Governors' Wind Energy Coalition

For many Democratic governors, climate change is a line in their stump speech. Washington Gov. Jay Inslee is different.

When Inslee stepped to the rostrum in Olympia for his annual State of the State address earlier this month, he dedicated most of his remarks to climate and his proposal to institute a carbon tax.

It’s an ambitious undertaking, as Inslee knows all too well. No state has ever passed a carbon tax, and Washington has twice rejected the idea. The Legislature last year batted aside Inslee’s carbon tax proposal. That followed a rejection from Washington voters, who voted down the idea at the ballot box in 2016.

Inslee believes this time is different (see related story). Divisions among environmentalists, which helped sink the ballot measure, have been healed, and Democrats now boast legislative majorities in the state House and Senate. Republicans and portions of the business community are opposed, and the governor will need to win over Democratic lawmakers leery of supporting the controversial measure in an election year.

The governor sat down with E&E News last week to talk about his proposal.

What makes you think the state is ready to pass a carbon tax now?

Many reasons that have changed in the recent past about this discussion. No. 1, we have business interest in this that has been expressed and help shape this package in a way that can promote economic growth. Those businesses have helped us, and they are new businesses at the table. Microsoft, Puget Sound Energy, Vista’s helped to shape this. There are other businesses we’re listening to. So I think the business case for this has come to be understood both because this is now a reason to encourage economic growth, not slow it down, and, two, people view this as a less-difficult issue than a regulatory approach or certainly an initiative approach, as well. There are thoughts this is better done through the initiative process.

No. 2, people have just recognized what carbon pollution and climate change is doing to them now. There was ash on the hoods of people’s cars in Seattle. I’ve lived here 66 years. We’ve never had that before when our forests are burning down in the Cascades. That’s never happened before. They are witnessing firsthand the 117-degree heat in Australia, where they had to close freeways, to the multiple hurricanes to these extreme weather events. People are recognizing as a reality rather than a graph or a chart. So public sentiment has changed on this.

Third, we have demonstrated in very real terms for people seeing job creation associated with clean energy. I was constantly amazed how this has happened around the state of Washington, not just in the Seattle area. In Moses Lake, where we have the Western Hemisphere’s largest manufacturer of carbon fiber that goes into electric cars, to Mukilteo, where we make the vanadium flow battery to integrate renewable energy into the grid. We’re just growing these jobs, and people can see that throughout the state of Washington.

So we’ve had three new changes. It’s a new day for this discussion, and all three of those things are opening people’s window of opportunity here. We even have a Republican, the Republicans say they are going to introduce a carbon pollution bill. I haven’t seen it yet. They will offer some approach to this.

You mentioned Republicans. They seem to be saying this is going to drive up energy prices for consumers. What do you say to that?

These are investments. And when we make investments in Washington, we grow the state. We’ve made big investments in our transportation system in the last few years. We’ve made big investments in our schools. Now it’s time to make an investment in the very fundamental systems that sustain our personal health and our larger economy. These are investments to sustain our forests so we can have a healthy forest products industry. It’s investment to help people get access to clean energy sources like solar energy and more insulation for their homes. It’s more investment in our employees with training programs. It’s investments in reducing toxicity in our waters for the fishing industry.

You make investments in the thing that you treasure, including everything from putting a new roof on your home to making sure the roof of our sky is not so polluted it damages our state. So there are some costs associated with any investment. And these are investments worth making.

We would point out that when we’re making these investments, this tax revenue will stay in the state of Washington. When we buy a gallon of gasoline, half of it goes outside the country. And 100 percent of it goes outside the state. These are investments made in the state of Washington putting people to work. So yes, this is a job creation entity making investments as we’ve had to be successful so many times in our state’s history here.

Convincing Democrats, in the state House in particular, is a big part of the push. What do you say to them about why this should happen now?

