Future of Washington state’s climate-pollution fund up in the air

Washington Gov. Bob Ferguson wants to slash spending on climate change as the state faces severe budget pressures.

His proposed budget would redirect $569 million from the state’s quarterly auctions of pollution permits away from the environmental spending those funds have been dedicated to since the auctions began in 2023. That half-billion-plus dollars would be used to shield state refunds of sales taxes for lower-income taxpayers from the budget axe.

“He is making this decision to avoid cuts to critical services to Washingtonians,” Ferguson spokesperson Brionna Aho said by email. “The alternative is hundreds of millions of dollars in cuts to key programs that assist hardworking Washingtonians.”

The pollution auctions have been a major revenue source for the state’s environmental programs and a major expense for polluting businesses, with $5 billion worth of pollution permits auctioned off in three years.

To date, the auction funds — paid by major polluters for the right to keep damaging the global climate with emissions of heat-trapping gases like carbon dioxide — have gone mostly to expand clean energy use and to help 16 communities in Washington identified as being overburdened by air pollution.

The Climate Commitment Act, which created the state’s cap on carbon emissions and system of carbon auctions, specifies that the sales-tax refunds are an approved use of auction proceeds, though no auction proceeds have been used for tax rebates to date.

“It's in the legislation. It's an entirely appropriate use,” Ferguson said at a December press conference rolling out his proposed budget. “Is it ideal? No.”

Swinomish Tribal chairman Steve Edwards said auction revenue has helped his tribe start to turn away from fossil fuels.

“Without those funds, we wouldn't be close to where we are today,” Edwards said.

In 2022, when he was running for reelection to the Swinomish Tribal Senate, Edwards visited with tribal students at La Conner Middle School.

“A couple of the students said, ‘Why don't we have solar?’ And I said, ‘That's a very good question,’” Edwards said.

At the time, the Swinomish Tribe had a clean energy plan but little money to turn it into reality.

Since then, seven clean-energy projects — five of them funded by carbon-auction proceeds — have helped the tribe turn to the sun. Buildings including the tribal headquarters, youth center, medical clinic, fisheries department, and 33 low-income homes now have solar panels and backup batteries.

Rooftop solar has helped some tribal citizens lower their monthly energy bills from $160 to $10, as well as avoid blackouts.

Half of electricity sold by Puget Sound Energy, the primary power provider for the Swinomish Reservation, came from burning fossil fuels in 2024, according to the Washington Department of Commerce.

Fossil-fuel combustion is the primary cause of the planet's rapidly heating climate.

Edwards said he hadn’t heard about the proposal to redirect carbon-auction funds away from clean-energy projects.

“It is so beneficial to our community, and I would like more communities and more kids to be able to experience what we've experienced,” he said.

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Republican legislators welcomed Ferguson’s proposal, while environmental groups panned it.

“Using Climate Commitment Act dollars to fund the working families tax credit has been a Republican priority and proposal for the last several years,” House Republican Leader Rep. Drew Stokesbary said. “I appreciate him following Republicans’ lead on this issue and recognizing the good idea that we had.”

The nonprofit Climate Solutions called Ferguson's proposal an “unprecedented raid on funding for clean energy and climate” in a press release.

Legislators are debating how the state should address its various budget woes during a 60-day legislative session that began Monday.

Ferguson’s office said the governor welcomes other ideas from legislators on ways to avoid draconian budget cuts and make Washington more affordable.