Washington Democrats Sen. Mark Mullet and Rep. Mike Chapman have introduced cap-and-trade reform legislation in the House and Senate to hold down energy costs.

Senate Bill 5783 and the identical House Bill 1887 seek to lessen cap-and-trade’s upward pressure on fossil fuel prices by stretching out forced cuts to greenhouse gases.

The state would still meet its ultimate goal of nearly eliminating fossil fuels by 2050, but would miss its target of halving carbon emissions by 2030.

Mullet, D-Issaquah, said Dec. 7 he wasn’t optimistic about persuading his fellow majority Democrats to throttle back the push to reduce greenhouse gases. “I’m going to try. You have to try,” he said.

Mullet said he will point to the possibility that an initiative, fueled by high pump prices, could overturn the entire cap-and-trade program next November.

“My main message to colleagues is that if we don’t fix this, the voters are going to repeal it,” said Mullet, a candidate in a crowded field to succeed Gov. Jay Inslee.

“The implementation of the Climate Commitment Act (the cap-and-trade law) has been a complete disaster,” he said. “We’re the legislative body. I think we have to fix the bill.”

Cap-and-trade costs

Cap-and-trade taxes and limits greenhouse gases from the combustion of most fossil fuels. The cap on emissions is scheduled to decline by 7% a year to meet the 2030 target.

Mullet and Chapman, D-Port Angeles, propose lowering the cap by just 3.6% a year, the same downward trajectory as in California.

Flattening the trajectory would increase the yearly supply of allowances and presumably make them less expensive. Allowances are a tax on fossil fuels passed onto motorists and ratepayers.

Allowances in Washington have sold for as much as $63.03. Mullet said he expects that his bill would drive allowances under $40, in line with California’s auction results. As a rule of thumb, this would reduce current gas prices by 20 to 30 cents a gallon.

“The governor does not favor anything that would slow down our efforts to reduce climate pollution,” Inslee spokesman Mike Faulk said in an email. “Washington and the rest of the world are already behind schedule reducing emissions to avert catastrophic climate change.”

Cap-and-trade rules seek to contain costs by holding additional auctions if allowance prices are unexpectedly high. The state has held two so far this year.

Allowance prices are also expected to drop if Washington holds auctions with California and Quebec. The earliest the programs could be linked in 2025, according to the Department of Ecology.

If allowance prices were lower, the state would collect less money for climate-change programs. Cap-and-trade auctions have brought in more than $1.5 billion so far this year.

Mullet, chairman of the Senate Capital Budget Committee, said the state has collected more than enough to fund already budgeted cap-and-trade projects.

Refunds to farmers

Devaluing allowances also could affect investors, who buy allowances expecting them to increase in value. Mullet said he opposed “speculators” being allowed to participate in auctions this year in the first place.

The legislation also would set up an account, funded by cap-and-trade revenue, to reimburse farmers. Fuel used to grow and transport agricultural products are purportedly exempt from cap-and-trade fees.

The exemption, however, has been unevenly applied. The Washington Farm Bureau estimates farmers have paid at least $153 million in unwarranted cap-and-trade fees.

The Inslee administration blames the oil industry for not applying the exemption. The oil industry has said refineries can’t track where all its fuel is eventually used.

”Some fuel companies have begun making refunds to customers whom they mistakenly charged for exempt fuels. We believe that is the right approach,” Faulk said.

Mullet and Chapman also propose using cap-and-trade revenue that exceeds budget projections to lower vehicle licensing fees.