Second time the charm? Washington Gov. Inslee proposes new $25 carbon tax in budget

Dive Brief:

  • Washington Gov. Jay Inslee last week released his 2017–19 budget proposals, which included a $25/metric ton carbon tax beginning in 2018 to help pay for the state's education system.
  • A similar carbon tax was rejected by voters in November, and according to The Spokesman-Review, faced resistance from Republicans in 2015 in the state's legislature.
  • Under Inslee's proposal, the carbon tax rate would increase annually by 3.5%, plus inflation, and is estimated to generate $1.9 billion in its first year and $2 billion in its second.

Dive Insight:

Inslee is committed to the concept of a carbon tax, which would be the first of its kind in the United States. Despite his initial plan being rejected by voters in November, and legislators in 2015, the governor is now including the proposal in his draft budget.

"By setting a price to discourage carbon pollution and incentivize clean alternatives, a tax will work in combination with other state policies, such as our renewable energy standard, to significantly reduce emissions to meet state limits," the proposal explains. 

The tax would apply to both sellers and users of fossil fuels, and would be levied on the "first possession," meaning that it would be imposed on any company that generates or imports electricity, natural gas or petroleum. The plan would exempt power generated by TransAlta’s facility in Chehalis, however, which is exempt pending its shutdown.

About half of the revenue generated by a carbon tax would go to fund education, with the remainder earmarked for decarbonization. According to the budget, that includes spending on energy efficiency, electrification of transportation and other programs.

The ballot initiative rejected by voters in November would have enacted a tax of $15/metric ton beginning next summer, rising to $25 in July 2018, and then 3.5% annually until $100. But it garnered weak local support, with many advocates saying the revenue from the proposal should be directed towards clean energy efforts. Inslee's new budget proposal appears to send significant revenues towards that end.

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Filed Under: Generation Regulation & Policy
Top image credit: Flickr; Señor Codo