Wash. scraps proposed carbon rule, plans new steps on climate

Source: Debra Kahn, E&E reporter • Posted: Tuesday, March 1, 2016

Washington air regulators last week withdrew their plan to cap large greenhouse gas emitters, promising to present a new proposal in the spring that some observers hope will be more akin to other carbon regulations in the United States.

The now-defunct proposal by Gov. Jay Inslee’s (D) Department of Ecology would have subjected emitters of more than 100,000 tons per year of carbon to a 5 percent reduction every three years. About 70 facilities were targeted, including refineries, landfills and aerospace manufacturers.

Observers are hopeful that the state will replace it with something more amenable to other state programs, and something that can cooperate better with U.S. EPA’s Clean Power Plan. The Obama administration’s CPP allows states to trade emissions credits among themselves. Despite the stay imposed earlier this month by the Supreme Court, Washington has pledged to continue supporting the federal plan.

“If you build a rule more on best practices, it might be easier to have those two puzzle pieces fit together,” said Vlad Gutman, Washington director of the nonprofit Climate Solutions.

It was unclear how Washington’s previous proposal would have meshed with the Clean Power Plan. It relied heavily on the use of offsets, which the CPP does not allow. It also would have allowed emitters to comply with their individual caps by submitting pollution allowances from other programs, including California’s emissions market and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast (ClimateWire, Feb. 12).

It had drawn a vaguely disapproving comment from the nine-state RGGI, which said the draft rule “raises substantive issues relating to the potential use of RGGI allowances.”

Companies may get ‘special consideration’

On Friday, the agency announced that the feedback it had received so far was substantive enough to withdraw the rule and come up with a new one in the spring. Ecology Department spokeswoman Camille St. Onge said manufacturers, in particular, had asked for “special consideration,” as had other organizations “who are sensitive to global pricing for their products.”

Other commenters asked for more detail on how the crediting system would work, she said.

REC Silicon is one company that requested special consideration. Three state lawmakers wrote to the Department of Ecology on REC Silicon’s behalf earlier this month to ask for offsets and credits, arguing that the company’s polysilocon solar products are aimed at reducing carbon dioxide. The lawmakers also asked for loosened emissions reduction requirements for businesses that are using the best technology available in their industry.

The agency will keep meeting with businesses and other groups while staff members rewrite the rule. Workshops that had been scheduled for March will be postponed, St. Onge said. Once the new proposal comes out, the agency will have six months to finalize it.

Observers stressed that the Department of Ecology’s repudiation of the previous proposal is somewhat procedural, rather than a reflection of a significant policy shift. The agency is unable to make substantial changes to a proposed regulation. It’s required instead to introduce a new rule with another public comment period.

Windfall profits

But the main change observers hope the Department of Ecology will make is to institute a straightforward cap on emissions, rather than subject each emitter to different individual caps.

“It’s useful to have a total economywide cap,” Gutman said. “Once you have that cap, that allows more cohesion and integrity when you’re dealing with businesses entering the market and businesses exiting the market.”

A key advantage of having an economywide cap is that individual businesses can’t get extra credit for cutting emissions they were scheduled to eliminate anyway.

TransAlta’s Centralia plant, which accounts for more than half the state’s power-sector carbon emissions, could have voluntarily participated in the Department of Ecology’s program, even though it’s scheduled to shut down or convert to natural gas by 2025.

“If they shut down, they have all these credits on the market,” explained Kelly Hall, Washington policy coordinator for Renewable Northwest, a coalition of renewable energy companies, environmental groups, law firms and ratepayer advocates.

“It’s a windfall profit issue. An aggregate cap would ensure that emissions do not go above that cap, whereas when you don’t have that, you could have some perverse leakages to new facilities and increase emissions.”

Hall said she hopes the new version will be more environmentally robust.

“I think there is an opportunity not only to make the rule better but take the Clean Power Plan into account while they’re drafting the rule, as well,” she said.