Washington Passed its Cap-and-Trade Climate Legislation. Now What?

SEATTLE– Washington state lawmakers have passed a sweeping set of environmental regulations meant to cut net greenhouse gas emissions to zero by 2050 while pumping billions of dollars into the state coffers and addressing environmental racism.

Next, they’ll have to make it all work.

Following on promises two years ago to decarbonize the state’s electricity sector, the Legislature recently passed a suite of climate bills aiming to cut greenhouse gas emissions from heavy industry and cars. The regulations are meant to put Washington on pace to reach the goals outlined in the Paris Agreement on climate change.

[Washington Gov. Jay Inslee: Time to ‘Seize the Moment’ on Climate Change]

The centerpiece of the climate effort led by Gov. Jay Inslee a new cap-and-trade system that will see the largest polluters buy credits from the state for each ton of greenhouse gas they create. The total number of credits would shrink each year, increasing the price of pollution, backers believe, as total emissions fall. The revenue estimates are shaky, but the state expects to bring in nearly $1 billion a year at the program’s peak in the late 2020s.

While the bill drew opposition from some progressives and no Republican support, its passage makes Washington the second state in the nation to cap industrial carbon emissions and will likely see it become the first state to join California‘s carbon market.

“We’re on the march toward Paris-level emissions reductions,” says state Sen. Reuven Carlyle, a Seattle Democrat and the leading booster for the bill. “This isn’t a think tank. It’s not an academic white paper. These are real steps toward reaching our climate goals.”

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As state Carlyle sees it, Washington’s cap-and-trade system is both the best the Legislature could do — a similar push in Oregon saw Republicans shut down the statehouse twice — and an example to state lawmakers elsewhere. It puts the state on a track that would, by 2050, see greenhouse gas emissions from the state’s largest polluters fall from about 100 million tons to 5 million tons, a 95% reduction.

“The country desperately needed a step forward like this,” Carlyle says. “These other legislatures just need to see an example.”

With the “cap-and-invest” program and stricter fuel standards in place, most facets of Washington’s economy will be covered by climate-conscious policies meant to reduce the state’s emissions, Carlyle says. Some of the state’s largest employers, including Microsoft and Amazon, have recently committed to cutting their emissions beyond the levels now set by law.

The bill’s passage was lauded by mainstream Democrats and environmentalists. Former U.S. Secretary of the Interior Sally Jewell, previously CEO of Seattle-founded REI, offered that it “puts Washington squarely in a leadership role in combating climate change and protecting the natural places we all love.” The Environmental Defense Fund described it as “a new gold standard for other states across the nation.”

Speaking on April 27, Inslee said that, as a “climate warrior” of more than two decades, he has never been more excited. Inslee enthused about plans rolled out by President Joe Biden during a climate summit in late April while noting that states, private industry and local governments can cut emissions in ways that, “at the moment, the federal government can’t do.”

[READ: With Biden Climate Goals on Horizon, States Continue Own Efforts]

“We’ve all got to be not just be partners with the (Biden) administration, we’ve got to be pulling,” Inslee said at a press conference for America is All In, a climate action organization funded by former New York Mayor Michael Bloomberg that Inslee co-chairs. “We’ve got to show the next horizon, the next step in this bold adventure.”

Carlyle and other supporters of the cap-and-trade bill hope Washington will tap into California’s carbon market, creating the foundation for a broad, competitive exchange.

Pam Kiely, associate vice president for U.S. Climate at Environmental Defense Fund, describes the limit on total greenhouse gas pollution — the “cap” in a cap-and-trade system — as a “backstop” pushing large polluters to do their part to reach the emissions goals set by the state. The cap is expected to become more important in the decades ahead as permission to pollute becomes harder to come by.

The system is flexible by design, she says, and can be calibrated to cut emissions in concert with programs targeting other parts of the economy.

“We’re always in the position of trying to ensure that policy is improved over time,” Kiely says. “The California program is strong … and there are opportunities to continue to improve.”

“One of the exciting things about the Washington program is that they’ve made a number of innovations in their legislation that respond to both critiques and opportunities as policymaking evolves,” she notes.

But the effectiveness of California’s system remains heavily contested and there is no clear evidence that it is delivering on the promised emissions cuts. Critics of the California system contend it is too lenient on polluters, particularly when it comes to allowing them to offset pollution by paying to capture carbon dioxide from the atmosphere.

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While technologists look forward to high-tech solutions that would see CO2 swept from the air, most of carbon capture is done today happens the old-fashioned way: with plants.

In California and soon in Washington, polluters can avoid buying pollution credits called offsets by paying for forestland set aside to store carbon. California polluters have been able to offset 8% of their pollution, or one-fifth of the 40% emissions reduction expected by 2030. California scaled back its pollution offset program in 2021, setting a 4% limit, and is expected to expand it again in 2026.

The degree to which those carbon capture projects — mostly trees — are actually addressing the pollution they enable isn’t clear, but a study released on April 29 by the climate advocacy organization CarbonPlan found that about 29% of the carbon capture credited to California’s $2 billion forest offsets program hadn’t actually occurred.

It’s not that cap-and-trade programs can’t work, says Danny Cullenward, policy director at CarbonPlan and one of the study’s authors. But, Cullenward says, California’s isn’t working well, and, even if it did, it could only do so much.

