Twenty-one Washingtonian leaders from business, labor, public interest, and public health communities and federal, tribal, and local governments walk into a room to discuss the best way to price carbon in the Evergreen State. What comes out after several months? A unanimous report that says: we should do this. With caveats and cautions and needs for more research of course, but the bottom line is that Washington will not achieve its statutory carbon targets without a price, and Washington can design a price—whether a cap or a tax—to protect public health and the economy and make the transition to a post-carbon world.
In April, Governor Inslee established a Carbon Emissions Reduction Taskforce (CERT) to provide recommendations about the design and implementation of carbon pricing in Washington. Today, the 21-member panel—with individuals drawn from business, labor, public interest, and public health communities and federal, tribal, and governments—released its unanimous recommendations. Here is my summary and commentary on their findings.
CERT members unanimously agreed on four findings. Stripping away the cautious consensus wording and hedging (the report says “thoughtful” 15 times in 27 pages), here is my interpretation of those findings, found more in the small print than in the bold headlines:
- There isn’t a meaningful difference between a cap and a tax. But if we do either one and do it well, we can inspire other jurisdictions to take action too, making it easier for everyone to go post-carbon.
- On the topic of doing it well, Washington needs to carefully design its price to meet the criteria discussed below.
- The price should work with complementary policies. In particular, the transportation sector needs an integrated approach with land-use policies, transit oriented development, and alternatives to current single occupancy vehicles such as adequate transit, zero emissions vehicles, and alternative fuel infrastructure. Washington could invest carbon revenue in clean energy and transportation options for a smooth transition to a post-carbon economy.
- More analysis is needed, particularly around impacts on businesses and low-income communities.
CERT Evaluation Criteria
The CERT developed eight criteria for evaluating carbon pricing options, and offered some thoughts on each. These criteria are useful for legislators wanting to design the price right, and CERT members’ informed perspectives can help move the conversation forward. Here is a brief run-down of the criteria and CERT’s thoughts.
CERT says a carbon price should:
- Actually cut pollution. On this, CERT members generally agreed a cap is better than a tax at guaranteeing legally mandated amounts of pollution reduction.
- Shift investments away from pollution and towards clean solutions. On this, CERT members generally agreed a tax is better than a cap at providing price certainty. However, CERT members saw that experience from other jurisdictions offers ways to design a cap with more price stability. Furthermore, political certainty over the long term (that is, the price will stay in place and not get overturned with every new political wind) is just as important as price certainty for motivating investments in a post-carbon economy.
- Minimize implementation costs and competitiveness impacts on Washington businesses. Many CERT members agreed that a regional approach would eliminate competitiveness concerns, because neighboring jurisdictions would pay the same carbon price. Short of that, CERT members agreed carbon pricing in whatever form is cheaper than command-and-control policies. If implemented well, offsets can play a role in keeping costs down. Some CERT members note that industries should not get windfall profits at the expense of citizens, so all or most allowances should be auctioned.
- Maximize economic benefits in Washington. To do this, CERT members discussed using carbon revenue to: address competitiveness impacts, reduce pollution, help low-income people who are impacted by price, and invest in adaptation. Some members offered more specific ways to maximize economic benefits in a transition to a low carbon economy by investing in: energy efficiency, smart growth, public transit, clean energy job training, building more wind and solar, enabling clean fuels at the ports and maintaining existing transportation infrastructure (but not starting up new expensive highway projects that will not be needed in an era of declining driving).
- Minimize costs and protect low-income communities. Those who have done the least to change the climate are the ones who suffer the most. Washington’s policy should at a minimum not make low-income people worse off and could provide transportation and economic opportunities. Some CERT members suggested that Washington could use California’s model and use 25 percent of the revenue to benefit disadvantaged communities and 10 percent to directly invest in these communities. Members also noted the need to help low-income families and communities of color access cost-saving options. Finally, they noted a need to help rural communities that drive more.
- Reduce public health risks, especially for vulnerable populations. CERT recommends holding polluters accountable and generating positive impacts for disadvantaged communities. Washington could use carbon revenue to improve air quality in communities that endure high pollution burdens.
- Be administered effectively. CERT members noted that a tax is easier to administer than a cap. However, linking to the existing California/Quebec cap would let Washington leverage the administrative infrastructure those jurisdictions have already paid to put in place.
- Influence and catalyze national and international action. A regional approach will be more influential than Washington going it alone. The most obvious path to a regional approach is to link to the California/Quebec cap.
What does it all mean?
Like all consensus documents, the CERT Report is careful. What is notable is that, despite the diverse interests represented, all of them agreed carbon pricing is an important and efficient way to cut pollution and a carbon price could be implemented through a well-designed cap or a tax. CERT members thought long and hard about how a carbon price could impact Washington businesses and citizens, and they did not throw up any of the tired excuses for inaction that we see at the national level. They concluded that Washington faces rising seas, acid oceans, dying forests, shifting water availability, and increasing heat waves. Given the choice between letting these crises engulf the state and designing a price system that addresses cost and competitiveness concerns, 21 Washington leaders said: let’s price carbon. Thoughtfully, of course. In a way that helps Washington not just cut pollution, but transition smoothly and cost-effectively towards a healthy post-carbon economy, of course. But Washington can do this. Especially in light of the recent China-US agreement on carbon pollution, the time might be right to nudge the United States forward on climate action, and Washington could be in a position to nudge.