The last gavel has fallen in Olympia this legislative session, marking the end of a crucial window of influence for Washington lawmakers before an initiative to repeal the state’s landmark climate law appears on ballots this fall.
In the two-month session, lawmakers set aside more than $1 billion for initiatives across the state intended to reduce greenhouse gas emissions and bolster responses to natural disasters, and that’s on top of $2.1 billion earmarked last year. As the Climate Commitment Act went into effect in 2023, the cash for these programs came pouring in, generated in the sale of greenhouse gas emission allowances to the state’s biggest polluting businesses in quarterly auctions.
Before many of these investments hit Washingtonians’ neighborhoods and wallets, Initiative 2117, which would repeal the climate law, will appear on ballots. This short session was a last-ditch effort to show voters the value of the law.
Detractors, like those behind the repeal campaign, paint the carbon market as a cash grab by state leaders, including Democratic Gov. Jay Inslee. They also accuse his administration of glossing over the real-world consequences of the policy, like higher prices for gas and utilities.
The carbon market is the centerpiece of the 2021 Climate Commitment Act, requiring the state’s biggest polluters — oil companies like BP and Marathon, and methane gas utilities like Puget Sound Energy and Cascade — to reduce the amount of climate-warming gases they release or purchase allowances to cover them. Over the course of seven three-year periods, state officials will reduce the number of allowances sold, ramping up pressure on the industries to lower their emissions.
The program is intended to cut emissions nearly in half by 2030, help the state become mostly carbon-free by 2050 and meet the intent of the Paris Agreement, which sets out an international framework to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) to avoid the worst impacts of climate change.
The state’s profits from the sale of allowances to polluting businesses are intended to be invested in Washington communities to help people, businesses and local governments transition to cleaner energy sources.
The carbon auction revenue, roughly $1.8 billion as of the final auction of 2023, is covering bus, light rail and ferry fares for anyone 18 or younger, urban tree planting, port electrification, electric vehicle charging stations and preparation for the state’s forests amid worsening drought and wildfire, among many other things.
The potential repeal of the act looms large.
“I think it lit a fire,” Sen. Joe Nguyen, D-West Seattle, said of the repeal effort. “… Lawmakers tend to need urgency for them to act.”
Should the repeal effort succeed, the effect would be like shooting a cannon through the state budget, said Clifford Traisman, a longtime lobbyist on environment and climate issues for Washington Conservation Action.
Spending $3 billion
This session, just 14 months since the Climate Commitment Act went into effect, lawmakers had their first opportunity to address the law’s effects on the cost of living, said Michael Mann, executive director of Clean and Prosperous Washington.
About a third of Washington households could be eligible for one-time $200 credits on their electricity bills under the $1.1 billion deluge of climate cash heading to the governor’s desk for approval.
Lawmakers this session earmarked $150 million for the credits that would automatically be applied to those enrolled in low-income energy assistance programs.
Another $30 million was set aside to help farmers recoup fuel costs since the carbon-pricing program began. Farmers were supposed to be exempt from the costs of compliance with the program, but the state had no mechanism to enforce this.
More than $120 million was set aside to help decarbonize state universities and K-12 school buildings, including a dairy digester for Washington State University, geothermal at Central Washington University and energy efficiency upgrades for school districts.
Another boost is coming for tribally led clean energy and ecosystem restoration projects, including $25 million for the Quinault Indian Nation to purchase over 11,000 acres of privately owned forestlands within the boundaries of the reservation.
“For too long, the Quinault Indian Nation has been forced to manage its territory as a tree farm due to the fragmentation of the reservation — and it’s time to start managing the lands aligned with Quinault values, prioritizing sustainable forestry, community well-being, cultural vibrancy and climate action,” Guy Capoeman, president of the Quinault Indian Nation, and Mike Stevens, The Nature Conservancy’s Washington state director, wrote in a recent op-ed in The Seattle Times.
Tribal nations including Lummi and Nisqually are slated to get more than a combined $20 million for clean energy projects, in addition to more than $2.5 million for the creation of a tribal clean energy workforce training center in partnership with the Northwest Indian College.
Big investments in reducing emissions from the transportation sector — which makes up the bulk of the state’s greenhouse gas pollution — are also coming down the pike.
Nearly $200 million could be going to electrify state ferries, including a proposal to build a hybrid ferry and upgrade the state’s terminals. An additional $100 million will build from the state’s existing community EV charging infrastructure grants. To date, $85 million has been awarded for individual projects.
