Political cracks show on carbon bills

A change at The Seattle Times; departures from Inslee staff; about that Nguyen rumor

Jan 26, 2021

Back in December, we wrote about the complex politics of Gov. Jay Inslee’s climate change package, and now we’re starting to see those tensions play out in the Legislature.

To review, Inslee proposed measures to impose a low-carbon fuels standard, create a cap-and-trade system to reduce carbon emissions from major emitters, and mandate lower emissions from buildings, largely through reducing the use of natural gas. Just a few weeks in, we’re seeing the enormous amount of influence that will be brought to bear on on those ideas, both for and against.

Last week, at the very moment that Sen. Reuven Carlyle’s Environment, Energy and Technology Committee was hearing opposition to the cap-and-trade bill from environmental justice advocates, House Democrats were unveiling the framework of a transportation package that includes a competing carbon fee paired with a big gas tax increase.

Meanwhile, some labor groups are pushing back on both the the low-carbon fuels standard and the clean buildings idea, arguing that both would undermine opportunities for their members to go to work. Turns out that all that natural gas needs pipes, and pipes need pipe-fitters.

This is reflective of some of the hard political facts of measures that would actually move the needle on reducing carbon: they all fundamentally alter large sectors of the state’s economy, and most would be experienced by voters as as more expensive gasoline. Meanwhile, we’re talking about big piles of money, and therefore an argument about what it should be spent on.

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The influence battle over low-carbon fuel standards

For climate hawks, these tradeoffs are a no-brainer compared to the looming threats of climate change, ideas that should have been adopted long ago. If you’re paying attention at all, your online world is likely full of this kind of thing, as environmental advocacy groups flood the zone to pressure lawmakers.

“We are way behind in adopting programs like this to address the largest source of greenhouse emissions in our state,” House Environment and Energy Chair Joe Fitzgibbon said before this year’s version of the standard, House Bill 1091, narrowly cleared his committee last week. Environmentalists want the standard it because it would actually mandate lower-carbon fuels in the state, while carbon-pricing schemes alone might just drive up energy costs without changing behavior, at least in the short run.

The low-carbon fuels standard has perhaps the best-organized opposition of any of the climate measures. Most oil companies hate the idea because it both interferes directly in their business and advantages their competitors, especially by incentivizing the adoption of electric vehicles. They have plenty of allies among truckers, farmers, and others who start at no on anything that drives up fuel costs.

The oil industry, most notably the Western States Petroleum Association, has been running an ongoing campaign the idea for years, spending heavily on targeted advertising, social media, and elaborate demonstrations to argue that the standard will drive fuel prices higher.

Fitzgibbon’s bill has passed the House each of the last two years, only to die in the Senate.

Some of the arguments against it this year came from labor unions concerned that increasing fuel prices via a low carbon fuel standard would make it hard to increase gas taxes and/or impose a carbon fee to pay for billions of dollars in transportation projects. No transportation package = fewer union hard-hats from going to work on all those road and transit projects.

The siren call of transportation money

Late last year, Carlyle told The Observer that all the elements of a sweeping agreement on climate legislation were present, and that may still happen. The governor and Democrats in both chambers seem highly motivated, and pressure from the well-funded environmental groups and philanthropists who support them is high. In the end, a big pot of money to fix major transportation problems could be the grease that lubricates a deal.

One of the biggest themes that’s emerging is the notion that a tax on the carbon produced by transportation — the tailpipes of cars and trucks — should be returned to the transportation system, preferably for greener modes of transportation than driving in your own gasoline-powered vehicle. House Transportation Chair Jake Fey, D-Tacoma, told reporters that was the takeaway of a series of listening sessions with stakeholders over the last year.

Think of it as the 21st century version of the decades-old bargain surrounding gas taxation — voters will grudgingly put up with gas-tax increases to make their roads better. One problem: there are many other things lawmakers would like to spend money on, from K-12 education to more generous pandemic relief to beefing up the public health system.

Also, the sheer scale of the plan Fey rolled out is fraught with political risk.

The House Democrats’ transportation proposal would spend $25.8 billion over 16 years. An 18-cent increase in the gas tax would raise $17.9 billion; $7.5 billion would come from the carbon fee, which would start at $15 per metric ton of emissions, eventually rising to $25 in 2025. Fuel producers would likely pass that fee on to consumers, driving the effective big on a gallon of gas close to $1 per gallon.

