Inslee carbon tax plan would help complete North Spokane freeway

SEATTLE – Washington Gov. Jay Inslee on Wednesday proposed an ambitious cap-and-trade program to require the state’s largest industrial polluters to pay for every ton of carbon they release.

The proposal, which also would pay for a significant portion of the remaining work needed to complete the North Spokane freeway, was part of a broader package that the Democrat said would help the state meet a 2008 mandate to drastically reduce greenhouse gas emissions blamed for global warming. It sets an overall limit on heat-trapping gases similar to a program that California launched nearly three years ago.

“It is primarily and foremost an issue of health for our children and our grandchildren,” said Inslee, who was flanked by Democratic lawmakers and other supporters at a news conference at REI’s flagship store in Seattle. “It’s not only a good idea, it’s the law.” Supporters hailed the plan as historic and bold, saying it will protect human health and the environment. Critics questioned whether the cap-and-trade program would raise gas and energy prices and harm families and businesses.

The proposal must be approved by the Legislature and is certain to face resistance. Republicans, who will control the Senate next year, have voiced opposition.

Sen. Michael Baumgartner, R-Spokane, said he’d even be surprised if Inslee’s proposal is approved by the Democratic-controlled House.

“What he said is a tax on polluters is in fact a tax on our manufacturers and our job creators,” Baumgartner said.

He added that climate change is not an issue that should be addressed by states.

“He should quit the governor’s mansion and join the State Department if that’s a path he wants to pursue,” he said.

Inslee, who has made tackling climate change a key issue since taking office two years ago, said the plan would raise nearly $1 billion in its first year, which would begin in July 2016.

Money raised by selling allowances to pollute would pay for transportation projects, education-funding requirements imposed by the state Supreme Court, and assist low-income families and industries that are most affected by higher energy costs.

State Sen. Andy Billig, D-Spokane, praised Inslee for delivering on campaign promises to address climate change.

“Our state has a history of leadership and taking on big challenges, and this is an opportunity again for us to lead in a way that will deliver for generations to come,” Billig said.

Inslee said legislators in both parties will have to face stark realities as they confront a projected budget gap of more than $2 billion during the next two-year period.

“They may conclude it’s better to tax pollution than voters, that it’s better to tax polluters than drivers,” he said.

Inslee said the carbon tax revenue, along with bonds and fees, would help pay for a $12 billion transportation package over the next 12 years. The plan’s $5.9 billion in new construction includes $432 million for completing the North Spokane Corridor from Francis to Trent avenues.

Billig said he’s not concerned that a program aimed at addressing climate change would pay to build a new freeway. That’s because, he said, Inslee’s transportation package also includes funding for alternative forms of transportation.

“Clean transportation advocates are in favor of balance,” Billig said. “It’s not about not building freeways, it’s about having those choices.”

But Billig said any transportation package should include full funding for the North Spokane Corridor to connect it with Interstate 90.

Baumgartner agreed and said any freeway funding plan must pay to extend it to I-90 in order to pass the Senate.

Republican state Sen. Doug Ericksen, who chairs the committee that deals with environment and energy issues, said the governor’s plan “would make it more expensive to take a family vacation, drive your kids to soccer practice and heat your home.”

The plan could raise fuel prices by 7 to 15 percent above what they would be by 2035, according to state estimates.

Among other initiatives proposed Wednesday, Inslee said he asked state regulators to draft a low carbon fuel standard similar to California’s first-in-the-nation mandate. Inslee said he wants to hear from lawmakers and others before beginning a formal process on a rule that would require cleaner fuels over time.

Inslee also proposed extending a break on sales tax for the first $60,000 on the cost of an electric vehicle, creating a $60 million fund to support clean-energy research and improving state incentives for solar energy.

The key part of the plan is cap-and-trade. Under that market-based program, the state would set an overall cap on carbon emissions and require the state’s biggest polluters to pay for each metric ton of pollution emitted. The price would be set at an auction. Polluters can sell excess permits they don’t need to others.

The proposal would apply to about 130 large facilities, including refineries, power plants and steel mills, or those that emit more than 25,000 metric tons of greenhouse gases a year. It will cover about 85 percent of all the state’s carbon emissions.

The overall cap on greenhouse gases would decrease over time, so fewer permits are issued, increasing their value on the market.

Companies may decide to pay for every metric ton they emit, or find that there’s more financial incentive for them to cut their pollution by becoming more energy efficient or finding newer technologies to reduce pollution.

Spokesman-Review reporters Jonathan Brunt and Becky Kramer contributed to this report.