New Yorkers look to Washington for advice on cap-and-trade

A lawmaker and two activists counseled Empire State stakeholders to be on alert for upticks in consumer prices as the program gets underway.

By: - July 13, 2023 5:23 pm

The Marathon Anacortes Refinery, operated by Marathon Petroleum, is seen on March 8, 2022 in Anacortes, Washington. (Photo by David Ryder/Getty Images)

Architects of Washington’s cap-and-invest program on Thursday told designers of a similar carbon pricing initiative in New York that as money starts to roll in, they should be cognizant of higher costs borne by consumers.

“I could go on and on about the exciting investments but part of the problem that we’re dealing with is that we just appropriated the dollars,” said Kelly Hall of Climate Solutions during a webinar hosted by the Georgetown Climate Center. 

“We’re now going through the whole process of setting these programs up and there’s a pretty big lag, you know, one to two years of when customers are feeling the price of allowances in their energy, but they’re not actually seeing the benefits yet,” she said. Do as much work upfront as possible on programs in which you will invest in order to reduce that lag time, she added.

Hall was joined by House Majority Leader Joe Fitzgibbon, D-Seattle, a driving force behind the 2021 law establishing the state’s cap-and-invest program, and Isaac Kastama of Clean and Prosperous Washington, a coalition of refiners, environmentalists and civic and tribal leaders. Dallas Burtraw, a senior fellow with Resources for the Future, moderated the panel.

Most of the 90-minute event dealt with nuts and bolts of the Washington program in which the state caps how much carbon pollution companies can emit. Businesses like refineries and mills unable to meet their prescribed target can purchase allowances from the state to make up for their emissions. The conversation touched on the state’s approach on exemptions, offsets, allowance prices, and using dollars to reduce greenhouse gas emissions.

Washington grossed $857 million from its first two auctions of emission allowances in February and May. A third is coming in August. 

Since February, gas prices in the state climbed to the highest in the nation, spurring debate on whether consumers are paying the cost of refiners’ compliance or getting gouged at the pump.

No questions came up on the link between the program and gas prices. But each of the Washington contingent acknowledged consumer costs cannot be ignored.

“There’s a pretty active campaign pushing a narrative about fuel price impacts in our state,” Kastama said. 

He and Hall said lawmakers can best deal with consumer costs by making sure the program’s revenue is spent in ways the public can see. 

“We want the public to be able to afford transitioning to clean energy and the reinvestments are really important for that,” Hall said.

Fitzgibbon said cap-and-invest is impacting fuel prices, but he didn’t say by how much and he also pointed to other factors in play.

“There are other things that are impacting the price of gas in Washington right now as well, including the scheduled maintenance shutdown of our major oil pipeline in the region, which connects four of our five refineries,” he said. 

To help residents deal with energy costs, he said the state is making “significant investments” in multimodal transportation and electric vehicle charging to provide alternatives to driving and less expensive ways of traveling in vehicles. There’s also money to help families install electric heat pumps to ease home heating costs. 

“Those are some of the places we’ve started. We’ll probably be coming up with new ideas for our 2024 session for other ways to both continue to reduce emissions and reduce cost burdens,” he said. “That’s obviously going to rely on giving people alternatives to fossil fuels.”

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Jerry Cornfield
Jerry Cornfield

Jerry Cornfield joined the Standard after 20 years covering Olympia statehouse news for The Everett Herald. Earlier in his career, he worked for daily and weekly papers in Santa Barbara, California.