Washington Business Fall 2016 | Washington Business | Page 36

business backgrounder | regulatory

Airing Out the Clean Air Rule
The state’s rushed Clean Air Rule sets stage for chaotic and costly carbon
cap implementation, with potentially devastating economic repercussions.
Bobbi Cussins
In one of the greenest economies and states in the nation, Washington Gov. Jay Inslee directed
his state Department of Ecology to draft complex, heavy-handed and costly new regulations to
cap and tax carbon emissions. And, he wants them implemented this year — a task
that may be completed, but not without challenges, including a court challenge filed
“The consequence
by AWB and a coalition of employer groups in September.
Washington state is poised to adopt a controversial, first-of-its-kind carbon cap-and-trade
tax policy at the direction of Gov. Jay Inslee, with unknown costs and consequences.
The timing and rush for the new and untested regulations on employers, particularly
those in energy-intensive, trade-exposed operations (EITE), raises concerns about the
economic repercussions for the state, its workers and families. That’s aside from questioning
the need for such a policy in one of the cleanest and greenest economies in the nation and
world.

of this policy
is that our most vulnerable, those
on fixed-income or living handto-mouth, will be forced to choose
between warmth and food.”
– Dan Kirschner, executive director,
Northwest Gas Association

clean air rule 2.0: carbon cap-and-trade energy tax
After bipartisan rejection of the governor’s attempt at a cap-and-trade energy tax in the 2015 Legislature, Inslee issued an
executive order to the state Department of Ecology (DOE) to draft a Clean Air Rule (CAR) that would essentially do the same
thing — cap and tax carbon emissions within the state, a move that may not pass constitutional muster.
The Association of Washington Business and its members detailed massive cost of compliance miscalculations in the first
version of the rule released last year, causing
the DOE to redraft the regulation.
The second iteration of rule, released
June 1, allowed for public comment through
July 22, with adoption and implementation of
version 2.0 of the rule scheduled for late fall.
The Clean Air Rule would require businesses and organizations responsible for
large amounts of greenhouse gas emissions —
including natural gas distributors, petroleum
product producers and importers, power
plants, metal manufacturers, waste facilities,
and others — to show every three years that
they’re reducing emissions an average of 1.7
percent annually.
In order to reach the mandate, companies
can cut emissions on-site through technology
or innovation; buy “emission reduction units,”
or “carbon credits,” from other emitters that
are below emissions quota; earn them from
emissions reductions projects like methane-toMonique Trudnowski, owner of the Adriatic Grill, testifies before the House Appropriations
Committee in March 2015 on Gov. Jay Inslee's carbon cap. After the governor's proposal failed to gain
energy converters; or buy “carbon reduction
traction in the Legislature, he imposed the rule administratively. Also testifying: Ian Tolleson of the
allowances” from out-of-state markets
Northwest Food Processors Association, Chris McCabe of the Northwest Pulp & Paper Association,
approved by the DOE.
and Tim Boyd of Industrial Customers of Northwest Utilities.

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