Washington Governor Announces Plan to Price Carbon

Gov. Jay Inslee at Bellevue College on Oct. 19 during a series of town halls to discuss the state’s role in combatting climate change. (Official Governor’s Office Photo)

Big things are happening in Washington State. Governor Jay Inslee announced carbon pricing as one of his main policy priorities during his annual State of the State Address on January 9th, 2018. On the same day, he announced legislation that he believes will implement his vision.

Gov. Jay Inslee at Bellevue College on Oct. 19 during a series of town halls to discuss the state’s role in combatting climate change. (Official Governor’s Office Photo)

The bill, SB 6203, imposes “a carbon pollution tax equal to $20 per metric ton of carbon dioxide on the sale or use of fossil fuel within the state of Washington and the sale or use of electricity in Washington generated using fossil fuels, beginning July 1, 2019.” The rate will rise annually by 3.5% plus inflation.

The bill is forecasted to generate $3.3 billion in revenue according to the governor’s office. Most of this revenue would go to environmental investments (making it “revenue-positive”). Additionally, the bill includes provisions to protect disadvantaged people and communities, and workers who are displaced by shrinkage of fossil fuel industries:

  • 50% of generated revenue will go into a newly created Energy Transformation Account that will fund GHG emission reduction projects in Washington, of which “priority must be given to projects and activities that benefit low-income communities­­, communities of color, and communities of indigenous peoples.”
  • 35% will go to a Water and Natural Resource Resilience Account which will appropriate funds to projects that reduce flood risk, reduce wildfire risk, and improve water supplies amongst other environmental projects.
  • The last 15% will go to a Transition Assistance Account that will fund three specific initiatives aiming to 1) mitigate any negative outcomes of shifting to a clean energy sector for low-income individuals 2) help transition fossil-fuel industry employees to the clean energy sector and 3) create “Clean Energy Centers” in local community and technical colleges.

There has been some criticism of the plan. On the right, a common refrain can be heard from representatives of the WA business community. They fear they will be at a competitive disadvantage when compared to firms operating in states without carbon pricing. On the left, there has been criticism of the revenue distribution formula. Representatives of Washington State Labor Council broadly support the tax but argue that the 15% going to the the Transition Assistance Account is insufficient and should be upped relative to the amount being spent on investment.

The Governor is relying on the bill’s chief sponsor, Sen. Reuven Carlyle (D-Seattle), to get the votes necessary to pass the bill before the end of the short session on March 8th. All signs indicate that the various proponents of carbon pricing are in support of the Governor’s plan and hope that it will pass. Al Gore, John Kerry and Microsoft President Bill Smith are among those who spoke out in favor of the plan:

We’ll be keep you updated on the bill’s progress from month to month.

Senate Bill Report Available Here
Governor's Office Report Available Here
Governor's Policy Brief Available Here