Washington State carbon fee initiative 1631 fails – Analysis

Washington Initiative I-1631, Carbon Emissions Fee Measure (2018), has failed to get approval from the voters in Washington with 43.5% voting Yes and 56.5% voting No. In total, 2.8 million votes were cast in the November 6, 2018 election. I-1631 called for an escalating $15/tonne fee on carbon dioxide emissions from many (but not all) sources of fossil CO2 in the state. The fee was set to escalate at $2/tonne + inflation till 2035, or until the state’s CO2 emissions targets were met. The money was to be used for a variety of investments, split up as 70 percent to the clean air and clean energy account for investments related to air quality and energy, 25 percent to the clean water and healthy forests account for investments related to water and forests such as programs, activities, or projects that: 5 percent to the healthy communities account for investments related to communities, such as programs, activities, or projects that: Complete details are here:

This follows the failure of Washington Initiative  I-732 two years ago in November 2016. I-732 called for an escalating revenue neutral carbon tax, with money raised going mostly towards reducing the state’s sales tax. The tax was also to start at $15/tonne, but then increase to $25/tonne the next year, and increase $5/tonne per year after that. Voters rejected it with 40.7% voting Yes, 59.3% voting No and 3.1 million votes in total.

On the surface, the failure of I-1631, a carbon fee and invest the proceeds measure, in arguably the second greenest state in the US (after California), does not bode will for the Not Impossible Plan proposal which calls for a $20/tonne fee and using the money for zero interest loans for renewable energy projects managed by the National Renewable Energy Fund.

Characteristics of the three schemes

There are four major differences between I-1631 and the NREF plan.

1. The fee amount. The maximum fees per tonne are very different. In I-1631 the increases are unlimited, while with the NREF, they are limited to $20/tonne + inflation.
2. The use of the fee money. For NREF the use is constrained to only loans for renewable energy projects, while in I-1631 the money can be used for many non-renewable energy projects. Also, the NREF can only be used for loans, so the money can be recycled into future projects, while I-1631 plans to spend the money each year.
3. How the funds are managed. While the I-1631 wasn’t totally clear on the management structure, the board was intended to made of stakeholders in areas like health and public lands. The NREF is envisioned as more of a professional investment structure, where decisions are based on the CO2 reductions involved rather than any social aspects.
4. Clear projections of CO2 emissions reductions. While I could find lots of projections about the costs of I-1631 (and I-732), I could not find any projections of reductions due to the fee. There were goals but no claim was made that this fee would result in reaching the goals. With NREF it is possible to make firm emission projections (given a set of assumptions of course.)

The lack of clear emission projections were featured prominently in the anti-I-1631 pronouncements. Along with the usual “this is going to cost families money” line, they also included “and there is no guarantee this fee will actually lead to reductions.”

What would the outcome have been if the yes side could say all the fee is going directly to reduce fossil CO2 emissions and creating for jobs that go along with that, that the cost per tonne will never increase (other than inflation) and it is guaranteed to reduce CO2 emissions by 80% by mid-century? While it would be unlikely to get 80% approval, it is possible to see it getting over 50% approval.

I hope the fine people of Washington state don’t give-up on the laudable task of tackling fossil CO2 emissions in their state. The support for action is there, it just has to work and not cost too much.