Wash. to keep climate course but still debating route

Source: Debra Kahn, E&E reporter • Posted: Tuesday, February 16, 2016

At the upper leftmost corner of the country, Washington is charting its own climate course.

Washington officials are forging ahead with proposals to curb greenhouse gas emissions from power plants, despite the setback that the Supreme Court dealt this week to landmark regulations from U.S. EPA.

Gov. Jay Inslee (D) said Wednesday that he would keep working on compliance with EPA’s Clean Power Plan, as well as his own state-level rule to limit emissions from all large industrial sources.

“Here in Washington state we are unfortunately already seeing the harmful impacts of climate change, and we will continue to take steps that reduce carbon and to lead the nation in clean energy,” he said in a statement. “The EPA’s Clean Power Plan remains a crucial tool to ensure that every state must do its part, and to empower them to do so.”

As well as Inslee’s Clean Air Rule, state lawmakers are also pursuing more-tailored efforts to wean individual power companies off coal-fired electricity, while citizen groups are considering multiple ballot initiatives to tax carbon. It’s not clear yet how all of the policies might interact.

“It’s like a four-ring circus,” said Philip Jones, a commissioner on the Washington Utilities and Transportation Commission, in an interview yesterday. “We have all this stuff going on. It’s hard to keep it straight, but we’re going to continue to move forward.”

Whatever happens, Washington is in good shape to meet its 2030 target under EPA’s Clean Power Plan of a 37.2 percent reduction in carbon emissions. It gets about 70 percent of its electricity from hydropower — giving it the lowest retail electricity rates in the country — and has 11 power plants that fall under EPA’s rule, 10 of them natural gas-fired.

The only coal-fired plant is TransAlta’s Centralia plant, which accounts for more than half of the state’s power-sector carbon emissions. It’s already scheduled to shut down or convert to natural gas by 2025.

“The Clean Power Plan target for Washington is almost certainly way higher than the emissions will be in Washington, under any circumstance,” said Noah Long, director of the Natural Resources Defense Council’s Western Energy Project.

“The question in Washington is largely one of state law, state ambition and goal on carbon, and then state interest and brainwork for participating in a larger program with other states,” he said.

A plan like no other

Inslee released a draft rule for greenhouse gases last month unlike any other jurisdiction so far.

Rather than a cap-and-trade program for emissions, as neighboring California and several other states have settled upon, Inslee’s Department of Ecology proposed subjecting emitters of more than 100,000 tons per year of carbon to a 5 percent reduction every three years. The program would initially cover about 70 facilitiesstatewide, including refineries, landfills and aerospace manufacturers, in addition to power plants. It would ratchet up to cover smaller and smaller emitters.

Rather than setting a statewide cap and creating allowances that are distributed at state-run auctions, the program allows 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.

The plan has run into some early criticism from regulators in other states. The nine-state RGGI said the plan “raises substantive issues relating to the potential use of RGGI allowances.”

It’s not clear how the Clean Air Rule, which covers all industrial emitters, would mesh with the Clean Power Plan, which covers only power plants. Another discrepancy between the two is that the Clean Power Plan does not allow offsets, which could disqualify programs that use allowances from out-of-state programs.

“There’s still a lot of questions underway about how these two different yet similar efforts would work together,” said Department of Ecology spokeswoman Joanna Ekrem.

Utility officials have expressed a preference for engaging with the Clean Power Plan, which allows trading with other states.

“Our general stance is that we think that CPP should prevail here, not a state rule,” said Ry Schwark, a spokesman for Pacific Power, the arm of utility PacifiCorp that has operations in Washington, Oregon and California.

On the Clean Power Plan, the state has said it plans to request the two-year extension that EPA has provided. “It’s been pointed out we can ask for an extension; that’s currently our preferred approach,” said the Department of Ecology’s Air Quality Program manager, Stu Clark, at a Jan. 20 legislative hearing.

Trading an open question

Beyond that, though, policymakers haven’t decided what policy instruments they might use to meet their goal, or whether they want to trade with other states. They have, however, expressed a preference for using mass-based rates so as to allow for easier trading between states.

A big question is how Washington will choose to interact with nearby states like coal-heavy Montana, from which it imports a significant portion of its electricity despite being a net exporter. The state’s largest utility, Puget Sound Energy, has put forth a bill in the state Legislature that would allow it to increase its ownership of Montana’s Colstrip coal-fired power plant in order to have enough control over it to decommission it.

Lawmakers are eager to put their stamp on Washington’s approach to the CPP. A state House committee earlier this month approved another bill that would direct the state to submit an initial plan to EPA and request an extension.

An earlier version had mandated the use of a mass-based emissions standard, while the current one allows a rate-based structure only if it would result in “greater quantifiable benefit to electric generation facilities, the flexibility of operation of the regional electric grid, and ratepayers in the state.”

It also instructs the Department of Ecology in its initial plan to preserve the state’s ability to use “market-based tools, including intrastate trading of allowance allocations.”

Separately, two groups have proposed different versions of a carbon tax. One group of economists, lawyers and entrepreneurs called Carbon Washington has put forth I-732, a $25-per-ton tax accompanied by a 1 percent cut to the state sales tax. That initiative is up for a hearing in the state Senate this week.

The Alliance for Jobs and Clean Energy, a coalition of labor and environmental groups, had announced plans last year to place a carbon fee on the ballot as well but is still debating whether to proceed.

“Everybody wants something that’s good and will pass,” said Deric Gruen, a spokesman for a coalition of environmental justice groups called Front and Centered that is involved with the AJCE. “There’s just a lot of confusion about what the best strategy is.”

Reporter Emily Holden contributed.