Washington’s Initiative 732: Important Lessons for Supporters of Carbon Pricing

September 30, 2016
Jason Barbose
Senior Policy Manager (Western States)

The Union of Concerned Scientists is a strong supporter of pricing the heat-trapping emissions causing climate change, and we have a history of advocating for a price on carbon in Washington State. Yet UCS has decided to take no position on a ballot measure this November that would establish a carbon tax in Washington, Initiative 732. It was a tough decision for our organization and we wanted to share our thinking about this issue with our members.

A price on carbon would help reduce emissions from large emitters in Washignton. Photo: Scott Butler / Flickr

A price on carbon would help reduce emissions from large emitters in Washignton. Photo: Scott Butler / Flickr

Carbon pricing is an important tool to address climate change

The top reason to put a price on carbon emissions through a carbon tax or cap-and-trade program is that it helps integrate climate risks into the cost of doing business, leading to fewer emissions that heat our atmosphere. Carbon pricing forces the costs of climate impacts and the value of low-carbon technologies to be better reflected in decisions businesses make about what to produce and consumers make about what to buy. UCS has strongly supported the establishment of other carbon pricing programs in the U.S., namely California’s multi-sector cap-and-trade program and the Regional Greenhouse Gas Initiative, the nine-state cap-and-trade program for power plant emissions in the northeast. These programs have proven to be a valuable complement to other carbon-reducing policies, such as standards for renewable energy, more energy efficient buildings and appliances, more fuel-efficient cars, and lower-carbon fuels.

While carbon taxes and cap-and-trade programs are powerful policy tools, not all programs are created equal. As a science-based organization, our biggest concern is whether the policy covers enough emissions sources and is stringent enough to result in significant emission reductions. (UCS believes the United States should be on a path to reach net zero carbon emissions by mid-century, in line with the goals of the 2015 Paris Climate Agreement.) There are many other important design considerations, but often the stickiest revolve around how revenues from a carbon tax or cap-and-trade program are utilized. Is money used to help low-income households defray potentially increased energy costs? What about investing in clean energy and vehicle technologies in communities hardest hit from pollution? Or supporting a transition for workers and communities that depend on fossil fuels for their livelihoods?  Are these objectives met through direct investments or changes in taxes? These are all important distributional considerations that shape the underlying fairness of a program.

I-732 is designed as a revenue-neutral carbon tax

There are clearly things to like about Initiative 732, the carbon tax on the ballot in Washington. The measure would impose a carbon tax on fossil fuels used in the state (including electricity generated out-of-state), starting at $15 per ton of carbon dioxide in 2017, increasing to $25 per ton in 2018, and automatically increasing at 3.5 percent plus inflation annually until reaching a price of $100 per ton (in 2016 dollars). This would be a strong price signal to reduce emissions. (In comparison, pollution permits in the California cap-and-trade program are currently selling for around $13 per ton.) In exchange, the measure would reduce two taxes: the state sales tax would decline by one percent over two years and the business and occupations tax for manufacturers would be eliminated. In addition, the measure would fund the Working Families Tax Credit to reduce the tax burden on low-income families. In all, the measure is designed to be revenue-neutral, with the tax cuts and tax credits cancelling out the new revenue from the carbon tax.

I-732 offers lessons for future carbon pricing debates

I-732 would be a significant step to reduce heat-trapping emissions in Washington and yet many pro-climate organizations have deep concerns about the measure. Washington-based environmental groups have withheld their support (e.g., Climate Solutions, Sierra Club’s Washington Chapter, Washington Environmental Council), while environmental justice and social equity organizations (e.g., Front and Centered, One America) and representatives of workers (e.g., Washington State Labor Council) are actively opposing the measure. These allies have argued that I-732 fails to adequately invest in communities disproportionately impacted by fossil fuel pollution, as well as workers in heavily polluting or energy-intensive industries. In addition, the state’s official analysis estimates that the measure would actually be revenue-negative.

Carbon Washington—the non-profit leading the campaign for I-732—has provided rebuttals to the issues opponents have raised. However, the adequacy of the arguments is not all that matters. It is clear that there is also friction over the process by which Carbon Washington developed I-732, with some stakeholders feeling they were not included. Amid this heated debate, UCS realized that it would be presumptuous for us, an organization based outside of Washington, to disregard the strong feelings of pro-climate  and equity-centered groups based inside the state who are withholding their support. Under these circumstances, we decided that this is a debate that should be settled by Washingtonians.

As fraught as the I-732 debate is, I have drawn important lessons from the experience. Most important, it is critical to work in inclusive and transparent partnerships with allies and stakeholders in any policy initiative. A diversity of voices is crucial to crafting a strong, fair policy solution, and it is important to build political support. For these reasons, UCS has been a partner for nearly two years of the Alliance for Jobs and Clean Energy, a coalition of businesses, unions, communities of color, environmental, health and faith groups working to tackle climate change in Washington.

We must “go fast” and “go together”

There is a well-known African proverb, “If you want to go fast, go alone. If you want to go far, go together.” I couldn’t agree more. And yet that truism runs right up against the frightening urgency of addressing climate change. It is in this healthy tension that we—as organizations and advocates working to address climate change—must operate. We must go fast and far to protect our planet, but we must work together if we are to succeed.

I encourage all our supporters and members in Washington to review the measure and arguments and make their own decision about how to best move Washington forward to tackle climate change. Regardless of what happens on election day, UCS will remain a faithful partner in moving Washington forward to protect our climate.