Inslee says he wants cap-and-trade to be ‘less costly’

Published 8:15 am Saturday, September 16, 2023

Washington Gov. Jay Inslee on Friday said he wants to make cap-and-trade “less costly,” while blasting oil companies for passing along the new fee on fossil fuels to motorists.

Speaking at the University of Washington, Inslee said he hoped holding cap-and-trade auctions with California and Quebec, Canada, would create a bigger pool of carbon allowances and lower prices.

“We’re for that. We want to make it less costly,” he said.

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“We think (joint auctions) will be beneficial in reducing the bid price,” Inslee said. “We think that can help restrain the compliance costs that are involved in this. It’s not like we’re ignorant of that.”

The Department of Ecology is due this fall to decide whether to pursue an agreement with California and Quebec to hold joint cap-and-trade auctions. Joint auctions would not start until at least 2025.

It’s unclear how compatible the cap-and-trade programs are. In the most recent California-Quebec auction, carbon allowances sold for $35.20. In the latest Washington auction, allowances sold for $63.03.

Allowance prices in Washington can be expected to add 50 cents to a gallon of gasoline and 63 cents to diesel, according to a formula cited by the California Air Resources Board.

Inslee said linking with California and Quebec won’t be easy. “Each state, province has its own approach, but we want to go that route to try to restrain these compliance costs,” he said.

Some lawmakers have proposed more immediate actions, such as increasing the supply of allowances over the next several years.

Washington has raised $1.46 billion in four cap-and-trade auctions this year. Ecology will hold two more auctions this year, including a second special auction triggered by unanticipated high allowance prices.

California and Quebec have the same safety-valve mechanism, but it’s never been used in more than a decade of auctions.

Washington’s cap-and-trade auctions have coincided with the state emerging as California’s only rival for having the most costly fuel in the Lower 48.

Inslee said he will sponsor legislation to examine fuel prices and “to get to the bottom of why they’re gouging us.”

“They make us pay for their pollution. They should be paying for their pollution,” Inslee said.

The governor’s comments won’t reduce cap-and-trade costs, Western States Petroleum Association spokesman Kevin Slagle said.

“The strategy of the Inslee administration seems to be to point at everybody else. That’s unfortunate because it’s not going to solve the problem,” he said.

Inslee’s remarks came during a panel discussion he hosted as a prelude to attending Climate Week NYC, an annual event held in partnership with the United Nations general assembly.

Cap-and-trade auctions are a windfall for the state, but costly to families, Affordable Fuel Washington said in a statement. The group’s members include the Washington Farm Bureau.

“Far from trying to undermine cap-and-trade, we are urging the Legislature to fix this badly flawed program,” Affordable Fuel spokeswoman Dana Bieber said in an email.

“We’d also like to hear what the state plans to do to return the excess profits from the program back to Washington consumers and to add more cost-control measures going forward,” she said.

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