Washington adopts ‘unique’ carbon-capping rule

Source: Debra Kahn, E&E reporter • Posted: Monday, September 19, 2016

Washington state regulators last week adopted a climate change measure unlike any other in the country.

The Clean Air Rule is intended to reduce the state’s emissions to 1990 levels by the end of the decade and 25 percent below that by 2035. Rather than one economywide carbon cap, the rule subjects the state’s 24 largest emitters to individual caps that decline by 5 percent every three years.

“Our approach is the first of its kind in our country,” said state Department of Ecology Director Maia Bellon at a press conference yesterday. “We are using the state’s Clean Air Act to limit carbon pollution. It’s a unique approach that provides flexibility for our businesses to trade independently amongst themselves and with other markets.”

Bellon said the state under Gov. Jay Inslee (D) had originally wanted to pursue a traditional cap-and-trade program but could not get authorization from state lawmakers. “We really wanted to set up a different program initially,” she said. “Our Legislature wasn’t prepared to provide us the authority to set up a true cap-and-trade carbon-market system.”

Under Washington’s program, in-state sources that emit more than 100,000 tons per year of carbon must demonstrate a 1.7 percent annual average emissions reduction every three years. The 100,000-ton threshold will decrease by 5,000 tons every three years until 2035 (ClimateWire, June 2).

To achieve the reductions, businesses will be allowed to trade credits among themselves, fund emissions reductions in uncovered sectors of the economy and also buy credits from other qualified programs, potentially including California’s economywide cap-and-trade market.

The plan, which takes effect next month, envisions regulating in-state power plants until and unless the federal Clean Power Plan for existing power plants comes into effect. A Department of Ecology official said it wouldn’t affect the state’s targets significantly if the power plants were regulated by one plan or the other.

“The nine baseload power plants that are covered under the Clean Power Plan are about 6 percent of our emissions,” said the department’s air quality program manager, Stu Clark. “It’s a very small percentage.”

Clark said Washington is closely watching other carbon programs, with an eye toward eventual linkage, including to that of California, which just last week strengthened its emission targets to 40 percent below 1990 levels by 2030 (ClimateWire, Sept. 12).

“We want to understand what other people are doing in this space on climate change, we want to be able to learn from those, we want to be able to adopt and change what we do as those other programs in the country,” he said. “Ultimately, it’d be nice if we could merge together with other states and other programs to have linkage across, so we are constantly paying attention to California.”

A ‘down payment’ on climate action

The final version of the plan is much the same as the draft that was released in June, officials said. The most significant difference is that it gives businesses that are vulnerable to out-of-state competition, like pulp and cement manufacturers, an extra way to comply. They can meet the annual reduction targets, or they can choose to have the Department of Ecology set production-based emissions targets based on how they compare to others in their industry.

Those “trade-exposed” businesses, as well as importers of petroleum, will have a three-year grace period before they have to start complying so that state officials can collect data.

Environmentalists had argued that the rule left out too many sectors, including agriculture, electricity imports and biomass combustion, and has the potential to allow businesses to get extra credit for emissions reduction projects.

“The proposed approach is essentially cap and trade without a cap, and it greatly undermines the quantity of reductions that can be achieved under the proposed regulation as well as the certainty that the reductions will be additional and real,” wrote Anna Moritz and Brian Nowicki of the Center for Biological Diversity in July.

Bellon acknowledged the plan might draw legal challenges but said she was confident that the state department is operating within its authority.

“I would encourage those who may not feel that it is going far enough … to engage with their legislative representatives to have that kind of a dialogue,” she said. “We feel very comfortable we are making a down payment on our fair share of trying to contribute to solving the climate problems that are not just happening in the state of Washington, but have global impacts.”

The state estimates that the plan will cost up to $6.9 billion over the next 20 years but will bring as much as $9.6 billion in benefits, including the incidental reduction of other pollutants along with carbon dioxide that can cause health problems.

“Likely you won’t feel it at all,” Bellon said. “We’re hoping that industry finds creative ways to meet these targets, but we’re not presuming they won’t potentially pass some costs off to consumers.”