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Initiative poses extra hurdle for merging of Washington, California carbon markets

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Initiative poses extra hurdle for merging of Washington, California carbon markets

Dec 02, 2023 | 7:00 am ET
By Jerry Cornfield
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Initiative poses extra hurdle for merging of Washington, California carbon markets

Gov. Jay Inslee and Democratic legislators see linking Washington’s cap-and-trade program with carbon markets in California and Quebec as a critical next step for the signature climate policy and are pushing ahead to make it happen. 

But a ballot measure to repeal the Climate Commitment Act may slow their pursuit – unless they are willing to see changes they make to the law in the upcoming legislative session also go before voters. 

A 35-page bill crafted by the state Department of Ecology would amend several sections of the  Climate Commitment Act to facilitate linking the programs. 

If those revisions to the 2021 law are construed as creating an alternative to the repeal measure, they would have to appear alongside the initiative on the November 2024 ballot. 

The governor and key Democratic lawmakers are trying to figure out what to do. They could pass the bill and potentially have to roll the dice with voters. Or they could hold off a year and focus on other linkage-related tasks.

“All the options are on the table. We’ll have to get an interpretation of what is and isn’t allowed,” said Sen. Joe Nguyen, D-White Center, chair of the Senate environment committee on Friday. “I don’t think it is a red-alarm, the sky is falling down situation. It isn’t as if [the linkage bill] needs to be done this year and we can’t do anything.”

Rep. Beth Doglio, D-Olympia, who leads the House environment panel, said lawmakers are discussing the best path forward. 

“Changes in the bill are important to demonstrate we are serious about [linking]. I’d like to see us do it this year,” she said Friday. “We just have to figure out what all the ramifications are.”

‘Potential issues’

Washington’s two-year-old Climate Commitment Act seeks to reduce greenhouse gas emissions by putting a price on pollution-causing carbon emissions. 

The state imposes annual limits on greenhouse gas emissions for major emitters such as oil refiners and utilities, and requires them to buy allowances at auctions for each metric ton of pollution. The state has raised roughly $1.5 billion so far from the sale of those allowances.

Proponents of merging carbon markets say that it could help to reduce costs for businesses and consumers under Washington’s program by bringing down the price of allowances, which are less expensive in California or Quebec.

State Rep. Jim Walsh, R-Aberdeen, filed the repeal measure, Initiative 2117, and last month he and supporters turned in petitions signed by an estimated 420,000 people. Foes of the law say it has driven up prices for fuel and energy, and amounts to a “hidden tax.”

The Secretary of State’s Office is determining if the repeal measure has enough valid registered voter signatures to get on the ballot.

As an initiative to the Legislature it will, if certified, be sent to lawmakers who can adopt it into law in the 2024 session as written – an unlikely scenario since this would involve Democratic majorities scrapping climate policies that they support. They also can reject or refuse to act on it, in which case the measure will go to voters.

Lawmakers can approve an alternative measure to be placed on the ballot alongside the initiative if they want, as well.

Case law and a 1971 Washington attorney general opinion seem to indicate that if the Legislature passes a bill on the same subject as the initiative it is supposed to go on the ballot as an alternative.

So far two bills dealing with the Climate Commitment Act appear as though they would trigger that requirement.

Brian Heywood, founder of Let’s Go Washington, is a hedge-fund manager who bank-rolled the signature-gathering effort, said the path ahead is clear.

“They are not allowed to make any significant changes on the same topic as our initiative. If they do, it has to go on the ballot,” he said Friday.

Inslee, like Democratic state lawmakers in the House and Senate, hasn’t reached the same conclusion, yet.

“We’re aware of some of these potential issues, are having conversations about them, but no decisions or details to offer at this time,” emailed Mike Faulk, Inslee’s press secretary. “We’re working with counsel to dig into the law around this.”

‘We have to fix this thing’

One of the bills in play is Ecology’s legislation on linkage which the department describes as “a significant agency action.”

Sen. Mark Mullet, D-Issaquah, authored the other and said three other Democrats had signed on as co-sponsors as of Friday. Mullet called it his attempt to “fix the CCA” and lower its impact on consumers. It’s 36 pages and among its provisions is one to use auction proceeds to reduce car tab fees for two years.

He said it is an alternative for the ballot and he thinks it can win support from voters who want to keep the climate policy while revamping it to be more affordable. 

“We have to fix this thing. It’s going to be up to Democrats in the Senate and House if they want to put an alternative on the ballot,” said Mullet, who is running for governor in 2024. “If we don’t fix it this session I am going to support repealing it.”