February 26, 2024

It took Washington state more than a decade to put a price on carbon pollution. The effort to make corporations pay for the greenhouse gases they produce began in 2009 with a series of failed accounts in the legislature. Frustrated climate advocates in Washington took the idea directly to voters, placing initiatives on the ballot in 2016 and back in 2018but both ballots flopped – the first defeated by infighting among environmentalists, the second by a $30 million publicity campaign paid for by oil money.

So it was a surprise when the state legislature finally managed to succeed a cap-and-trade program in 2021, requiring Washington to cut its carbon emissions nearly in half by 2030, with 1990 levels as the baseline. Even more surprising, perhaps, was that the law was supported by BP, the same oil giant that spent $13 million killing one of the ballot initiatives three years earlier. Now the landmark law, the Climate Commitment Act, is under attack, threatened by a repeal effort bankrolled by a hedge fund manager, and representatives for oil companies say they have nothing to do with it. In fact, oil giants want to keep it alive.

“We’ve never been against the Climate Commitment Act,” said Kevin Slagle, vice president of communications for the Western States Petroleum Association, a lobbying group that represent oil companies including ExxonMobil, Chevron and Shell.

In 2023, its first year in operation, the state’s program has more than $2 billion for projects to clean up transport, transition to clean energy and help communities adapt to the effects of a changing climate. But this fall, voters will get a chance to wrap it all up. A ballot initiative started by Brian Heywood, a hedge fund manager irritated by Washington state taxes and liberal politicswould kill the law and prevent the state from ever introducing a cap-and-trade program again.

The existing law requires companies to buy pollution “permits” at quarterly auctions, a way to encourage emissions reductions and generate money for climate solutions. Heywood argue that the program helped the state of the highest gas prices in the country and say that Governor Jay Inslee and other officials were not upfront about its possible effects on consumers. Last month, the state certified it the measure gathered enough signatures to go to the polls this fall.

Heywood’s campaign, called “Let’s Go to Washington,” took off $7 million last year to qualify a total of six initiatives for the ballot. Among other things, the proposals would repeal the state’s capital gains tax and reverse policing restrictions. Some $6 million some of that money came from Heywood, but other donors include the state Republican Party and the Washington Bankers Association. The closest it comes to oil money is a $25,000 contribution from Five Point Capital, a private investment firm in Houston with a focus on oil, natural gas and water infrastructure. The newly formed “No on 2117” committee opposing Heywood’s initiative raised $1 million so far this year from Tableau Software co-founder Chris Stolte, plus a $1,500 contribution attributed to Trudi Inslee, the governor’s wife.

While the Western States Petroleum Association does not support the repeal, that does not mean oil companies are satisfied with the current program. Slagle describes it as broken because the auctions produced high prices for pollution permits. His lobby group released ads matching Heywood’s message, to link the climate law to high gas prices. It’s hard to know exactly how much the program drove up prices, but estimates range from about a quarter to 50 cents per gallon, depending on who you ask.

However, Slagle disagrees with Heywood’s approach: He wants to work with lawmakers to address these shortcomings, not throw out the law. “I think what’s being missed is that it can be resolved without an initiative, right?” Slagle said. “That’s what we say. We’re actually in the middle of this saying, ‘Hey, let’s fix this show.’

BP, which left the Western States Petroleum Association in 2020 about the trade group’s opposition to certain climate policies in Washington state, is also in favor of keeping the Climate Commitment Act alive. “We believe that the market-based, economy-wide carbon pricing program will work, and we oppose the initiative to reverse it,” a spokesperson told Grist in an email.

The stakes of the repeal are huge: eliminating the cap-and-invest program would rip a $5 billion hole in the state’s transportation budget, take away free public transit rides for young people, funding for bus routes, and more. The Legislature will have to rework the budget and make tough calls about which bridges to replace and which roads to close because they can’t be repaired, said Lennon Bronsema, vice president of campaigns at the Washington Conservation Action. a nonprofit organization that is part of the No on 2117 Committee.

