Late in February, Washington State’s Senate Committee on Environment, Energy, and Technology passed the Climate Commitment Act (CCA) by a vote of 7 to 3. This step accelerates momentum for essential climate action in Washington this session. The CCA will now move on to the Ways and Means Committee before hopefully coming to the Senate floor for a vote.
As the CCA continues to build momentum, it is important for climate advocates to understand exactly what type of climate bill it is. The CCA would cut Washington’s greenhouse gas emissions (GHGs) by implementing an economy-wide cap-and-invest system. Under this system, Washington would annually distribute and auction off a capped and decreasing amount of “allowances” starting in 2023, aligned with the state’s 2030, 2040, and 2050 GHG limits. The system includes both a price floor and ceiling to ensure revenue availability, encourage innovation, and insulate from price shocks. Overall, the CCA makes sure carbon emissions directly affect every big polluter’s bottom line, placing the existential threat of climate change squarely into the decision-making process businesses already use to interact with the world.
The CCA not only accounts for, but centers equity and environmental justice in its design. Auction proceeds will fund prioritized investments which are reviewed by the Environmental Justice and Equity Advisory Panel and are focused on the needs of overburdened communities. This Panel evaluates and provides guidance on investments and program design. The CCA also requires an Environmental Justice review every other year to measure trends in emissions from high priority facilities, ensuring they are adequately reducing emissions. The bill provides special considerations for prioritization and fair treatment of high-risk and low-income communities as well as trade-exposed businesses. Finally, it protects low-income rate-payers while incentivizing more efficient provision of essential energy services.
It is fair to wonder if putting a price on carbon will cause everything to become more expensive. However, both the short- and long-term benefits of the CCA will outweigh any cost increases, such as a cents-not-dollars increase at the gas pump. This is because the revenues generated by the CCA will be used as a kind of economic stimulus package that:
- Stimulates local economies by investing more money in-state
- Protects Washington jobs while the state transitions to a cleaner economy
- Creates new jobs in construction, infrastructure, natural resources, and other fields
- Generates unprecedented investment in clean transportation and natural lands
- Incentivizes climate action from businesses by making emissions more expensive over time
This 2020 study by the Low Carbon Prosperity Institute and Climate XChange found that climate investments are key to a resilient recovery, generating exceptional job growth and statewide economic benefits. The CCA funds these types of investments, allowing Washington to realize the economic benefits. It also provides a clear signal for businesses to innovate and compete while cost-effectively reducing carbon pollution to legislated limits.
It is no secret that business interests have not always been supportive of major pieces of environmental legislation. For the past five years, climate activists in Washington State have been trying to pass a carbon tax at the ballot, first with I-732 in 2016 and then with I-1631 in 2018. The business community’s response to the first campaign was described at the time as “tepid at best”, and one conservative-leaning business group, the Association of Washington Businesses, filed a lawsuit against I-1631 as soon as it was filed.
Despite this history, the CCA has received a remarkable amount of support from the private sector. Unlike the previous ballot initiatives, the CCA is a cap-and-invest bill, not a carbon tax. Instead of paying a tax for the carbon that polluters would emit anyways, the CCA would give them the opportunity to purchase allowances for that carbon in a market. Since the cap is lowered every year, there will always be fewer allowances available for purchase, compelling businesses to plan for a low-carbon future. Creating this carbon market encourages a transactional, rather than adversarial, relationship between the public and private sector. It also gives businesses a constant, direct financial incentive to reduce pollution in whatever ways make sense for that particular business. This creates a system that works with the private sector, not against it, and encourages investment in developing emissions-reducing technologies for businesses’ own financial benefit.
Cap-and-invest in the Pacific Northwest has received support from some of the modern economy’s biggest employers including Microsoft, Nike, Uber, and many more. For some it may even be surprising to read that a number of these businesses are proponents of Cap-and-invest. Businesses are supporting the CCA and taking financial responsibility for their own emissions because it is ultimately good for their bottom line. Business is better in a more stable, thriving economy, which the CCA will help foster. Even the traditionally conservative U.S. Chamber of Commerce is calling for “a fiscally and environmentally responsible infrastructure package that stimulates the economy and improves the quality of life for every American….”
On the west coast, only California has implemented cap-and-invest, and it’s also the only state to have reduced its GHG emissions from 2012-2018. California’s Gross State Product (GSP) per capita is up over 20% since 2012, which is a faster economic growth rate than Oregon, Washington, and British Columbia. The state also met its 2020 statewide emissions goal four years early. Meanwhile, Washington State’s emissions have grown 8% during that same period.
The Climate Commitment Act would put Washington in an excellent position to take advantage of being one of the early adopters of the exponentially growing global trend towards different forms of carbon pollution pricing. 2021 is a unique year where Washington can get ahead of the curve preparing its economy for a sustainable future but doesn’t need to pilot a new program from the beginning. Washington can learn from what its neighbor to the south has already done and model its cap-and-invest system off of existing best practices.
The Climate Commitment Act is “probably the largest infrastructure and environmental package that the state has ever seen,” according to State Senate Transportation Committee Chair, Sen. Steve Hobbs. It provides a direct, predictable, and perpetual source of revenue. This revenue will be used for green infrastructure investments that improve the productivity of Washington’s economy by limiting costly energy waste, creating good jobs, and improving public health. Decisions about design of the cap-and-invest program will be made by an Environmental Justice and Equity Advisory Panel. The environmental movement has been working tirelessly on emissions-reducing policies that will make meaningful progress towards a livable future. The CCA still has many steps to go through before becoming law, but it looks like climate activists can be cautiously optimistic that something big might be happening this session in Washington.
