Carbon tax initiative would charge fee on polluters, spend money on clean energy
Washington state’s main labor organization lives by a proud motto: “Working people standing together.” But as voters cast their ballots in the midterm elections, they will have to decide on a carbon fee initiative that has divided the state’s labor movement, causing disunion among scores of unions.
The product of a year of deal-making, Initiative 1631 would create the nation’s first fee on oil refineries and other fossil fuel industries, raising an estimated $1 billion annually for clean energy and other projects. Oil companies are spending millions of dollars to defeat the initiative, while business leaders concerned about climate change, such as Bill Gates and Michael Bloomberg, have contributed millions to pass it.
But it could be the state’s union members — roughly of 580,000 them — who could provide the decisive margin for victory or defeat. Several of the state’s top labor leaders, including the president of the Washington State Labor Council, helped write the initiative, ensuring that it included provisions favored by organized labor.
“Right now is no time for small changes. We have to be bold,” said Jeff Johnson, president of the Washington State Labor Council and an architect of 1631. The initiative, he said, could help labor unions become part of the solution to climate change, while accelerating the state’s transition to a more carbon-free economy.
But unions that represent the building trades and refinery workers have come out against the carbon fee, fearing it could cost them jobs. Lee Newgent, former executive director of the Washington State Building & Construction Trades Council, says the initiative’s supporters exaggerate the clean-energy jobs that might result and downplay the jobs threatened.
“This whole idea of green jobs is bunk,” said Newgent, a paid consultant to the “No on 1631” campaign. “The supporters can’t tell what green jobs will be created, just that they will. That is not enough for me.”
Carbon fees and taxes are hardly a novel concept, having been enacted in several European countries and in British Columbia, Canada, Washington state’s neighbor to the north. Proponents say such levies encourage conservation and use of renewable energy, driving down emissions that are warming the earth’s atmosphere.
Yet no U.S. state has yet to enact a fee or tax on carbon, which is why Initiative 1631 is being watched by environmentalists and fossil-fuel industries nationwide. At least one poll suggests the measure stands a good chance of passing, with a Crosscut/Elway poll of 400 registered voters in early October showing 50 percent of those surveyed in support, 36 percent opposed and 14 percent undecided.
Initiative 1631 would place a $15-per-ton fee on carbon emissions from certain industries by 2020 — estimated to generate $1 billion annually by 2023 — with the fee increasing to $40 per ton by 2035. Decisions on spending would be made by a 15-member board, within perimeters set by the initiative.
Some 70 percent of the funding would go to “clean-energy infrastructure,” such as solar, wind and energy efficiency projects, as well as expanded transit. A quarter of the funding would go to water and forest projects — such as thinning to reduce wildfires, which release carbon emissions. Some 5 percent would go to offset impacts on low-income communities, such as paying for higher utility costs.
The carbon fee would be sure to increase gasoline prices — up to 14 cents per gallon, according to one analysis. Over time, it could also threaten jobs at oil refineries, including four in the northwestern Washington towns of Anacortes, Bellingham and Ferndale, where thousands of union members work. That’s one reason the Pacific Northwest Iron Workers came out against the initiative in September, with President Steve Pendergrass saying, “Now is not the time to put good-paying jobs at risk.”
Yet even here in Washington’s refinery region, some labor loyalists support the carbon fee. One of these is Steve Garey, a Skagit County machinist who worked for 25 years at Anacortes refineries and retired as head of the United Steelworkers local.
Garey says he’s grown increasingly concerned about climate change partly because of mounting scientific reports and the impacts he’s seen in his own backyard. Summer droughts in recent years have contributed to wildfires, dense smoke, depleted rivers and diminished irrigation water for many Washington state farmers.
“We have to act,” said Garey, a volunteer for the “Yes on 1631” campaign. “The science has told us for some time we are on a collision course with a difficult and maybe even impossible future if we don’t do something.”
Kristin Eberhard, a senior researcher for the Sightline Institute, a Seattle-based group that supports 1631, said the carbon fee could potentially create thousands of jobs, particularly in the retrofitting of buildings to make them more energy efficient. While the fee could also cause some negative effects, she said, they are unlikely to be widespread. “British Columbia’s program has been around for a while, and it hasn’t devastated their economy,” she said.
Initiative 1631 grew out of a losing effort two years ago to pass a carbon tax in Washington state, known as Initiative 732. That ballot measure was designed to be “revenue neutral” — with tax breaks offsetting the proposed carbon tax. But unions and social justice groups opposed the measure, arguing it would not benefit workers and low-income people. The oil industry also campaigned against the measure, which failed 59 percent to 41 percent
Less than a year later, a coalition of groups — including representatives of unions, Native American tribes, low-income communities and environmentalists — came together to draft what eventually became 1631. Johnson, the state labor council president, was part of that effort, ensuring the measure included provisions sought by unions, including labor standards and wage requirements for projects receiving funds.
The initiative also earmarks at least $50 million for a program to support refinery workers and others hurt by the transition away from fossil fuels. These funds could be used for wage replacement, health benefits, pension contributions, retraining costs, and other services.
Johnson acknowledges the “safety net” provisions of Initiative 1631 are untried, but he calls them a good-faith effort help smooth the state’s clean energy transition.
“This transition is going to happen,” said Johnson, speaking from the labor council’s offices in Seattle. “It can be merciless or brutal on people, or it can be built with workers and communities in mind.”
Despite his year-long involvement, Johnson was unable to persuade his state labor council to formally endorse the carbon fee initiative. Some 60 percent of union delegates at a May meeting voted to support Initiative 1631, short of the two-thirds needed for an endorsement.
Johnson blamed the setback on being “out-organized” by opponents, particularly Newgent of the building trades council. Newgent, he said, has “radically changed” the direction of the building trades, coming out in support of coal export terminals in Washington state and now campaigning against 1631 with the oil industry.
For his part, Newgent accused Johnson of letting his personal agenda get ahead of the best interests of the labor council, which includes more than 600 union locals statewide. “This is all about his personal views on environmental issues,” he said.
Voters in Washington state, who started receiving their ballots last week, will likely be inundated with Initiative 1631 television ads right though election day. The Yes campaign has raised $14 million so far, largely from The Nature Conservancy, Bloomberg, Gates and other Seattle tech entrepreneurs.
By contrast, the Sacramento-based Western States Petroleum Association has raised $25 million against the initiative, largely from oil companies with refineries in northwest Washington, including BP, Phillips 66 and Andeavor (formerly Tesoro).
The oil companies are focusing their attack on “carve outs” in the carbon fee initiative, which exempts companies facing international competition. These include Boeing, with 81,000 employees in the state, and the state’s sole remaining aluminum plant, owned by Alcoa, in Ferndale. The initiative also exempts the TransAlta coal plant in Centralia, which is in the process of closing down by 2025.
During a recent debate in Seattle, Dana Bieber, spokeswoman for the No campaign, blasted these exemptions and blamed them on “big polluters who were able to cut a deal.”
Yet supporters of 1631 that, before going to the ballot, they tried to engage the oil industry on a carbon fee proposal that the Legislature could enact. “Big Oil has opposed us at every turn,” said April Sims, political and campaign director for the state labor council.