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Washington Carbon Tax Advances

Pending legislation would likely force gasoline prices up 10 CPG

OLYMPIA, Wash. -- Legislation that would create the first direct carbon tax in the United States—a tax that would likely force an increase in gasoline prices—has passed a critical fiscal committee in Washington’s state Senate, the Associated Press has reported.

On Feb. 22, the Washington Senate Ways and Means Committee voted in favor of Senate Bill 6203, which would impose a tax of $12 per metric ton of carbon emissions on the sale or use of fossil fuels, including gasoline and natural gas. The tax would start in 2019; then, beginning in 2021, it would rise $1.80 per ton each year until it reaches $30 per ton, or around 2030.

The state would levy the tax once at the first point of sales or use, AP reported, but experts expect it would be passed on to consumers. Legislative analysts estimate the carbon tax would lead to a 10-cent-per-gallon increase in gasoline prices in 2020, or almost 4% higher than typical growth trends. It would not apply to diesel, biodiesel or fuel used in certain energy-intensive agricultural and food manufacturing industries.

The $12-per-ton figure is lower than a failed proposal by Gov. Jay Inslee that would have imposed a $20-per-ton tax. In 2016, voters rejected a separate carbon-tax initiative, mainly based on where the revenue would go. Senate Bill 6203 is expected to generate $766 million in its first two years and grow to about $988 million in the next two years. Half of its revenues would be invested in projects that cut greenhouse-gas emissions, 20% would be applied to climate resilience measures, and the rest toward help for low-income families, fossil-fuel industry employees and economic development for rural areas.

Support among legislators for the bill is "lukewarm," AP reported, making it uncertain whether it can pass by the March 8 end of the legislative session. However, if it does not pass, a coalition of environmental, tribal and other groups pledged to get a carbon initiative placed on the ballot for November’s election.

In December, a judge ruled that the state could not force fuel distributors to comply with Washington's Clean Air Rule, which requires several industries to cap and decrease their carbon emissions by an average of 1.7% annually. The judge found that the state could not force distributors to reduce emissions on fuel they did not burn themselves.

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