Learning from California

What Washington’s learning from California on climate

Washington Gov. Jay Inslee is preparing to fend off a familiar challenge to the state’s landmark carbon program.

By JORDAN WOLMAN

Washington Gov. Jay Inslee is facing multiple attacks on his signature carbon-pricing program. He can look south for solace.

California ran a strikingly similar obstacle course more than a decade ago on the way to establishing its cap-and-trade program, now an éminence grise with more than $28 billion in sales.

Whether Washington’s program can navigate the same obstacles will shed light on the durability of state-level climate programs — and to what extent ambitious Democrats like Inslee can continue trying to stake their reputations on tackling climate change.

“We have the benefit of 10 years of California learning,” said former Washington state Democratic Sen. Reuven Carlyle, who authored the state’s 2021 law. “In Washington, we have the luxury of going second.”

Washington is currently facing a November ballot initiative to overturn its year-old program that’s already spooked the market enough to send carbon prices down 50 percent from last year — part of a series of attacks from conservatives on similar programs across North America. There’s also a lawsuit from a former state employee who alleges officials are trying to suppress the program’s effect on gas prices. And on the left, environmental justice groups are protesting Inslee’s plans to link the market with California.

California, which hurdled an industry lawsuit, another from environmental justice groups and an oil-funded ballot initiative, is cheering Washington on.

“I am optimistic that things are going to fall into place just as they did in California,” said Katelyn Roedner Sutter, the Environmental Defense Fund’s California state director. “This is just some natural growing pains that Washington will grow out of.”

Washington’s already learned some lessons that could help it at the polls, like calling the program “cap and invest” instead of “cap and trade” as in California. Carlyle said the name change was meant to emphasize benefits.

“We got to design a version 2.0, and a lot of the learning is that the investment dollars are the central drivers of value,” he said. Inslee is leaning into that as well, pointing to state investments in things like transportation infrastructure and heat pump and solar installations.

“Families are now seeing the benefits,” Inslee, a Democrat who leaves office in January, said in an interview last month. “They don’t want to lose those benefits.”

Another point in favor of the growing-pains argument: While the fossil fuel industry backed the 2010 ballot initiative to overturn California’s suite of climate programs, oil companies this time are either staying neutral or — in the case of oil major BP, which contributed $1 million — actively fighting the repeal effort.

“We’re staying out of it,” said Kevin Slagle, a spokesperson for the Western States Petroleum Association. “Our focus has continued to be that we don’t need to repeal it, we need to fix it,” citing concerns about the supply of allowances being too tight and driving up prices.

But the ballot initiative’s backer, conservative hedge funder Brian Heywood, also took lessons from the Golden State. He contends the emissions-capping program has led to high gas prices in Washington — a charge the Inslee administration rejects.

“I learned from California: That’s why I’m trying to stop this damn thing before it becomes so entrenched that you can’t get it out,” he said.

California voters soundly rejected a 2010 ballot measure seeking to suspend the state’s landmark climate law that established pollution reduction goals and a cap and trade program until unemployment dropped to 5.5 percent for at least a full year.

California also survived two lawsuits against cap and trade at the outset: A 2009 challenge from environmental justice groups over the state’s choice of cap-and-trade to reach its emissions targets and a 2012 challenge from the California Chamber of Commerce that, after multiple appeals, wrapped up in 2017.

Washington voters have rejected emissions-capping programs at the ballot in the past. Polling on the current measure to repeal the program varies widely, with one conducted in April by a group opposing the ballot measure finding it would fail by 20 points and another more neutral one conducted earlier this month showing it with a 10-point advantage.

The fact that California rode its wave of early turbulence to become a carbon-trading veteran is inspiring confidence in supporters of Washington’s program that they can push through.

But the fact that carbon prices are low “right now, from a political perspective, falling auction prices are not a bad thing for us,” said Washington state Democratic Sen. Joe Nguyen, who co-sponsored the law. “As long as we defend this program, we’ll be OK.”