Tuesday, December 23, 2008

Cap-and-trade idea bumping up against economic forces

Last year the Legislature approved HB 2815, a comprehensive bill that put in motion an aggressive effort to dramatically decrease greenhouse gas emissions in Washington state. The state Department of Ecology and Department of Community, Trade and Economic Development just released the Comprehensive Plan focusing on the first major goal of the legislation which is to reduce Washington’s greenhouse gas emissions to 1990 levels by 2020.

A centerpiece of the plan is a regional cap-and-trade system in cooperation with the Western Climate Initiative, a coalition of seven states and four Canadian provinces. It also happens to be the top priority of the Washington Environmental Priorities Coalition which actually calls this a "Cap and Invest" program, emphasizing that money from the program would be directed to encourage new green jobs and innovation, as well as help low-income households with energy bills.

There’s broad agreement among legislators and stakeholders that such a system is the right way to go, but as with many good ideas, disagreement arises over the details of how it should be implemented.

And now that Washington is looking at an almost $6 billion shortfall, the details are getting even stickier. Environmentalists and many legislators have pushed for a cap-and-trade system that auctions off credits to businesses. The idea is that companies who need the emission credits will buy more.
But businesses, suffering through the economic recession, are raising concerns, leading Gregoire to consider an alternative.

The Associated Press reports:
Concerned about the bad economy and pressure on businesses, Gregoire is leaning toward giving away most of the pollution credits, rather than auctioning them off as environmentalists had hoped.
But other pieces of the plan may still move forward with broad agreement despite the economic situation. The article continues:
The governor’s proposed budget includes about $25 million for climate change, including money to add solar panels to three state prisons, increase the energy efficiency of public buildings and fund anaerobic digesters to reduce waste. There’s also money in the budget to increase vanpools.

The Climate Action Team, which Gregoire convened last year to come up with concrete ways to fight climate change, earlier this month called for more energy-efficient buildings, compact urban development, better collection of recycled materials, reduced driving and revised development rules to account for greenhouse gas emissions.

Janice Adair of the state Department of Ecology said the state won’t pursue some of those recommendations next year, such as giving tax credits to buildings that reduce energy use.

She said other groups or legislators may push for them, and some efforts, such as revising the energy code to reduce energy use, can still be done.

Some environmentalists say they understand the situation.

“It’s obviously a dismal budget situation,” said K.C. Golden, policy director with Climate Solutions. “We’re not expecting enormous public investment.”

He said there’s opportunity for private investment in energy-efficient buildings and through the cap-and-trade program.
However this plays out, it will be certainly be one of the issues that businesses and environmentalists will be keeping an eye on this session.