Oil money flows to stop carbon fee By Rye Druzin
Texas companies fight Wash. measure that would tax emissions
Texas energy companies are pouring millions of dollars into Washington state to fight a ballot measure that, if passed, would create the nation’s first carbon fee, raising the cost of gasoline and other fossil fuels and likely hurting demand for petroleum products.
The fee, essentially a tax on carbon emissions, is considered by environmentalists, economists and even some oil companies as a market-based approach to slowing the pace of climate change by providing incentives to use energy sources that produce less carbon dioxide, a greenhouse gas that traps the sun’s heat and contributes to global warming. Fossil fuels, such as coal, oil and natural gas are among the largest sources of carbon dioxide emissions.
Washington’s proposed carbon fee, which voters will be asked to approve in November, would impose a fee of $15 a ton on carbon emissions starting in 2020, which
would increase by $2 a ton a year in subsequent years. The state estimates the carbon fee would raise upward of $2.3 billion in the first five years, with 70 percent of the money spent on developing renewable energy, 25 percent to respond to effects of climate change such as rising sea levels and 5 percent toward reducing the impact of climate change on the most vulnerable communities, such as those at risk from from wildfires.
The campaign over Initiative 1631 could be a gauge of public concern over climate change and willingness to adopt policies aimed at reducing the use of fossil fuel — even if it means higher energy costs, analysts said. Washington voters will consider the ballot question following a summer of wildfires that destroyed wide swaths of California and deadly flooding in North Carolina caused by Hurricane Florence — natural disasters blamed in part on warming global and ocean temperatures.
If the initiative passes, it could provide the impetus for carbon fees or taxes across the country, said Aseem Prakash, a University of Washington political science professor and founding director of the Center for Environmental Politics at the University of Washington.
“If the ‘yes people’ succeed here,” Prakash said, “then first of all, it will demonstrate that there’s popular support, and second, it will give an empirical basis to claim that a carbon tax or a carbon fee actually does not hurt economic growth.”
In Washington, refiners and transportation fuels would bear the brunt of the carbon fee, which would raise the price of gasoline by 14 cents a gallon and cost a two-driver household an additional $167 a year, according to an analysis by the Washington Policy Center, a think tank that promotes free-market solutions. Companies such as Phillips 66 of Houston and the British oil major BP — both of which operate refineries in the state — have contributed nearly $19 million to the campaign to defeat the proposal.
The companies argue that the carbon fee would be ineffective because the proposal excludes some large carbon polluters that are considered energy intensive and compete in global markets, a definition that could include pulp and paper manufacturers, maritime companies and the aircraft-maker Boeing, one of the state’s biggest employers. The initiative also exempts a coal-fired power plant near Centralia,Wash., until it shuts down in 2025.
Coal is one on biggest producers of greenhouse gases.
“We agree that there’s a carbon mechanism that can be put in place, but it’s got to be fair,” said Dana Bieber, spokeswoman for the No on 1631 campaign. “It can’t exempt the largest polluters, it can’t unfairly put the burden on families and consumers, and it’s got to provide some assurances that carbon emissions will, in fact, be reduced.”
But perhaps the biggest concern among energy companies is that the initiative would open the door for states to adopt their own brands of carbon taxes or fees, creating a maze of varying systems and costly administrative nightmare for companies trying to comply with 50 different versions of a carbon charge. BP, for example, has joined other oil companies, such as Exxon Mobil, that have called on Congress to adopt a national carbon tax that would be the same in all states.
“BP supports a welldesigned price on carbon that is clear, flexible, efficient and can be applied consistently across the economy,” the company said in a statement.
At least 10 states, including Washington, have considered carbon taxes and fees, although none has yet to pass them, according to the New York research firm Rhodium Group. Internationally, several European countries and Canadian provinces have adopted carbon taxes of some sort.
The idea behind carbon taxes and fees is simple. By raising the costs of fuels that emit carbon dioxide, consumers and businesses will turn to alternatives, creating bigger markets for electric cars or solar and wind power and encouraging investment in cleaner forms of energy that ultimately reduce greenhouse gases.
This is not the first time Washington voters have considered a carbon tax or fee. In 2016, a carbon tax proposal, Initiative 732, was rejected decisively, with nearly 60 percent of voters opposing the measure.
Supporters of the initiatives say this time is different because Initiative 1631 earmarks money raised from carbon fees for specific measures to shrink the carbon footprint of power generation, such as investing in renewable energy, and help communities cope with the effects of climate change . The state has suffered at least five wildfires that each burned more than 100,000 acres in the last five years, according to data from the National Interagency Fire Center, a support center for wildland firefighting based in Boise, Idaho. In 2015, the state, well known for its rain, was gripped with extreme drought conditions.
“What 1631 does is it identifies a future in which Washingtonians have more choices,” said Mike Stevens, the Washington state director for the Nature Conservancy, a national environmental advocacy group. “We will be stimulating investments in new and emerging technologies that are cleaner and sus- tainable and profitable for Washington businesses.”
The Nature Conservancy is the largest donor to the Yes on 1631 campaign, contributing more than $1.2 million. The Yes campaign has raised more than $6.5 million.
That pales in comparison with the money raised for the No campaign. Phillips 66 and BP, which each have refineries in the state, contributed $7.2 million and $6.4 million, respectively. Before its merger with Marathon Petroleum of Ohio, the San Antonio refiner Andeavor, which also operated a refinery in the state, contributed $4.3 million.
Valero recently gave $495,000 to No campaign. Koch Industries, run by the influential backer of conservative causes, Charles Koch, recently contributed $300,000.