Washington voters reject historic carbon tax proposal

Anacortes Refinery
This refinery, operated by Texas-based Tesoro Corp., is one of Washington’s major sources of greenhouse gas emissions. Image courtesy Wikimedia.

Voters in Washington state defeated last week the nation’s first proposal to enact a tax on carbon dioxide emissions.

The tax was expected to raise about $2 billion per year from levies on gasoline and fossil fuel-generated electricity. It would have assessed a $15 per metric ton levy on carbon dioxide emissions beginning in July, a rate that would have risen steadily, taking into account inflation, until it reached $100 per metric ton in 40 years.

Gasoline importers and power plant operators would have been the principal payers of the new tax.

To offset the revenues generated by the carbon emissions tax, the measure specified that Washington’s sales tax would be cut by one percent over a period of about 18 months and that a tax on businesses would be reduced by a fraction of a percent.

That provision proved to be controversial among advocates for the poor and even many environmental groups, who wanted revenue gained from the carbon tax to support programs aimed at reducing the state’s climate impact.

“The only way to combat climate change fast enough is to both cut pollution and invest in clean energy solutions like wind and solar power,” a statement released by the Alliance for Jobs and Clean Energy said. “And doing it right includes investing in communities and workers hardest hit by pollution and the transition off dirty fossil fuels.”

Not every environmental organization opposed the initiative. Audubon Washington, a coordinating entity for 25 local National Audubon Society chapters in Washington, backed it.

Gail Gatton, the organization’s executive director, said that Audubon members were mostly concerned about whether I-732 would help to combat anthropogenic climate change, not about its fiscal implications.

“That’s not our issue,” she said. “We really look at it through the lens of whether it will reduce carbon emissions. Even a small step in the right direction is something we’ll support.”

I-732 also called for a tax credit of up to $1,500 for about 460,000 low-income households.

A number of climate scientists supported the initiative. James Hansen, a former NASA climatologist now with Columbia University’s Earth Institute, wrote an editorial for the Seattle Times that urged Washington’s electorate to vote for the proposal.

“The most efficient way to phase out fossil fuels is a steadily rising carbon fee collected from fossil-fuel companies and distributed uniformly to the public,” Hansen wrote. He stressed that the initiative would lead to lower greenhouse gas emissions and improve the state’s economy:

“The public should support this “carbon fee and dividend.” Wealthy people will pay more in increased prices than they receive in the dividend. However, economic studies show that carbon fee-and-dividend spurs the economy, increases the gross national product, creates millions of jobs and rapidly reduces fossil-fuel use. Most people would come out ahead.”

Dr. Cecilia M. Bitz, a climatologist at the University of Washington, stressed that  lower carbon emissions is crucial if humanity is to keep the extent of atmospheric warming to a manageable and possibly safe amount.

“Roughly, what we have emitted today would reach about 1.5 degrees [Celsius],” she said.

Bitz explained that it will be difficult to keep the change in the planet’s average temperature below 2 degrees Celsius, a goal that underlies the Paris Agreement on climate change and which scientists have suggested is a reasonable objective, without stronger measures to encourage emission reduction.

“If we want to achieve those thresholds, we need to start reducing emissions immediately and think of ways to draw down those levels of C02 in the atmosphere,” she said.

More than four dozen scientists affiliated with the University of Washington also spoke in favor of I-732 by publishing an open letter in support of the measure.

“This revenue-neutral measure offers the most progressive change in our tax code in decades and represents a bipartisan effort that rejects ideology,” the letter argued. “While many interrelated social and environmental needs demand out attention, complex problems are best solved one step at a time.”

Bitz, who signed the letter, said that she recognizes that the measure did not address the equity concerns of some environmental advocates and organizations dedicated working to assist low income families.

“I feel the urgency was so great that I was willing to overlook deficiencies and I think strongly the way it was written was intended to reach conservative and progressive people alike by making it revenue neutral,” she said. “I think that was a strength.”

Revenue neutrality may not have been as obvious of a strength as advocates of the initiative believed, though. An analysis by the Washington Department of Revenue concluded that the measure would reduce state tax receipts by more than $670 million between fiscal years 2017-2021.

The state, which has no income tax, relies heavily on sales taxes to support government services and operations. Moreover, Washington is under a Dec. 2012 state supreme court order to increase funding for its public schools and was held in contempt in 2014 because it has failed to abide by that mandate.

Gatton said that she thinks the controversy over the measure’s revenue neutrality may have been a key factor in its defeat.

“With the complicated funding structure, and with our government under court orders about funding education and funding  mental health issues, people didn’t tend to believe it was revenue neutral,” she said. “The I-732 camp was never able to get over that perception in people’s minds even though there were a number of independent studies done that found that it was as about as revenue neutral as you’re going to get.”

On Tuesday I-732 failed when 59 percent of Evergreen  State voters  said “no”to the new carbon tax.

Bitz said that she believes that proponents of a carbon tax will re-visit the issue in the future.

“If the richest country in the world is not doing its part, how can the rest of the world justify any kind of economic hardship they may incur by adding a cost to energy?,” she said. “It’s not free.”

UPDATE, Nov. 15, 2016, 9:15 am MST: Comments of Dr. Cecilia Bitz were added.

UPDATE, Nov. 18, 2016, 9:41 am MST: Comments of Gail Gatton were added.

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