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41 large polluters to get free passes in Washington state carbon trading market

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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 put that goal out of reach.

In January, the State Department of Ecology will roll out a cap-and-invest program that will require 99 of the state’s largest emitters to incrementally cut emissions or pay to continue burning fossil fuels. Although the list will be finalized later this year, 41 major polluters will be allowed to pollute at little to no cost over the next 12 years.

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

Critics say the designation treats certain industries differently than others. Government officials running the program largely agreed, but their hands are tied.

Leaving the rules unchanged, they said, could jeopardize the entire state’s decarbonisation efforts.

“If (designated emitters) don’t reduce their emissions and we’re in 2040 and 2050, we probably won’t be able to meet our national targets,” said Luke Martland, the program’s implementation manager.

Only new legislation will change the way designated issuers operate after the next 12 years. Earlier this year, a bill that would have done this was not passed through the legislature.

Exempt industries include petroleum refineries and pulp and paper mills, as well as a handful of chemical, mineral and metal manufacturers, all of which together account for 10% of the statewide emissions covered by the program.

For example, a pulp and paper mill is subject to changes in the price and availability of wood and other raw materials. If the price of materials rises, the plant may struggle to absorb those costs and meet program mandates, which require polluters to reduce their emissions or pay the difference.

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

The state’s cap-and-invest program, a key component of the Climate Commitment Act signed last year, is a market-driven compliance tool used by individuals, companies, cities, states and countries around the world to reduce to encourage fossil fuel consumption.

Any entity that emits more than 25,000 tons of carbon dioxide each year must participate in the program. If they can’t or can’t do it fast enough, they can buy “surcharges,” each equivalent to one tonne of carbon dioxide emissions, at online auctions held quarterly. Over time, the amount of these allowances will decrease, increasing the price and making it increasingly expensive to continue burning fossil fuels.

Done right, carbon trading could help the state achieve its ambitious goal. Or it could give polluters the means to pay their way out of the system and avoid a meaningful reduction in harmful, planet-warming gases for years to come.

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

Critics say special designations and free grants will dampen the program’s impact.

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

The group went on to say that any free passes into a carbon trading system will make the program ill-equipped to significantly reduce or eliminate emissions. The solution, they said, lies in requiring companies to immediately and immediately eliminate major sources of pollution.

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

The effects of industrial pollution are especially pronounced among marginalized communities.

Still, Senator Reuven Carlyle, D-Seattle, one of the chief architects of the Climate Commitment Act, said the Front and Centered report failed to recognize that the law requires all polluters to reduce emissions, regardless of whether they get free allowances. They are also subject to air quality regulations designed to address concerns about environmental justice and industrial pollution.

“There is a belt and braces approach where we have a market-oriented system to find the most economically efficient emission reductions,” he said.

Yet these polluters are only one piece of a tricky puzzle.

Required program participants account for approximately 75% of statewide emissions, 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 sets the starting price of allowances when the program starts in January.

Finding the right starting price is a balancing act, says Climate Commitment Act communications specialist Claire Boyte-White. “Ultimately, we want entities to obey willingly, cooperatively, openly, and on time,” she said.

If emission allowances are too cheap, major polluters may consider the entire program a slap on the wrist. If allowances become too expensive, voluntary participation may be low and large emitters may look elsewhere for a more affordable market.

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

Earlier this year, the government commissioned an independent study into the Climate Commitment Act.

Results published in July showed that merging Washington’s carbon market with those of California and Quebec would significantly lower the price of allowances and expand the market.

Each fee is expected to cost $41 if Washington’s market is tied to theirs, according to the analysis, but could be up to 65% higher in various scenarios.

The initial cost would be “very, very high,” according to the analysis, according to regulators. As an immediate response, they decided to open a reserve fund designed to cut costs if allowances became too expensive. They will also aim to merge markets earlier than previously discussed, with a tentative target of 2025.

Washington energy suppliers are also subject to the Clean Fuel Standard – passed in 2021 and requiring 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 enables agency cooperation and funding to address environmental injustice.

“We are on track to become the number one state in the nation when it comes to reducing our emissions in line with science-based targets,” Carlyle said. “That doesn’t make it easy.”


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(c)2022 The Seattle Times
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Quote: 41 major polluters get free passes to Washington state carbon trading market (2022, Aug. 4), retrieved Aug. 4, 2022 from https://phys.org/news/2022-08-large-polluters-free-washington-state .html

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