Photo of a beach in an orange haze.
People walk at Alki Beach Park in September 2020 as smoke from wildfires fills the air in Seattle. Lindsey Wasson/Getty Images

Voting down the law would also take away funding for improving air quality in the state’s most polluted communities. “Those people who want to repeal the Climate Commitment Act are going to try to force more pollution down our throats and into our children’s lungs,” Governor Inslee said. comments to the press last month. “They want to destroy our protections for our children’s breathing.” And it will add more carbon to the atmosphere as the state struggles with the effects of climate change: freak heat wavesunusual large and destructive forest firesand descending snowpack on mountains, a key water source for the region.

The repeal may also have repercussions at the national level. New York recently plans announced for a cap and invest program, and officials are monitor the backlash in Washington State. “If this repeal initiative passes, it will be a blow to that momentum,” said Caroline Jones, a senior analyst at the Environmental Defense Fund. last year, An Environmental Defense Fund Analysis found that the United States cannot fulfill its international obligations under the Paris Agreement without countries following through on their goals. Washington is one of the few states on track to meet its carbon-cutting goals, thanks in large part to the Climate Commitment Act, Jones said.

So how did the state end up with a law that Jones considers a “gold standard” for state climate policy — and also something that oil companies support?

For the oil industry, part of the appeal lies in the law’s exemptions. As BP and other crude refiners fall under the category “emission-intensive, trade-exposed” industries, they get some pollution permits for free, making it cheaper to comply with the law. When the cap-and-invest program was enacted, about 50 percent of the credits were handed out to big polluters to use, said Caitlin Krenn, a climate and clean energy campaign manager at Washington Conservation Action.

Refineries get 100 percent of their allowances for free for the first four years of the program — after that, it will drop to 97 percent. This is due to fears that these facilities will move elsewhere if Washington places strict regulations on them. But the gas and diesel fuel suppliers, which may be owned by the same company that operates a refinery, don’t get any credits for free, Krenn said.

After the Climate Commitment Act was passed in 2021, BP, which owns the state’s largest oil refinery near Bellingham, spent about $270 million on efficiency upgrades at its facility, which are estimated to reduce the refinery’s emissions by 7 percent. By cutting its emissions earlier than necessary, BP has been given room to bank, trade or sell its allowances. “The Climate Commitment Act rewards us for that. So, it’s not just a stick. It’s also a carrot,” said Tom Wolf, a BP government relations manager for the West Coast the Seattle Times several months after Inslee signed the legislation. “We did it anyway… but there’s no doubt that it [the act] make it even better.”

If the Climate Commitment Act is shot down in November, it will also make it difficult for companies to plan for the future. “If the program went away, then we’re kind of back to square one,” said Slagle, of the Western States Petroleum Association. “And so then, what might happen in the way?”

Businesses have long argued for a market-based approach to climate policy instead of what they see as heavy-handed regulatory measures. This is part of the reason why the Climate Commitments Act ended up being structured the way it is, with prices set at auctions and polluters able to buy and sell permits.

“It’s a market-based solution, isn’t it? This is what business needed to have some predictability about this,” said Bronsema. “The alternative is an incredibly heavy hammer from the government that may lower emissions but is not going to help provide all the benefits that the Climate Commitment Act brings.”

What the oil industry doesn’t like about the current program is the cost. At the first auction a year ago, the price of emitting a ton of carbon came in at $49, nearly double the average price in California’s cap-and-trade market at the time. During the course of the year the price rose to $63 per tontriggering extra “emergency” auctions intended to ensure businesses can access enough grants at fair prices.

Washington is currently seeking to link its carbon market with those in California and Quebec, a move that favors Slagle as it likely to lower the cost of grants. However, that whole process can get delayed by the repeal initiative.

Early polling shows that proponents of the repeal, Initiative 2117, have some convincing to do. In a opinion poll released last October, 41 percent of Washington residents would vote yes on the repeal, compared to 49 percent who would vote no. That leaves nearly 10 percent undecided, and historically voters in the state have tended to reject initiatives, according to analysis by Washington Conservation Action. Washington’s politics have changed since the late 1990s and mid-2000s, when voters approved initiatives to get rid of vehicle taxes and limit property taxes sponsored by anti-tax advocate Tim Eyman.

“People really want to know, like, ‘It’s a good idea to repeal it,'” Bronsema said. “And I think we have a strong case that it’s not a good idea.”

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