse gas emissions. It sets an overall limit on heat-trapping gases similar to a program that California launched nearly three years ago.
Under cap-and-trade, the state would set an overall cap on carbon emissions and require the state’s largest polluters to pay for each metric ton of pollution emitted. The price would be set at an auction. Polluters that cut emissions below the cap can sell leftover permits to others who pollute more.
The overall cap on greenhouse gases would decrease over time, so fewer permits are issued, increasing their value on the market.
Companies may decide to pay for every metric ton they permit, or find that there’s more financial incentive for them to cut their pollution by becoming more energy efficient or finding newer technologies to reduce pollution.
The number of metric tons of greenhouse gases emitted in 2013 by three Cherry Point industries was corrected Thursday, Dec. 18.
TOP POLLUTERS IN WHATCOM COUNTY, 2013