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Washington carbon exchange lets many big polluters off the hook

caption: The sun sets behind the Marathon Petroleum refinery in Anacortes in April 2022.
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The sun sets behind the Marathon Petroleum refinery in Anacortes in April 2022.
Courtesy of Kathleen Lumiere

State officials are putting the final touches and taking public comment on the centerpiece of Washington Gov. Jay Inslee’s push to fight climate change.

Critics say the state’s new system for capping greenhouse gas emissions from major polluters lets many of the worst climate offenders off the hook, forcing others to shoulder more of the burden of keeping the planet livable.

“It is the premier policy vehicle that's going to try to drive our economy towards clean energy, and if it works, it will be fantastic,” said climate activist Clif Swiggett with Carbon Washington.

Swiggett says that’s a big if.

For Washington to slash emissions in line with its own mandates and with scientists’ estimates of what is urgently needed to forestall catastrophic warming is no small undertaking.

“It's very, very unlikely that we're going to hit our greenhouse gas targets, given that industry is exempt,” Swiggett said.


or centuries, humans have used the atmosphere pretty much like an open sewer – a place to dump our pollution and forget about it.

In Washington state, that long history turns a corner in January.

Big polluters will have to start paying to pump climate-harming substances into the air. As a group, they’ll quickly have to reduce the volumes they emit — by 7% annually, halving their climate impact in less than eight years.

But not all big polluters have to clean up their acts.

Some, including oil refineries, pulp mills, and steel mills, will get to keep polluting for free, at close to their current levels, through the year 2035.

Other sources, including airplanes, ships, farms, and the military, are not covered at all by the state’s “cap-and-invest” (or “cap-and-trade”) system. They total 25% of the state’s greenhouse gas emissions but face few or no limits on their climate pollution.

“This gives the highest emitters in Washington state a free pass to pollute, while individuals in front-line and overburdened communities, they are going to be the ones paying with their health and their life expectancy,” said climate-justice activist Guillermo Rogel Jr. with the group Front and Centered.

The group released a report on Thursday criticizing Washington’s cap-and-invest system.

Under that system, many entities pumping out at least 27,500 tons of carbon dioxide a year (or the equivalent in other heat-trapping gases like methane) will have to buy “allowances” to pump those greenhouse gases in the air. Proceeds from auctions of those pollution permits are expected to raise $500 million annually, with at least 35% to be spent to benefit tribes and other low-income communities hard hit by fossil fuel pollution.

Any business that goes over its carbon cap can buy more permits from other polluters.

The no-cost allowances provided to refineries and manufacturers could save them $4 billion or more over the next 12 years.

“I think the system is trying to be fair and trying to reduce greenhouse gases, but in a way that, hopefully, will keep businesses and keep jobs in the state,” said Luke Martland, who manages the cap-and-invest system for the Washington Department of Ecology.

“It's a way to use market forces to incentivize big reductions in greenhouse gases statewide and get us to our greenhouse gas reduction targets,” Martland said.


ashington is the second state to implement a cap-and-trade system for a broad swath of its economy, following California.

In California, heavy industries get free carbon allowances, similar to Washington, but the industries have to reduce their emissions 4% a year, the same rate as everyone else covered by the law.

Under Washington’s cap-and-invest law, refineries and other heavy industry have to reduce emissions 0.75% a year, while other polluters have to cut their climate impacts nine times faster, or 7% a year.

“It has an essential unfairness about it that I don't think has been highlighted, but it could create political problems downstream,” said Clif Swiggett with Carbon Washington.

“Your average guy, the electrician, plumber, whoever, house cleaner — people who are working hard in this state aren't going to be given any free allowances,” Swiggett said. “They're just going to see that it costs them more to get to their job.”

At hearings in Olympia in January, industry groups lined up to say they understood the need to protect the planet, but their businesses needed the special treatment to survive and stay in the state.

Without that treatment, “our steel, which has the lowest embodied-carbon content on the planet, would be replaced by steel from a more carbon-intensive producer outside the state of Washington,” said Patrick Jablonski, environmental manager of the Nucor steel mill in West Seattle.

“From a climate perspective, we want to make steel here. This is a great place to make steel,” he said.

Heavy reliance on hydropower gives the Northwest an unusually climate-friendly electricity supply.

“The everyday products that we make won't just disappear from store shelves. They will be made in other countries that have little regulatory oversight and higher emissions profiles,” lobbyist Joshua Estes told legislators on behalf of the Association of Western Pulp and Paper Workers Union. “That means more global emissions.”

The industry groups testified in opposition to a proposal to get industry to pull its weight for the climate starting in 2035.

The bill’s primary sponsor, Democratic Rep. Joe Fitzgibbon of Seattle, said it aimed to close the gap between “a very, very gentle reduction curve” that the favored industries currently face and the much steeper reductions others face, but without driving businesses away from Washington.

“There's a lot of very important economic activity in our state in these sectors,” Fitzgibbon said.

Not all big polluters spoke against tighter regulation 13 years from now to help the climate.

“If I told you today that we have figured out how to get to net zero [emissions] at the refinery, that would not be accurate,” said Tom Wolf with BP America.

BP’s Cherry Point oil refinery is Washington’s second-biggest source of greenhouse gas emissions. It is expected to become number one in 2025 when the TransAlta coal plant in Centralia closes.

“We're trying to find the ways to do that. We do believe that with time and innovation and incentives and programs like this, the innovation will be there for us to get there,” Wolf said.

But with many industry groups opposed to speeding up their transition away from fossil fuels, the legislation died in the state House of Representatives.

The hour is too late for anybody not to shoulder some of the burden of defending the global climate, according to activist Jill Mangaliman with Front and Centered.

“Companies, industries also have to change,” Mangaliman said. “All of us have to change our practices. We have to transition this economy or else, you know, the consequences are drastic for everyone.”

The Washington Department of Ecology is taking public comments on its cap-and-trade system through July 15.

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