Climate control proposal faces business opposition

OLYMPIA - After two days of hearings that drew hundreds to the state capitol, Gov. Jay Inslee’s carbon reduction proposal has the full attention of Washington lawmakers.

In an effort to curb climate change while raising money for transportation and education, Inslee is proposing a statewide cap on carbon emissions that would require polluters to buy credits to continue polluting at today’s levels. Carbon prices would start at $12 a ton and would bring in an estimated $1 billion in the program’s first year.

The main idea behind cap-and-trade markets is to create a financial disincentive to emit greenhouse gases.

The Democratic governor’s proposal has quickly become controversial in a legislature with power divided between a Republican Senate and a divided Democratic House. The issue exploded this week during hearings in a House hearing that spanned two days and required the use of overflow rooms.

By the end of the first hearing on Tuesday, so many people had showed up that House Environment Committee Chair Joe Fitzgibbon (D-Des Moines), had to give each speaker only two minutes to address the committee.

He still had to cut off multiple witnesses in order to make room for the many speakers who travelled long distances to testify.

Since the proposal’s unveiling in December, Fitzgibbon and 36 other House Democrats have shaped the governor’s cap-and-trade idea into House Bill 1314. A similar bill in the 49-member-Senate has 20 Democratic co-sponsors.

Neither bill has a single Republican backer signed on in support.

While supporters say the plan is needed to reduce carbon pollution while creating clean energy jobs and building up some much-needed revenue along the way, representatives from Washington’s business sector expressed concerns that charging firms for carbon emissions could ultimately lead to economic disaster.

“At the end of the day this becomes a competitiveness issue,” said Kristofer Johnson, president of the Association of Washington Businesses. “Our employers have deep concern of being at a competitive economic disadvantage in this state, especially as they compete across the country and across the globe.”

Spokespersons for the fuel, manufacturing and agricultural sectors repeatedly warned the committee that putting a price on carbon emissions would only cause polluters to pass the additional costs onto consumers.

When that isn’t possible, they argued, businesses would eventually either cut staff or move their operations out of the state entirely.

Frank Pupo of Tacoma’s Associated Petroleum Products warned legislators his firm would ultimately have to pass down all additional costs, calling consumers the true polluters.

“Fuel distribution is not the polluter; it’s the end use,” he said. “So if this is going to start upstream with distribution, that cost is going to be pushed down to the end use: the customer.”

Rep. Jake Fey, D-Tacoma, was skeptical.

“It seems to me like the king of Saudi Arabia has more to do with the price of oil than this bill does,” he said. “It seems to me that [fuel distributors] don’t have much say in that situation.”

Pupo responded saying that a lot more factors and a lot more variables are in play when calculating oil costs.

Not everyone from the business sector presenting remarks at the hearings is opposed to the plan. Virinder Singh of EDF Renewable Energy testified that the wind industry has paid Washington construction workers nearly $100 million during the past two years, and his firm has generated more than $80 million in property and generation taxes.

“We want to make sure that affected businesses concerns are taken firmly into consideration with this legislation, but at the same time the strong upsides to the clean energy economy need be taken into consideration as well,” he said.

While most business representatives in attendance expressed either approval or disdain for the proposal as a whole, others only advocated for specific amendments to it.

Mark Berejka, REI’s director of government affairs, worried about the impacts of pushing pro-environment legislation that doesn’t include any significant financial support for environmental agencies.

“If the government is going to raise millions in the name of the environment, it should assure that some reasonable amount is reinvested,” he said, citing the Department of Natural Resources, state parks and other programs that protect natural places and help Washingtonians connect to them as critical beneficiaries.

A representative from Airlines for America advocated for an amendment that would exempt jet and airline fuel from whatever legislation is passed.

California’s cap-and-trade law already provides such exceptions, he said.

The Senate companion bill had its first reading on Jan. 19 and was referred to the Senate Energy, Environment and Telecommunications Committee.

No hearing date has been set.

- Cooper Inveen is a reporter with WNPA’s Olympia News Bureau.



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