If history is any guide, this package is just too rich to swallow all at once. Ballot initiatives that would have imposed carbon taxing schemes in the $15 per ton range went down in flames in 2016 and 2018, although they didn’t offer voters any transportation goodness. Statewide voters haven't considered a gas tax since 2002, when a 9-cent bump — from 23 cents to 32 cents per gallon — was soundly defeated.* Lawmakers have since nudged the tax gradually higher without taking it to the ballot. Today it stands at 49.4 cents per gallon, fourth-highest in the nation. (California has the highest, at 62.47 cents, while Alaska has the lowest at 13.77.**)

So, as Fey said last week, that proposal might be the high-water mark, with whatever final deal emerges spending less and doing less.

There’s an interesting distinction between money from the gas tax and money from the new carbon fee. Gas taxes, per the Washington Constitution, can only be spent on roads and ferries the haul vehicles. A carbon tax could go to bus or rail transit, passenger-only ferries, bike paths, and pedestrian infrastructure. Such flexible money is always in too-short supply to satisfy advocates for those transportation modes. Another political wrinkle in the House Democrats’ proposal: They plan to do it in cash, without issuing bonds.

To bond or not to bond

Brace for some procedural wonkery here: Issuing debt — selling bonds to be repaid with tax revenue in the future — requires a supermajority of the Legislature, which generally means cutting a bipartisan deal with the minority party. That’s usually how transportation packages work, and it frequently means that one side or both has to swallow something they hate — think too much country road-widening for urban Democrats or too many city bike lanes for rural Republicans.

For example, the transportation package passed in 2015, when Republicans controlled the Senate, contained the so-called “poison pill,” which prevented a low-carbon fuels standard by threatening to revoke money for progressive transportation priorities.

No debt means no supermajority, which would allow for a much more progressive-leaning transportation package. So the House’s proposal can be viewed as warning shot in that direction.

The flip side of that argument is that debt is currently historically cheap, and issuing bonds can get money on the street, and thus get projects under construction, much more quickly. Also, freezing the minority party out completely can create other problems, most notably on the capital budget, which typically includes a bonding provision of its own.

Cap and trade vs. a straightforward carbon tax

The two basic schools of carbon taxation are cap-and-trade and a more straightforward per-ton tax or fee on carbon emissions. Fans of cap-and-trade like the idea of allowing market forces to incentivize companies to pollute less. For example, an electrical utility can convert from coal to wind, while selling its allowance to emit carbon to a company with less flexibility, such as an oil refinery. The money the utility gets from the refinery helps offset any transition cost.

However, many environmentalists, particularly among the environmental justice community, argue that flexibility allows polluters to essentially buy the right to keep poisoning the air, water and local communities. They argue for more straightforward taxation, with much of the money spent in communities impacted by pollution in the past.

Inslee’s current preference, and Carlyle’s signature bill this session, is a cap-and-trade plan that gradually reduces the overall emissions allowed in the state, but allows major polluters — or others — to buy the right to pollute under the cap at a state-run auction, and then trade those allowances.

Testifying before Carlyle’s committee last week, Guillermo Rogel of Front and Centered, a coalition of environmental justice organizations, called cap-and-trade is a false promise that allows pollution to flow where it is cheapest to produce, particularly low-income areas and communities of color. Rogel and other environmental justice advocates met with Inslee earlier this month, according to a copy of his calendar obtained under the Public Disclosure Act.

He urged lawmakers to reject the idea and instead adopt the Washington STRONG Act we wrote about in December, which envisions a steep fee on carbon to pay for a massive massive pandemic relief bonding system.

In a little twist, Rogel testified while Vice Chair Liz Lovelett, D-Anacortes, one of the authors of the STRONG act, was presiding. Lovelett’s bill, the Observer is told, will be introduced soon.

*The 2002 gas tax increase was sent to the voters by the then-closely divided Legislature. It’s unlikely the current legislature would be so deferential to Washington’s tax-averse voters. It’s also unlikely that a plan of this magnitude doesn’t provoke a referendum or initiative campaign to force a vote anyway.

**The Alaskans get to double-dip here. They sell us most of our oil, which has the effect of reducing all their taxes. So we’re paying their gas taxes too.

**The House Democratic caucus is both larger and more progressive than the Senate Democrats, so they’re likely to go big and make the Senate slim it down.

