Posted on March 10, 2020 by Mark W. Schneider
In Washington State, some legislators and regulators have been acting locally. But are they thinking globally?
Our two-term governor sought for years, unsuccessfully, to persuade our legislature to authorize a statewide program to reduce carbon emissions. After several unsuccessful attempts, his Department of Ecology passed the Clean Air Rule (Chapter 173-442 WAC), which attempted to accomplish by regulation what he couldn’t accomplish by legislation. The Clean Air Rule imposed requirements on direct and indirect emitters, with the goal of reducing carbon emissions in the state. Predictably, it was challenged. The trial court invalidated the Clean Air Rule in its entirety, and the Washington Supreme Court, by a 5-4 vote, ruled in January that the Washington Clean Air Act (Chapter 70.94 RCW) authorized Ecology to regulate direct emitters, but not indirect emitters. Ass’n of Washington Business et al. v. Washington State Dep’t of Ecology, 455 P.3d 1126 (Wash. 2020). Our legislature, with a different makeup of senators and representatives than in the past, is now considering several bills expressly authorizing Ecology to regulate indirect emitters. And in next year’s legislative session, the Governor, who is likely to be elected for a third term, may ask the legislature to pass a comprehensive cap and invest bill to govern emissions from Washington State sources.
Is this thinking globally? Does imposing carbon emission limits in Washington State lower or raise global emissions? Many observers, including Energy Intensive Trade Exposed entities (“EITEs”), have demonstrated that the state-only limits on carbon will lead to “leakage” – a reduction in emissions of greenhouse gases within the state that is exceeded by an increase in emissions of greenhouse gas emissions outside the state. Some of the EITEs engage in operations with far less “carbon intensity” (tons of carbon emitted per unit of product produced) than their competitors in other states and countries. With carbon emission limits, and resulting costs, imposed only on entities operating in Washington State, the EITEs may lose business to out-of-state competitors, many of which emit more carbon per unit of product. More carbon pollution. That’s local action that, along with other things, may contribute to global harm.
Or will this local action lead to global benefits? In the face of federal government inactivity on carbon, some states have already taken action on a statewide level. Will Washington State legislative or regulatory action induce more states to follow suit, and will that result in lower emissions of carbon in the country? And, if that happens, will other countries take action to lower global emissions? Or will it incentivize US companies to operate elsewhere in countries with less stringent emissions?
As this state/national/global tension continues to build, we need to think globally and act locally in a way that will result in reductions of global carbon emissions. In Washington State, one thoughtful step would be to regulate EITEs in a way that allows them to grow but doesn’t contribute to leakage. That could include measuring compliance for them based on output of emissions per unit of production, rather than mass of emissions. It could also mean recognizing past beneficial conduct and crediting EITEs for prior efficiency improvements that reduced the carbon intensity of their operations. And it could mean providing a variety of compliance pathways for EITEs, rather than simply requiring an inflexible linear reduction in emissions.
That’s one step. We need many others.