Washington state’s landmark climate law faces Election Day test

Three years ago, Washington state legislators passed a landmark climate law that positioned the Evergreen State among the nation’s frontrunners in climate action. Now that status is at risk, thanks to an upcoming ballot initiative this November.

The 2021 Climate Commitment Act introduced a statewide cap-and-invest program — only the second in the nation after California’s — requiring businesses to purchase allowances to emit greenhouse gases. The system is designed to help Washington achieve its climate goals of nearly halving economy-wide emissions by 2030 and virtually eliminating them by 2050.

Since its official launch in January 2023, Washington’s cap-and-invest program has raised over $2 billion in revenue — cash that’s already started to flow toward thousands of clean energy, public transit, energy efficiency, and climate adaptation projects in cities and towns across the state.

This Election Day, Washingtonians could put a stop to all that. Voters will have the chance to weigh in on a ballot measure spearheaded by local hedge fund millionaire Brian Heywood that aims to repeal the state’s climate law and its signature cap-and-invest program.

Proponents of the measure, I-2117, claim the policy has imposed burdensome costs on businesses and consumers. Environmental advocates say a repeal would jeopardize a crucial source of funding for hundreds of state programs, chilling climate progress in Washington and beyond.

“It’s hard to overstate the impact” of a potential repeal, said Caitlin Krenn, climate and clean energy director for the advocacy group Washington Conservation Action. ​“We’re talking billions of dollars that would be lost” in terms of funding for clean energy and electrification projects.

How Washington’s ambitious climate law came under fire

Washington’s cap-and-invest law arrived after years of attempts to introduce carbon pricing in the state.

The program sets an annually declining cap on statewide carbon emissions and creates a fixed pool of ​“allowances” based on that limit. Large businesses covered under the law, including utilities, refineries, and heavy industry, must bid to purchase allowances equal to the amount of carbon dioxide they emit. As time goes on, the number of allowances shrinks, raising carbon prices in an attempt to prod businesses to proactively reduce emissions. Revenue from the program gets funneled to decarbonization efforts.

Close to 75 percent of the state’s emissions are covered under the system.

While many states, Washington included, have passed climate policies targeting specific industries, such as clean fuel standards, cap-and-invest programs are one of the best ways to ensure states can reach broader emissions-reduction targets, according to Caroline Jones, senior analyst at the nonprofit Environmental Defense Fund.

These programs ​“act as a backstop, or insurance policy, alongside those sector-specific policies,” Jones said. ​“So if those policies don’t deliver the level of reductions that had been hoped, there’s still a plan in place to make sure emissions are going down.”

In terms of their scale, the emissions-reduction targets Washington aims to hit with its cap-and-invest program surpass even California’s goals. Washington’s law also includes provisions to identify and reduce harmful air pollution in communities most impacted by it. Taken together, these features make the policy a ​“gold standard” among state climate initiatives, said Jones.

That same ambition has prompted major backlash from local conservatives, who are hoping to not only end the policy but also prevent the state from ever enacting a cap-and-invest program again.

Heywood, who lives in the Washington city of Redmond, launched the campaign to repeal the state’s climate law last year. His political action committee, Let’s Go Washington, spent around $7 million — with more than $6 million coming from Heywood himself — to fund signature gathering for the initiative, along with several others that have successfully landed on this year’s ballot. Another measure, I-2066, aims to prevent restrictions on natural gas use in buildings, while two others target the state’s capital gains tax and long-term-care insurance program. Let’s Go Washington counts among its donors and top supporters the state’s Republican Party.

Heywood and other backers of the repeal, including industry interests and conservative groups, have blamed the cap-and-invest program for Washington’s high gasoline prices, claiming that refineries and other regulated businesses have passed on the program’s costs to consumers. (Heywood’s initiative first emerged after gas prices briefly rose to the highest in the nation last summer.)

But experts at the Washington Department of Ecology say that multiple factors go into the state’s gas prices, including the global crude oil market as well as individual oil companies’ choices on which expenses to pass on to consumers. They estimate that the climate law has led to an additional cost of about 10 cents per gallon, though gas prices have fluctuated since the cap-and-invest program’s introduction.

Meanwhile, current and former state lawmakers point out that the oil industry provides little to no transparency on its profit margins, making it impossible to tell how much the climate law is impacting consumer costs.

“Right now, we have no visibility,” Democratic state Senator Joe Nguyen told The Seattle Times last year. ​“Washington state is held hostage to oil companies, whether the climate bills are in place or not.

The consequences — and chances — of a repeal 

Washington lawmakers have so far earmarked billions from the cap-and-invest auctions to fund climate solutions — and given how new the program is, much of that money is just starting to flow to communities across the state.

So far, revenue from the Climate Commitment Act has provided $115 million to help low-income households and small businesses purchase heat pumps and other electric appliances, $150 million to offset household energy costs, and tens of millions in additional funds to electrify the state’s ferry system and help schools switch to electric buses.

The law has also funded free public transit for anyone 18 or younger since last year. Auction revenues have also pumped millions into the state’s transportation funding to improve road infrastructure and biking and trail routes and to fund tribal transit projects. Other investments have supported climate adaptation efforts, including $50 million for tribes grappling with global warming impacts such as erosion and sea-level rise.

Already, some experts have speculated that the repeal effort may have negatively impacted this funding stream for climate solutions. In recent auctions, carbon prices have dropped to among their lowest levels since the program’s introduction. The uncertainty spurred by the repeal initiative is a potential factor.

A repeal would outright eliminate what’s estimated to be billions more in funding for similar projects in the years to come. Some climate advocates also worry a repeal would slow momentum in other states that are considering similar cap-and-invest schemes, including New Jersey and Colorado.

Despite the high-profile opposition, Washington’s cap-and-invest program enjoys broad support within the state, including from unexpected backers such as the oil giant BP and the Western States Petroleum Association, an oil and gas industry lobbying group. No on 2117, a political action committee formed to oppose the repeal, has already raised nearly $12 million from donors including Microsoft co-founder Bill Gates and Amazon and other major companies, far outpacing the $5.5 million raised by Let’s Go Washington since the start of this year.

Meanwhile, recent polling indicates voters will likely reject the measure. A statewide survey conducted in early September found that 46 percent of voters said they would reject I-2117, while 30 percent said they would approve it (24 percent remained undecided).

Those numbers, said Krenn from Washington Conservation Action, prove that Washington’s climate law enjoys far greater support in the state than opponents claim.

“I think what we’re really seeing with Let’s Go Washington and this whole campaign is a very small, wealthy group of people trying to push their ideological vision onto the state, and they’ve run out of other venues to do so,” Krenn said, pointing out Washington’s Democratic-controlled legislature and governor’s office. ​“They’re just desperate to find some way to impose their vision.”