“When you look at the California (cap-and-trade) program, it helps a little bit,” Cullenward says. “But it’s never been the star of the show.”

To Cullenward’s eye, California’s efforts to move away from coal-fired power plants and toward lower-emission vehicles have done more to move the state toward carbon neutrality. Lawmakers in Washington state have taken on both pollution sources as well, most recently by taking steps toward phasing out the sale of new gasoline-fueled cars by 2030 and inking new restrictions on greenhouse gas-heavy fuels.

A bill passed in late April will force fuel producers and distributors in Washington to shrink the carbon footprints of their products, either by buying biofuels like biodiesel or underwriting the shift to electric vehicles by subsidizing electric cars and paying for charging stations.

While opponents of the fuel standard contend it will cause fuel prices to spike, supporters argue the increased costs will ultimately come out of fuel producers’ profits, not drivers’ pockets. All agree it will make biofuels competitive with fossil fuels at the pump.

Biofuels booster Tim Zenk, president of Clean Fuel Washington, which lobbied for the legislation, calls it a “market-making bill.” Oregon, California and British Columbia already have similar programs in place that penalize fossil fuel production and make biofuels more competitive. With Washington in the mix, Zenk says, there’s a West Coast-wide market for the fuels, which in biodiesel’s case produce about a quarter of the emissions released by its fossil fuel equivalent.

“The ‘Clean Fuel Coast’ concept is a big deal,” Zenk says. “That market will be the largest contiguous low-carbon fuel market in the world.”

The shift away from fossil fuel cars could also lighten the pollution burden that, in Washington and most of the nation, falls inequitably on communities of color. Washington’s cap-and-trade legislation faced opposition from a coalition of activists that included Washington state’s largest NAACP chapters and dozens of community groups, in part because of concerns that it would do too little to cut emissions in the state’s most polluted areas. Those neighborhoods along the Interstate 5 corridor between Everett and Olympia, in Yakima and other eastern Washington cities are disproportionately home to Black, Latino and Native American people.

The cap-and-trade bill promises to push hundreds of millions of dollars in support to communities burdened with pollution, places where rates of asthma and heart disease are elevated, and life expectancy is shortened. State Rep. Debra Lekanoff, a Democrat from northwest Washington, says it’s now up to lawmakers to deliver on those promises.

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“We have to follow through, or we’re going to continue to let these communities live in a pollution-based economy,” Lekanoff says. “We’ve stuck our neck out here. And we’ve got to deliver.”

Lekanoff was among a group of progressives supporting a carbon tax put forward as a more stringent alternative to the cap-and-trade system that ultimately passed. Unlike several carbon tax supporters, she voted for the cap-and-trade bill, describing it as an imperfect “big, bold move” forward.

In other legislation aiming to achieve a measure of environmental justice, Washington lawmakers — after decades of prodding by activists — passed legislation requiring that state agencies better address for racial disparities in exposure to pollution. The promise that the state government will at last meaningfully address environmental racism in Washington came because of activist pressure and a historic shift in the Legislature’s makeup, says Lekanoff, a Tlingit tribal member long active in state, tribal and federal government. Lawmakers of color accounted for almost a third of the Democratic caucus, which holds a comfortable majority in the statehouse.

“Climate change has been being addressed by a handful of white men,” Lekanoff says. “That changed this year.”

Cullenward suspects that Washington’s cap-and-trade system, like California’s, will be better than nothing at all. But there is also a hazard: Lawmakers who fought to put the program in place are obliged to defend it, and are disinclined to further restrain industry already subject to the cap-and-trade system.

Washington state Republicans, out of power in state government, opposed the environmental justice law, the fuel standard and the cap-and-trade system. While some took the opportunity to question climate change, most Republican opponents argued the cap-and-trade system will flatten the state’s economy, which, while booming on the Puget Sound and some cities east of the Cascade Mountains, has been stagnant in much of the rural, Republican-heavy eastern half of the state.

[These Are the Greenest States in the U.S.]

State Sen. Shelly Short, a Republican representing a farms-and-forests district north of Spokane, described the cap-and-trade system as “horrendous.”

“What we are looking at today is the wholesale obliteration of our economy,” Short said before voting against the proposal on April 24. “We have done tremendous things in the state of Washington to curb emissions. People are doing the things that make sense for them. It’s not been as punitive as it is today.”

Carlyle, the state senator from Seattle, says Washington’s system has been informed by California’s experiences. He describes his staff poring over a 2019 ProPublica investigation into California’s system — ” Cap and Trade Is Supposed to Solve Climate Change, but Oil and Gas Company Emissions Are Up” — looking for problems Washington can avoid.

Whether Washington’s cap-and-trade law translates into climate action will depend on what happens next. The carbon market is extraordinarily complex, Carlyle says, and it will be years before Washington’s system is up and running.

Still, the senator celebrates that Washington has narrowly managed to begin that work.

“There are a thousand reasons not to do something,” Carlyle says. “We’re walking the walk.”

More from U.S. News

Washington Gov. Jay Inslee: Time to ‘Seize the Moment’ on Climate Change, Clean Energy

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Washington Passed its Cap-and-Trade Climate Legislation. Now What? originally appeared on usnews.com

Correction 05/13/21: A prior version of this article included an incorrect name for climate advocacy organization CarbonPlan.

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