A change at The Seattle Times editorial board

The recent departure of Brier Dudley from The Seattle Times’ editorial board could result in some subtle changes on the opinion pages of the state’s largest daily.

Dudley, who’s moving over to head the paper’s Save the Free Press initiative, was one of the board’s longest-serving members, and perhaps the best articulator of its generally centrist positions. For an example, check out their endorsement of Sen. Mark Mullet in his moderate-vs.-progressive showdown last year.

This is important because the Times is one of the few remaining papers that actually maintains an editorial board robust enough to opine forcefully and frequently on public affairs. And although the board’s positions frequently enrage progressives, an audience with them is still an important stop for organizations trying to get things done in the halls of power.* For an example of the fruits of a successful pitch to the board, check out its recent support for extending the window for establishing new charter schools.

It’ll be interesting to see whom the paper choses to replace Dudley.

*In my former life as a strategic communications consultant, I took several clients before the board, with mixed results.

More departures from Inslee’s staff

A few weeks into Gov. Jay Inslee third term, high-profile departures from his staff continue. Lauren McCloy, Inslee’s senior policy advisory on energy, left recently to join the NW Energy Coalition as policy director. The coalition advocates for “renewable energy, energy efficiency, low-income and consumer protection, and restoration of fish and wildlife on the Columbia and Snake Rivers.” Before joining Inslee’s office, McCloy worked in several roles at the Washington Utilities and Transportation Commission.

McCloy’s colleague in the policy office, Charles Knutson, recently departed for Amazon’s lobbying shop.

Casey Katims, Inslee’s director of federal and inter-state affairs, which is a fancy title for the state’s federal lobbyist, joins the Biden Administration as deputy associate administrator for intergovernmental affairs at the Environmental Protection Agency.

About that Nguyen-Constantine rumor…

Erica Barnett over at PubliCola noted recently that state Sen. Joe Nguyen’s name has been floated as a potential challenger for King County Executive Dow Constantine this year. Your correspondent hears the same rumors, almost certainly floated by Nguyen himself. lt’s an interesting thought exercise.

On paper, Constantine looks pretty bulletproof. The closest thing to a contested election he has faced was his first against Republican Susan Hutchison in 2009. He won easily. He’s had token opponents and huge margins of victory in the two elections since then. He’s a formidable fundraiser who’s already sitting on a sizable war chest.

But, as Erica obliquely referenced, Nguyen himself is proof that Constantine’s machine may not be that well-oiled in the age of Democrat-on-Democrat races. A tech-savvy progressive firebrand, Nguyen came from basically nowhere to beat Constantine’s chosen candidate in the 2018 state Senate race in the 34th District (think West Seattle and environs), an area that Constantine had represented in the House, Senate and on the King County Council. Nguyen accomplished that by aggressively organizing to split the endorsement of the 34th District Democrats, and win key endorsements from the left, including from U.S. Rep. Pramila Jayapal and The Stranger.*

There’s also something of a trend of young candidates shouldering aside established politicians in King County. Girmay Zahilay claimed civil rights icon Larry Gossett’s King County Council seat in 2019, and David Hackney ousted longtime state Rep. Zack Hudgins in the 11th District in November. Constantine, now 58, has never faced a real challenge from the left.

Also, there just isn’t a ton of downside for Nguyen, 37. His Senate seat isn’t up until next year. The chief reason for not challenging Constantine would be to avoid pissing him off. Safe to say Nguyen doesn’t really care about that.

*Back in his strategic consultant days, your correspondent supported Nguyen’s opponent, Shannon Braddock, in that race. It so happens he was at that meeting of the 34th District Ds. The reception for Constantine, a former chair, was more than a bit frosty.

Worth reading from other reporters

Melissa Santos over at Crosscut has a look at this year’s attempt to allow marijuana users to grow their own. The bill has stalled in recent years after concerns from law enforcement, and presumably sub-rosa lobbying from the well-connected commercial weed industry.

Michael Goldberg at the Washington Wire reports on labor concerns about the big unemployment insurance bill, which is aimed at tax relief for businesses and increasing the weekly benefit for workers. Labor’s uneasy about a Republican-sponsored amendment aimed at preventing people collecting more unemployment than they made in wages.

Assign your own metaphor…

Milo would never think of raiding the giant bin of dog food, but he’ll violate any norm, risk any sanction, for an ounce of that delicious butter.

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