WA’s top climate polluters hand in emission allowances – except one
SEATTLE – The bills are due for Washington’s top polluters, which must buy allowances for the greenhouse gases they emit into the atmosphere, and every company paid up – but one.
The process of buying and turning in these allowances serves as a cornerstone of the state’s 2021 Climate Commitment Act, which survived a hard-fought repeal effort last month. Over the next few decades, state officials will ratchet down the number of allowances sold as a way of cutting emissions.
This strategy is working as intended, officials with the state’s Department of Ecology say. Of the 97 major polluters in the state required to participate, 96 have turned in their share of allowances. The lone holdout, a relatively small and defunct mill in Grays Harbor County with a checkered past, didn’t participate at all, marring the state’s otherwise perfect record.
Now that mill, Cosmo Specialty Fibers, has a few months to fix its books or face a smattering of fines, which will grow with each passing day. Meanwhile, the other companies or institutions will move forward as the Climate Commitment Act intends, building momentum in the fight against climate change, said Joel Creswell, who manages Ecology’s climate pollution reduction program.
Cosmo Specialty Fibers
Until it closed after the start of the COVID-19 pandemic, Cosmo Specialty Fibers employed some 170 people around the town of Cosmopolis. The facility created a type of dissolving pulp fibers with a wide variety of applications in things like textiles and fabrics, pharmaceuticals, cosmetics and more.
When it was running, the mill took in wood chips and cooked them down in acid through a series of large tanks or “digesters.” The facility then bleached the leftover pulp with different types of caustic chemicals like chlorine and hydrogen peroxide. Leftover waste could either be burned for more energy or drained into Grays Harbor. The process is energy intensive, making the mill one of the state’s largest polluters when it’s running. But even sitting unused, the area still generates emissions, Creswell said.
Mill owner Richard Bassett said he bought the facility at the start of 2023, after it had been shut down. Before that, he had been a minority shareholder in the site, which he sees as a potentially lucrative investment.
Bassett, who lives in England, has a background in corporate finance but began in the milling business around 2005 when a shuttered mill on Vancouver Island drew his interest. This site in Cosmopolis, however, has even greater potential, he said. But before launching into his grand vision for the business, he must first square up with environmental regulators.
The mill has repeatedly been cited for environmental violations by state and federal officials. Ecology cited the company in September for multiple dangerous waste violations, issuing a $42,000 fine. Twice it fined the mill for breaching wastewater pollution limits, in 2022 and 2015, accumulating more than $24,000 in fines.
Even closed, the site still contains hazardous and corrosive chemicals, according to the U.S. Environmental Protection Agency. Earlier this year, federal officials ordered the mill to keep power and water on at the site, alongside 24-hour security. But the company didn’t, so the EPA stepped in. Now, those federal regulators are developing a plan to safely store or dispose of the chemicals on-site.
Most recently, the mill failed to turn its greenhouse gas allowances in to the state, which is required by the Climate Commitment Act.
While it’s inactive, Cosmo Specialty Fibers counts as one of the smaller polluters required to buy allowances. Other facilities on the list include oil and gas refineries, cement plants, entire cities (including Seattle) and Boeing.
The largest emitter on the list is Marathon Petroleum, which has a refinery in Anacortes. It was required to turn in nearly 2.4 million allowances this year, each one representing a metric ton of greenhouse gases.
Under current conditions, Cosmo Specialty Fibers is only required to submit 860 allowances. While prices have fluctuated greatly, at their peak those allowances could have cost the company more than $54,200, though at more recent prices they would have cost about two-thirds of that.
Bassett said he’ll buy and turn in the allowances. He chalks up the missed deadline to an oversight as he’s been trying to chase down funding to reopen the mill, money that hinges on his ability to appease federal regulators.
In the grand scheme of the entire venture, which has already consumed millions and needs more than $50 million more in repairs, Bassett said the cost of buying allowances is fairly insignificant and one he’s happy to handle.
“The last thing in the world we need is to have an environmental issue, while we have these significant aspirations,” Bassett said.
Washington’s carbon market
In a way, Cosmo Specialty Fibers’ failure to submit its allowances is a signal the carbon market is working, Creswell said.
Washington isn’t cutting pollution levels all at once. Instead, the Climate Commitment Act sets out a series of seven four-year periods. For each period, the state will reduce the number of allowances it auctions off.
As the program moves forward, polluters can either compete for the dwindling number of allowances (the cost of which will increase as time goes on), reduce their emissions, or both, said Ecology spokesperson Caroline Halter.
Money raised from the auctions (more than $2.6 billion so far) will go toward efforts intended to reduce emissions or adapt to climate change across the state.
Eventually, polluters must turn their allowances back in to the state. Rather than requiring the companies to return all their allowances at the end of each four-year period, Creswell said, for the first three years they must only submit a fraction of the total.
“You could think of this as a down payment,” he said.
The rest will be due at the end of the period, on Nov. 1, 2027.
This strategy allows state officials to see whether polluters are on track, Creswell said. Otherwise, they might not catch a problem until it has progressed for years.
With Cosmo Specialty Fibers, state officials reached out to warn of the missing allowances. As a penalty, the company must submit four times as many allowances (3,440) by May 1, Halter said. Should it continue to fall short, state officials could fine the company up to $10,000 per day, per violation.
One missing allowance could be considered a single violation, Halter said.
So theoretically the state could fine the company $8.6 million each day. But Halter said state officials have discretion in the fines they would issue, so such a large amount would seem unlikely.
Plus, Bassett said the company is already working with state officials to turn in the allowances within the allotted time frame, so a fine shouldn’t be necessary.
If the mill does reopen, the company will have to buy many more allowances to account for the increased emissions. But Bassett said once the revenue stream turns back on, that won’t be a problem.
Aside from the hiccup with Cosmo Specialty Fibers, however, every other company submitted their share of allowances as required, 19,526,071 in all.
Creswell said that could also be a positive sign for onlookers.
State officials are looking to merge Washington’s market with the joint one operated by California and Quebec. The linkage, as it’s called, would theoretically calm market prices further and build momentum for the increasing number of states and provinces looking to cut greenhouse gas emissions.
Such high levels of participation are a good sign that the market is working as intended, Creswell said.
“Having almost 100% compliance puts us in a good position to link,” Creswell said. “This shows them that we are running a serious program.”
Officials in California and Quebec have been open to the prospect, noting that the markets could be merged by the end of next year.