A new report suggests that Washington state’s cap-and-trade policy may barely make a dent in reducing industrial greenhouse gas emissions. The report, authored by environmental researcher Greg Karras, was sponsored by the organization Front and Centered, a coalition of more than 70 people of color-led groups across the state focused on climate and environmental justice.
In a June 23 press conference, Karras said that the vast majority of industrial emissions would not be covered by the carbon pricing policy.
He said that, in the best case scenario, 94 percent of the permits to emit pollution will be given away to industries for free by 2034.
The cap-and-trade scheme, signed into law in 2021, is only the third carbon-pricing policy to be implemented in the United States after California’s and a regional electricity-focused cap-and-trade program in the Northeast. It is a signature element in Gov. Jay Inslee’s climate change mitigation plan, with Inslee saying last year that the law “may be the most important environmental legislation in our state in the past 50 years.”
The idea behind cap and trade is to increase the cost of polluting by limiting the total amount of greenhouse gasses — specifically carbon dioxide — a big industrial polluter can emit. Over-polluting companies can buy credits from other polluters who don’t reach the cap. By increasing the total cost of releasing carbon dioxide, carbon-pricing proponents believe that industries will have to decarbonize in order to stay in business.
However, the Front and Centered report puts into question the true efficacy of Washington’s new cap-and-trade policy. The report points to the fact that the most-polluting industries — paper mills and petroleum refineries — fall under the “emissions intensive, trade-exposed” (EITE) category, meaning that they get free pollution credits relative to historical emissions levels between 2015 and 2019.
The report claims that these EITE emissions account for at least 90 percent of all industrial emissions included in the cap-and-trade program.
Karras warned that emissions could continue to increase into the 2030s due to the free credits given to exporters. He pointed to the example of California, where petroleum refineries have increased emissions since the passage of the 2013 cap-and-trade law.
At the press conference, Karras said that because of the exemptions EITE industries receive under the program, other polluters in Washington would have to cut close to 60 percent of their emissions to be able to make up the 50 percent carbon dioxide reduction goal that Washington committed to by 2030. Some of these industries, such as the airline industry, would be very difficult to decarbonize, he said.
Karras said that while it’s already unclear how effective carbon pricing is in encouraging industries to decarbonize, the free credits given to exporters completely undermines it.
“But then if you’re just saying, you don’t even have to pay: ‘We’re giving you permits to pollute for free.’ … That’s not going to reduce emissions,” Karras said.
“And, depending on the situation, [emissions] could continue to increase as the industries follow their development path and expand.”
Karras also said that the more the state delays on reducing emissions, the more unjust the decarbonization transition will be, as industries go out of business and workers get laid off with no plan in place.
Jill Mangaliman, a board member of Front and Centered, said that policymakers must center frontline communities — who are already affected the most by pollution — so that transitioning to a low-carbon economy does not further marginalize them.
“The thing that needs to be emphasized is that it has to be a just transition,” Mangaliman said. “We can’t continue to sacrifice Black and Brown people, working class low-income people for the greater good and let these bigger industries, let people with a lot more resources, get off with a free pass.”
Front and Centered is calling on Washington state to directly regulate polluting facilities to achieve the necessary carbon reductions.
Karras said that tackling the climate emergency requires implementing all the policy tools in the toolbox.
“These problems with the new policy here are real and won’t go away till they’re solved,” he said.
This article has been updated to clarify the types of emissions covered by the cap-and-trade policy.
Read more of the June 29-July 5, 2022 issue.