SB 5735 As Introduced In The Legislature

We must break our dependence on foreign oil and reduce green house gases.  However, we must do it in a thoughtful and deliberative manner that does not leave our state exposed to another Enron, our businesses downsizing due to uncertainty, or our citizens with excessive utility rates.

The Governor’s Office led a valiant effort to try and craft a final regional Climate Control bill for 2009, but the product leaves even the most basic questions unanswered.

The Cap & Trade approach to reducing greenhouse gas emissions requires utilities and large businesses to gradually reduce their emissions from the generation of power, or purchase emission credits in the marketplace.  The Governor’s Office worked with a group of states and Canadian provinces that make up the Western Climate Initiative, to negotiate a framework for a Cap & Trade proposal.  Unfortunately, there were too many delays and the final legislation provides little detail on (1) which businesses would be covered by the program, (2) how would a proposed auction work, (4) how would market manipulation be prevented, (5) how could credits be earned, (6) why there are contradictions like rewarding coal generation over wind and natural gas, and (7) how would Washington State hydro power and other realities be accommodated with California’s goals.  The WCI is still a long way from answering these questions and so the legislation leaves it all up to agency rulemaking.

Compounding the problem the proposal could force businesses and homeowners to pay twice, once for their utilities’ cost of meeting emission reduction goals and again with a new tax on any remaining emissions.

The Governor’s legislation would not only impose on utilities and businesses the cost of reducing greenhouse gas emissions, but at the insistence of environmentalists, would further tax them through an auction for whatever emissions they continued to emit.  No matter how efficient a utility might be the new tax would increase costs for of electricity.

Many state businesses will simply shut down if faced with this kind of uncertainty, particularly if they have competitors in other parts of the country who will not face these costs.

Even a solar panel manufacturer like Cardinal Glass Industries in Lewis County will be discouraged from investing in Washington State and believes its current operations will be jeopardized by this legislation.  During an economic crisis we don’t need this kind of uncertainty hanging over business decisions.

Despite the fact the legislation implements a fundamental change in the Washington State economy, no detailed economic analysis of the impacts has been completed --- this alone is unacceptable.

As both the Washington Research Council review of the WCI regional analysis and other peer reviews of similar studies demonstrate, the modeling simply does not make sense and the WCI contractor has refused to permit a full sensitivity test of the economic model.  Further, no open, detailed analysis of Washington State impacts has been completed.  How can we move forward on legislation that will profoundly change the cost of electricity, gasoline, food and most other goods in this state without determining the impacts on citizens and businesses?

Finally, if our goal is to reduce greenhouse gases it makes no sense to try and move forward with energy laws that are inconsistent and even contradictory.

While the Cap & Trade bills attempt to reduce greenhouse gas emissions, the state is still stuck with laws like Initiative 937 that penalize companies who use clean hydro power instead of higher carbon power from gas.  And why are Washington businesses placed at a disadvantage under I-937 when competing for green power with California businesses.  These inconsistencies must be addressed.  Any analysis should also compare other options including carbon tax and emission limitation approaches.

As the bill has moved through the legislature, Republicans and Democrats alike have responded to  many of the concerns and signficantly redrafted the bill so that more details must be developed and brought back to the Legislature before any final plan will be adopted.  Unfortunately new issues have been added that raise new concerns.

For other perspectives go to the Department of Ecology or to Sightline Institute.

To read the Bill or detailed Bill Report for HB 5735 see Legislative Bill Page.