More than $34 million was set aside to help clean up ports, including adding onshore electric power to reduce emissions from idling engines. An analysis of asthma rates in one California port community found that 1,600 cases of childhood asthma were attributable to proximity to ship traffic.
“One of the things that is always front of mind … but I think maybe just a little bit more front of mind this year, is showcasing the ways in which our CCA investments do more than just reduce greenhouse gas emissions,” said House Majority Leader Joe Fitzgibbon, D-Seattle, “but also to help build a better state in other ways.”
Fitzgibbon pointed to the creation of a grant program to help school districts in overburdened communities replace diesel-powered school buses with electric or zero-emission alternatives.
Other honorable mentions, he said, include investments in grants to reduce food waste; connect farmers with hunger-relief organizations, like food banks; and ensure food that would otherwise have gone to a landfill and released methane, instead gets into systems that fight food insecurity.
This all comes in addition to $2.1 billion in carbon auction revenue allocated in the biennial budget.
Last year, lawmakers made hefty investments in incentives, like $163 million to help Washingtonians install electric heat and air conditioning in their homes and another $120 million to replace fossil-fueled school buses with electric and other zero-emission buses as well as incentives and infrastructure for zero-emission commercial vehicles.
Some of these grant programs, and directly funded programs, have begun to roll out, but it’ll take time for the investments to show up in Washington communities.
“One of the things that’s hard is getting money out the door,” said Mann, of Clean and Prosperous. “A lot of this is competitive grants that take time, and a lot of them are construction projects. Building EV charging stations doesn’t happen overnight.”
“We can point to a lot of funding, we can start now pointing to awards, and projects,” Mann continued. “But we are still in the infancy of the program, and it’s hard to yet point to projects on the ground.”
“We’re screwed”
Still, some feel investments are not happening quick enough.
Front and Centered, an environmental justice group representing communities of color and people with lower incomes, says the state is still falling short of its obligations to communities saddled with a disproportionate amount of health, social and environmental inequities.
The Climate Commitment Act explicitly outlines that at least 35% of the revenue from the auctions should be used “in ways that benefit vulnerable populations in overburdened communities.” Another 10% is required to fund projects led by tribal nations.
The group’s preliminary analysis shows that only 21% of qualifying funds in the supplemental budget will directly benefit overburdened communities.
“We just are a little bit concerned that without having this funding explicitly dedicated to overburdened communities, there’s no guarantee that communities that need this sort of investment are going to see the benefits of the program,” said Guillermo Rogel, legislative and government relations advocate for the nonprofit. “I know that that’s a primary concern for Democrats. … Do folks around the state feel the impact of this program? Can they really connect these investments to: there’s cleaner air in my community, they are weatherizing our homes at little to no cost for people who can’t afford it.”
Through the first seven months of the biennium, July 2023 to January 2024, state agencies spent $165 million of the $2.1 billion allocated last year to protect state forests, provide matching funds for a federal hydrogen hub grant, remove fish passage barriers like culverts, help pay for home weatherization for people with low incomes and more.
Hundreds of millions of dollars are in the pipeline, including for projects to address childhood asthma in King County and replace the heating and cooling system at Chief Leschi Schools.
The state Department of Commerce is accepting applications from local governments, tribal nations and other tribal groups looking to establish or expand incentive programs for high-efficiency electric equipment and appliances, and clean-energy grants.
If the program were repealed, all CCA cash remaining in state coffers would be able to be spent. In this session’s budget, $816 million cannot be spent until January 2025, in case voters repeal the law.
Revenue loss from the repeal is estimated at $1.42 billion in the first biennium ending in 2025, $1.77 billion in the following biennium and $1.4 billion in the biennium ending in 2029, according to the state Office of Financial Management.
Grant programs available to local governments, tribes and communities would be suspended, according to the office. Many capital projects would cease operations and many state government programs aimed at supporting a transition to clean energy, reducing greenhouse gas emissions, improving climate resiliency, supporting tribes and furthering environmental justice would cease, according to the office.
The impact would amount to cuts of nearly 200 full-time staff across 39 state government agencies.
“We’re screwed,” said Nguyen, the West Seattle senator, if voters repeal the CCA. “That’s kind of the gist of it. That became the cornerstone of all three budgets: operating, capital, transportation.”
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