Because it’s long overdue. The Legislature made a promise to Washingtonians over 10 years ago. They adopted into law a committment and a statute for the state to reduce its carbon pollution. And they have not fulfilled that. That promise will be broken if they don’t act this session. So if the Legislature is going to fulfill its promise to the Washington people, it has to act. That’s a clear, scientific fact.

The other fact is this is upon us, and it’s not going to get easier later on. The longer we delay making these investments, the more expensive it will be at a later date. It’s a pay-me-now-or-pay-me-later-type situation. And it’s cheaper for investors, taxpayers and citizens to make those investments than it will be 10 years from now. And we just don’t have a lot of time. Our health is being affected. You know, the kids with asthma. Seniors with COPD [chronic obstructive pulmonary disease]. Firefighters that have to go out and fight these cataclysmic fires.

You know, I was walking up the steps of the Capitol yesterday, and a woman who used to worked for me told me her mother-in-law risked death getting out of her home that was washed away or covered in mud down in California. After you had these horrific fires followed by torrential rain. That’s a biblical experience, and not in a good way. We just don’t have time to lollygag around here. It’s time for action.

You proposed tax credits for utilities that invest in emissions reduction. Is that something you worked on with Puget Sound Energy specifically, and, more broadly, what was the logic behind that? (Editor’s note: Puget is supporting efforts to price carbon.)

The logic is some of these entities know their operations and have had some success bringing efficiencies. This leverages their talent and technical knowledge in how to make the best investments that are most effective. That’s not a bad thing. Puget has done some things. It would require them to make the kind of investments that would be most effective. That’s a smart thing to do to maximize the investment. Because they’re a regulated industry, we have a good way to monitor what’s happening. That’s kind of unique to them. We have the infrastructure to make sure it happens.

In terms of how the revenue is spent, why did you go with an investment approach? Others want it to be revenue-neutral.

Well, the advantage is that where you get the bulk of the carbon emission reduction. It’s not from the price signal. I think that’s sort of a misunderstood facet of these plans. This is a relatively small price signal to the market. But these are significant investments. That is actually where you get the bang for your buck, where you get people into electric cars, where you sequester carbon, where you have more insulation, where you invest in things throughout the economy that actually gets reduction of carbon. That is by far where the majority of our carbon reduction comes from, the investments rather than the price signal. Because it’s relatively small as far as things go. It’s less than gasoline fluctuates in a given three-month period probably. So you have to make those investments to make those savings, savings of carbon.

In Oregon, it looks like they have a good shot at passing a cap-and-trade bill. Why are you doing a carbon tax instead of cap and trade?

Because it’s more likely to pass in my Legislature. It has more support. If it was me, I’d probably prefer a cap-and-invest system, but it has more support. Now it [a tax] has some certainty to the amount of the investment. Cap and invest is more volatile, you don’t know what you’re actually going to generate. This has more certainty as to the investment, the fund you can generate. And it has the great advantage that it can pass [Laughs].

You’ve talked a lot about regional cooperation, especially out West. How does that impact Washington’s ability to collaborate with other states?

Well, ideally at some point we’ll have regional cooperation on a price signal. That’s not on the short term. With California, we’ve had a cap-and-invest system. I think the important thing for each state in the short term is to have an investment vehicle and some price signal. So we have consistency with other areas. They’re not mutually inconsistent.

I’m sure you’ve seen the data recently. Transportation emissions overtaking the power sector as the largest source of emissions nationally. That seems important in your case because Washington has so much hydropower and a relatively green grid from a national standpoint. Are you confident this proposal gets at those emissions?

It does because we will have a fund of hundreds of millions of dollars that will help people transition away from fossil-fuel-based systems, which means by and large getting to electric cars and public transit. That is the principal means of moving us away from a polluting system. It’s working. The technology is coming on like gangbusters in electric cars. I think every major manufacturer is now going to offer an electric car. In Norway, 50 percent of their sales today in cars are electric cars. This is a technology that is racing ahead, and this would accelerate the ability of consumers to get access to those.

This interview has been edited and condensed.