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Inslee appointees oppose merging Washington’s carbon market with California, Québec

Washington Gov. Jay Inslee, seen here at a July 20, 2023 news conference on climate policy and gas prices, supports linking the state’s market for air pollution allowances with a similar program covering California and Quebec. His appointees to an environmental justice panel aren’t convinced this is the best path.
Office of the Governor
Washington Gov. Jay Inslee, seen here at a July 20, 2023 news conference on climate policy and gas prices, supports linking the state’s market for air pollution allowances with a similar program covering California and Quebec. His appointees to an environmental justice panel aren’t convinced this is the best path.

Gov. Jay Inslee is pressing ahead with plans to combine Washington’s carbon market with ones in California and Québec despite opposition from a statewide panel of his own appointees.

The Environmental Justice Council says the merger could hurt communities where pollution causes the most harm and weaken existing air quality improvement programs. Council members informed Director of Ecology Laura Watson of their concerns in a letter on Oct. 26 – a week before Watson called for her agency to pursue linking with the other markets.

They said potential benefits are based on “speculative and uncertain” projections. And they listed several significant concerns including a lack of assurance that consumers with lower incomes can be insulated from higher energy prices that may result.

“While Ecology has articulated a number of strategies and tools to mitigate potential harms, Council confidence in their efficacy and the ability of Ecology to identify and act expeditiously is low,” they wrote.

Lawmakers created the council in 2021 and required the legislative and executive branches to consult it on all aspects of the Climate Commitment Act, including the cap-and-invest program.

Watson responded Nov. 2 – the same day as her decision – saying she had “deeply considered” the issues the council raised. She assured the group’s members that Washington would not merge with California and Quebec if it hurt either the state’s ability to curb emissions or communities already beset by pollution.

“We take their concerns and recommendations seriously,” Watson said in an email to The Standard. “We are looking into their policy proposals and will continue to engage with the Council throughout the linkage process.”

Inslee knew of the council’s opposition when he applauded Watson’s decision.

“The council’s role is extremely important to ensuring our climate policies are successful,” said Jaime Smith, Inslee’s executive director of communications. It’s why, she said, the statement he issued that day committed “to ensuring that linkage would benefit our overall climate efforts as well as strengthen protections for overburdened communities.”

‘A substantive role’

Legislators created the Environmental Justice Council in the Senate bill known as the Healthy Environment for All, or HEAL, Act. They directed the council to let state agencies know when their policies have the potential to cause environmental harm.

Its 14 members, all appointed by the governor, represent communities grappling with some of the most serious challenges in the state when it comes to climate change and pollution risks.

That same year, lawmakers gave the council additional responsibilities in the Climate Commitment Act.

Specifically, the panel must provide recommendations on the development and implementation of the cap-and-invest program, and on revenues collected from the auction of pollution allowances.

It is the only advisory panel whose guidance on significant statewide environmental policies is required in two laws.

“There is a substantive role for the council. The voices matter,” said former state senator Reuven Carlyle, prime sponsor of the Climate Commitment Act.

‘We are not convinced’

When Watson announced her decision, she called merging carbon markets “the best path” to addressing the “moral imperative of protecting Washington and the planet from dangerous greenhouse gas emissions.”

Combining markets, or “linkage,” would ensure a durable carbon market that will allow the state to attain its emission reduction targets in the next 25 years, she said.

As envisioned, the expanded market would enable businesses to pay less for pollution allowances needed to comply with the state’s climate rules and to share those savings with consumers. Watson also said a larger, linked market would bring more predictability to allowance prices and provide businesses a greater incentive to step up investments to slash their greenhouse gas emissions.

The state can begin conversations with California and Québec – which merged markets in 2014 – to determine their interest in linking with Washington. Harmonizing the three programs will likely require revising some rules in each place, so combining the markets is not expected before 2025, with some predicting it could be 2027 before it happens.

Council members on Sept. 28 discussed a draft of their opposition letter penned by their Climate Commitment Act committee. They took final action Oct. 26.

The letter recommends not to pursue linking until more is knownabout how joining the larger carbon market would reduce pollution. There was general concern that businesses could save money by paying less for allowances without curtailing emissions in a measurable way in neighborhoods suffering the negative effects of greenhouse gas pollution.

“We are not convinced or sufficiently satisfied that Ecology has provided evidence or assurances of protections for overburdened communities and that it has the tools to address the concerns that we have identified,” committee chair David Mendoza said at the September meeting. Mendoza is director of government relations for The Nature Conservancy in Washington.

The Environmental Justice Council’s position isn’t a total surprise. Some members, or the organizations they represent, opposed Washington using a market-based approach to reducing carbon emissions when lawmakers debated the Climate Commitment Act in 2021.

Yet even strong backers of the state’s approach said the council’s concerns and guidance should not be ignored.

“I think there’s a lot in their letter about being cautious about linkage which is absolutely right. We need to be cautious,” said Kelly Hall, state director of Climate Solutions. “They are a very important voice and the Legislature and governor should listen.”

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This story was originally published by Washington State Standard.