A carbon cap, but what then?

Among those who are concerned about the effects of climate change and want to see steps taken to slow it, most are supportive of placing a cap on carbon emissions.

Carbon dioxide, while only a small fraction of a percentage of our atmosphere, is increasing. That increase in carbon dioxide and other greenhouse gases from the burning of fossil fuels traps more heat from the sun in the atmosphere, contributing to global warming and climate change. Climate change may not get the blame for this year’s low snowpack and drought, but many see this as a glimpse into our new normal later in the century.

Put a cap on carbon emissions and maybe we can begin to slow climate change.

It’s what happens after the cap that has caused a split in Washington state among environmental groups, public officials and others.

Gov. Jay Inslee, at the start of the year, wanted the Legislature to take up his proposal for a carbon cap-and-trade program that would have set limits for industrial carbon emissions, allowed industries to buy and sell carbon credits and generated $1 billion a year in new state revenue through fees. When the proposal didn’t advance in the Legislature, Inslee changed his tack earlier this summer and had the Department of Ecology begin work to implement a carbon cap, while leaving out, at least for the time being, the trade mechanism and the revenue it might have generated for the state.

Another proposal, this time by a group calling itself Carbon Washington, wants to tax carbon to encourage its reduction. But instead of using it as a additional source of income for the state, its initiative to the Legislature, I-732, seeks to be revenue neutral. Phased in over two years, the proposal would tax industries $25 for each ton of carbon they produce, increasing 3.5 percent plus the rate of inflation until reaching $100 a ton. But the revenue it would generate would allow for reductions in the state sales tax and the state business and occupation tax for manufacturers. The state’s portion of the sales tax would be cut by a penny to 5.5 cents per dollar from its current 6.5 cents. The B&O tax for manufacturers also would be significantly reduced.

The revenue also would go toward funding of the state’s earned income tax credit for low-income working families, a program that currently exists but has been in limbo without funding. A credit of up to $1,500 would be provided as a match to the federal earned income credit for about 400,000 low-income households in the state.

But don’t expect a windfall. Carbon Washington says most families can expect their tax burden shifted one way or the other $100 to $200 as the sales tax declines but the price of gas increases.

Carbon Washington currently is gathering signatures to put the issue before the Legislature. If it doesn’t adopt it, the measure then goes to the ballot in November 2016. It has gathered about 191,000 of the 247,000 signatures it needs to qualify before the end of the year. Organizers are hoping to gather about 330,000 to assure a buffer against disqualified signatures.

We’ll wait to decide on a full endorsement of the initiative, but I-732 has a few merits beyond its cap on carbon: The reduction in the state sales tax is a side-benefit that would begin to address what is among the most regressive tax systems in the nation. And there’s some limited potential to attract support among conservatives who see earlier proposals as damaging to business. With that support Washington state could be a leader in the country as a way forward on carbon reduction from the middle ground.

There are concerns, as well: It is essentially a sin tax that, if successful, results in a reduction of the thing being taxed. I-732 attempts to address this with its incremental increases, but we’re not convinced that it will always bring in enough to replace what would be lost in the reductions to the sales tax and B&O tax.

In voicing opposition to I-732 from the left, the Alliance for Jobs and Clean Energy says it is working on its own carbon cap proposal but has not released details.

Without another plan before us, I-732 is what is now available to allow the discussion to continue about how we reduce carbon emissions and take climate change seriously.

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