Lawmakers in oil refinery districts propose carbon fee for COVID relief

Money would back "green bonds" to pump billions into the economy

Three Democratic state lawmakers whose districts collectively include Washington State’s four largest oil refineries are proposing a steep fee on carbon to pay for a massive pandemic relief bonding system.

The proposal, called the Washington STRONG Act, was laid out in broad strokes in a press release sent out Monday. No bill has yet been filed, but there are more details on the website of Carbon Washington, the group behind Initiative 732, the first attempt to impose a carbon tax in Washington, which failed badly in 2016.* The new proposal starts at $25 per metric ton of carbon, compared to the $15 per metric ton called for in I-732 and Initiative 1631, which failed two years later.**

But the thing about the STRONG Act that immediately caught The Observer’s eye was the sponsors: Rep. Debra Lekanoff, D-Bow; Rep. Sharon Shewmake, D-Bellingham; and Sen. Liz Lovelett, D-Anacortes. Lekanoff and Lovelett represent the 40th District, which includes Anacortes, home to the Shell Puget Sound Refinery*** and the Marathon Anacortes Refinery. Shewmake represents the 42nd District, which includes BP’s Cherry Point Refinery and Phillips 66’s Ferndale Refinery.

Together, those refineries produce the overwhelming majority of the gasoline, diesel and jet fuel used in the Pacific Northwest. Both the production of the fuels and their consumption represent giant portions of the region’s carbon footprint. They are also among the largest employers in both districts, and major drivers of local economies. Ordinarily, their elected representatives would not propose major new taxes on their products. But progressives in the Legislature are looking for both climate action and money to revive the pandemic-battered economy.

“Washington state is facing an economic crisis, and we have the choice to use progressive revenue to grow our economy by investing in green infrastructure and clean transportation projects that put people to work and build a climate-resilient future,” Lekanoff said in the news release.  “This economic policy is based on our state’s needs right now, one that puts our frontline communities and environmental justice first, instead of increasing inequity and placing the burden on our most impacted communities.”

Rep. Debra Lekanoff

On the question of taxing hometown employers, Shewmake, who is also a Western Washington University economic professor, noted that oil companies are increasingly open to carbon pricing.

“BP’s thinking of themselves as an energy company not just a fossil fuel company,” Shewmake told The Observer. “There are a lot of Priuses in the parking lot.”

Rep. Sharon Shewmake

BP spent more than $13 million defeating I-1631 just two years ago. But it is true that the company recently withdrew from the Western States Petroleum Association, the trade group that spearheads opposition to carbon-reduction measures.

Shewmake also cited the need for aggressive help for stimulus money, noting that the prospects for help from the federal government are uncertain.

“We have to borrow money for economic recovery anyway, we might as well do it in a way that gets us to a cleaner economy,” Shewmake said.

The proposal envisions a 10-year series of “green” bonds that would drive $16 billion for direct investment with the potential to create as many as 150,000 jobs through local economic stimulus focused on rural economic development and frontline communities. By bonding against the revenue from the carbon fee, the state could maximize the amount of money it pumps into the pandemic-battered economy.

We get into the tough history of carbon tax measures in the footnotes below, but this proposal also faces some interesting complications in the Legislature.

Rep. Joe Fitzgibbon, D-Burien, who chairs the House Environment and Energy Committee, is known to favor the cap-and-trade approach to carbon reduction, in which companies that reduce their emissions can sell credits to companies that either can’t or won’t.

Meanwhile, Senate Transportation Committee Chair Steve Hobbs, D-Lake Stevens, has his eye on a carbon tax to pay for a sweeping transportation package. That could set up a conflict between road and highway boosters, who want more asphalt in the suburbs, and environmentalists and transit advocates who want investment in mass transportation, pedestrian and bicycling infrastructure.

Looming over all of this is Gov. Jay Inslee, coming off a landslide win in his reelection bid. Inslee, who has pushed carbon reduction policies to limited effect since he was first elected in 2012, is no doubt looking for a big win as he prepares his policy proposals for the Legislature’s upcoming session.

The Observer makes a habit of requesting the governor’s calendar under the Public Disclosure Act. On the Monday before Thanksgiving, Inslee met with Fitzgibbon and Sen. Reuven Carlyle, Chairman of the Senate Environment, Energy & Technology. Later that day he met with Lekanoff — twice.

Lekanoff hasn’t yet returned The Observer’s message. The governor’s folks were coy about what happened in those meetings, as was Carlyle.

“I see the elements of a grand bargain,” Carlyle told The Observer. “A lot of room for a win-win.”

There’s a saying that you should never waste a crisis. Perhaps the appeal of billions of dollars to ease suffering caused by the pandemic will move lawmakers to do what voters have twice refused to do.  

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*Initiative 732 had an elegant simplicity to it. The money from the carbon tax would have been returned to taxpayers in the form of lower business and occupation taxes and sales taxes. The mainstream environmental community opposed it because there was no money for them. Without their support, it failed, with nearly 60 percent of voters checking “no.” The problem with carbon taxes is that ordinary voters experience them as a backdoor gas tax increase.

**Initiative 1631 did have the support of the mainstream environmental community and a broad coalition including labor groups and Native American tribes, in part because it would essentially have created a $500 million slush fund, much of which would have gone to coalition members. The coalition spent $16.4 million trying to pass it, but was soundly defeated after opponents spent $31.5 million. Across the state, the results were very similar to I-732.

***Conflict of Interest Disclaimer: In my prior life as a strategic communications consultant, the Shell Puget Sound Refinery was a client.

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