41 major polluters to get free passes in the WA carbon market

Washington is required by law to eliminate or offset all of its greenhouse gas emissions by 2050. But generous exemptions for more than 40 of the state’s biggest polluters in an upcoming carbon market could push that target beyond reach.

In January, the state Department of Ecology will launch a cap-and-invest program through which 99 of the state’s largest emitters must gradually reduce emissions or pay to continue burning fossil fuels. While the list will be finalized by the end of the year, as it stands, 41 large emitters will be able to pollute at little or no cost at least for the next 12 years.

This is because they have been designated by the state legislature as industries particularly susceptible to fluctuations in regional markets and global trade.

Critics say the designation treats some industries differently than others. State officials implementing the program agreed, for the most part, but their hands are tied.

Leaving the rules unchanged, they said, could jeopardize decarbonization efforts across the state.

“Self [designated emitters] we do not reduce their emissions and we are in 2040 and 2050, we will probably not be able to reach our targets across the state, “said Luke Martland, responsible for implementing the program.

Only new legislation will change the way designated emitters operate beyond the next 12 years. Earlier this year, a bill that would do so was not approved by the legislature.

Industries exempted include oil refineries and paper and paper mills, as well as a handful of chemicals, minerals and metallurgical productsrs, which collectively account for 10% of the statewide emissions covered by the program.

A paper mill, for example, is subject to changes in the price and availability of wood and other raw materials. If the price of materials rises, the mill could struggle to absorb those costs and meet program mandates, which require polluters to emit less or pay the difference.

According to the ecology department, lawmakers were concerned that global market competition, exacerbated by strict climate targets, would prompt these companies to cut staff and production, close shops or leave the state for less green pastures.

The state cap-and-invest program, a core of the Climate Commitment Act signed last year, is a market-driven compliance tool used by individuals, businesses, cities, states and nations around the world to incentivize fossil fuel reductions consumption.

Any entity that emits more than 25,000 tons of carbon dioxide each year is required to participate in the program. If they can’t or don’t do it quickly enough, they can buy “allowances,” each equivalent to the emission of one ton of carbon dioxide, during the online auctions held every quarter. Over time, the amount of these quotas will decrease, thereby increasing the price and making it increasingly expensive to continue burning fossil fuels.

If done right, carbon trading could help the state achieve its ambitious goal. Or it could provide polluters with the means to exit the system and avoid significant reductions in gases that are harmful to global warming in the years to come.

The program rules are now being written and will be finalized in the fall before the programs begin on January 1, 2023.

Critics say special designations and free bonuses will cushion the impact of the program.

Providing free allowances to heavy polluters could prevent 90% of industrial emissions reductions through 2034, according to a report released earlier this month by Front and Centered, a statewide environmental justice group led by communities of color. .

The group went further, stating that any free membership in a carbon trading scheme will make the program ill-equipped to substantially reduce or eliminate emissions. The solution, they said, lies in requiring companies to eliminate major sources of pollution directly and immediately.

“If we’re not addressing this major source of greenhouse gases and local pollution, then we’re not really addressing the problem,” said Deric Gruen, co-executive director of Front and Centered.

The impacts of industrial pollution are particularly pronounced among marginalized communities.

However, Senator Reuven Carlyle, D-Seattle, one of the principal architects of the Climate Commitment Act, said the Front and Centered report did not recognize that the law requires all polluters to reduce emissions, regardless of whether they obtain or fewer free shares. They are also subject to air quality regulations designed to address concerns related to environmental justice and industrial pollution.

“There is a belt-and-garter approach where we have a market-oriented system for finding the most cost-effective emission reductions,” he said.

However, these polluters are only one piece of an irritating puzzle.

The required participants in the program represent approximately 75% of emissions across the state, including transportation, electricity, natural gas, refineries and other industrial sources.

Agriculture, aviation, and maritime industries, which make up the bulk of the remaining 25%, were excluded from the program due to existing state laws and federal regulations.

The state will set the starting price for benefits when the program begins in January.

Finding the right starting price is a balancing act, said Claire Boyte-White, Communications Specialist for the Climate Commitment Act. “At the end of the day, we want entities to comply voluntarily, cooperatively, openly, on time.” , he has declared.

If the quotas are too cheap, the big polluters could see the whole program as a slap in the face. If the allowances become too expensive, voluntary participation could be low and large issuers could look elsewhere for a more affordable market.

“We want something that companies can participate in effectively and successfully, year after year after year,” said Boyte-White.

Earlier this year, the state commissioned an independent study on the Climate Commitment Act.

The results, released in July, found that the merger of the Washington carbon market with those of California and Quebec would significantly reduce the price of allowances and expand the market.

Each allowance is expected to cost $ 41 if the Washington market is linked to theirs, according to the analysis, but could be up to 65% higher in several scenarios.

The initial costs were expected to be “very, very high” in the analysis. As a direct response, they decided to advance a reserve fund intended to help cut costs should the quotas become too expensive. They will also aim to unite the markets earlier than previously discussed, with a tentative target of 2025.

Energy suppliers in Washington are also subject to the Clean Fuel Standard, which was passed in 2021 and requires fuel suppliers to reduce the carbon intensity of transportation fuels, including gas and diesel, to 20% below 2017 levels by 2038, as well as the Healthy Environment for All Act, which facilitates cooperation and funding between agencies to address environmental injustice.

“We are well on our way to becoming the nation’s number one state in terms of reducing our emissions in line with scientific goals,” said Carlyle. “That doesn’t make it easy.”

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