Posted by: Tim Sweeney | March 1, 2015

Ericksen’s bill would gut energy act under the guise of climate action

The Policy Junkie takes a closer look at Ericksen’s climate change legislation. You can read his previous articles here.

Tim Sweeney is The Policy Junkie

Tim Sweeney is The Policy Junkie

Senate Republicans have been adept at attacking Governor Jay Inslee’s climate proposal in ways that put them in a good light.

In February, the Senate Republicans proposed a gas tax and transportation budget that generated some positive vibes from all over the state, given their general reluctance for tax increases. But as usual, the devil is in the details. The transportation proposal would take away funding for transit and pedestrian and bike paths if the Governor proceeded with state rules on low-carbon fuel standards.

Not one to be outdone, Sen. Doug Ericksen has used the “cap and trade” concept in the Governor’s climate proposal as window dressing in his effort to subvert the state’s alternative energy mandate.

“Cap and trade” is where a limit (or cap) is set on a form of pollution and the regulated polluting entities are allowed to sell (trade) the unused portion of their limits to others who have not yet complied. By inserting a market element into a regulatory scheme, the idea is to unleash creativity and innovation. This concept was successfully applied in the 1990 Clean Air act to reduce sulfur dioxide (acid rain) emissions.

The Governor’s climate proposal included a “cap and trade” program (SB 5283 / HB 1314) that would install a carbon emission cap, decreasing over time. The state’s largest polluters would be required  to buy or trade for emission allowances and carbon offset credits based on the metric tons of carbon they emit over that cap. The House version is now in the House Appropriations Committee awaiting a decision on how the $1 billion in annual revenue it would raise would fit into the next state budget. The Senate version of the bill, introduced by Senator Kevin Ranker, never received a hearing.

Ericksen and Ranker

Sens. Ericksen and Ranker

Instead, the Senate Energy, Environment and Telecommunications Committee, chaired by Senator Ericksen, took up SB 5735 which amends the state’s Energy Independence Act — a law that has been in Sen. Ericksen sights ever since it was approved by 52 percent of the electorate in 2006.  I-937, as it is most commonly called, requires that energy utilities ramp up their participation in conservation and alternative energy by setting specific targets. Though these targets are not “caps” in the sense of a pollution limit, they do provide a mandate for environmentally friendly investment.

I-937’s alternative energy mandate requires that power utilities serving more than 25,000 customers must obtain at least 15 percent of their electrical power from renewable sources such as wind and solar by 2020. Hydropower, with some exception, does not count toward the goal. Utilities, such as Puget Sound Energy, have had to meet a 3 percent target by 2012 and will need to hit a 9 percent target by 2016.

There is an escape valve. Utilities do not need to spend more than 4 percent of their annual retail sales per year in meeting this goal. If the utility is in a no-growth situation with no need to acquire power, a 1 percent spending limit is set. This proviso ensures that rates don’t increase significantly as a result of the requirement.

Sen. Doug Ericksen

Sen. Doug Ericksen

Sen. Ericksen’s proposal would give credit toward the alternative energy mandate if utilities invest in other, non-power generating carbon reduction activities, such as electric vehicle charging stations and converting fleets to alternative fuels. If these investments can be verified by a third-party to reduce carbon emissions, then that reduction would be converted into a credit towards meeting the 15 percent alternative energy mandate. This is the “sizzle” part of the bill that captures the idea of the carbon trading concept, without really using a cap.

I-937 advocates argue that the Senator is mixing apples and oranges by pirating a program that was intended to diversify the state’s energy portfolio and using it as cynical response to the Governor’s more genuine cap and trade proposal.

Sen. Ericksen argues that Energy Independence Act drives up rates, hasn’t produced enough jobs in Washington and still requires that fossil-fuel generation be created to firm up the variability of alternative energy sources.

Still, Puget Sound Energy, which delivers electricity to Skagit and Whatcom Counties, has easily met the mandate and did not participate in the hearing on SB 5735. One of the loudest whiners on I-937 (and loudest supporters of the Senator’s bill) is Benton PUD, which gets most of its power from hydro and nuclear and will likely spend close to the 4 percent retail sales cap to meet the 2020 goal.

What undercuts Sen. Ericksen’s grandstanding on being cap-and-trade friendly is the escape valve mentioned earlier. His bill would extend the 1 percent of retail sales spending limit to all utilities, not just those who are in a no-growth position. The lower spending threshold negates the “sizzle” part of the bill since it’s a relatively easy threshold to meet compared to the more difficult task of proving carbon reduction.

At its best, SB 5735 will not reduce carbon emissions any more than the current Energy Independence Act. More likely, it will be a step backwards.

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Responses

  1. I’m not sure Ericksen has even put forward a serious bill here. It gives the Rs something to vote on other than Inslee’s initiative and therefore splits support. Probably destroys both efforts this session, and enforces the status quo. A win for Ericksen’s backers in the energy industries.

    • Good point. File this bill under “baffle ’em with bullshit.”

  2. […] Didn’t I hear something about Ericksen’s climate change shenanigans? Something to effect of him trying to block Governor Inslee’s climate change efforts. For that whole discussion, stay tuned for tomorrow for a special report from The Policy Junkie.UPDATE: Click here for all the details on Ericksen’s efforts to thwart climate action! […]

  3. Perhaps the only thing more disingenuous than Senator Ericksen’s alternative energy proposal (redefining I-937) is his senate supporter, Tim Sheldon (D-Potlatch – Mason County), calling himself a Democrat.

    • It is more than a little trite for a “Democrat” from a town named after a timber company to throw his lot in with another shill for big natural resouce exploiters. Perhaps we should rename Ferndale “BP” so Doug Ericksen could be the Republican from BP.

      Duh – It actually makes more sense than Fernburg or Ferntucky.

      • I always thought the term Potlatch referred to the indigenous peoples’ gatherings for trade. The site of Potlatch State Park on Hood Canal is supposedly the traditional site of these meetings and is near Tim Sheldon’s home.

        Perhaps the timber company reference is more appropriately associated with Sheldon given his political proclivities, even though Potlatch Timber Co. is based in Spokane.

        I agree with your reference to Doug Ericksen.
        – Mike

      • From the Wikipedia entry on Potlatch, WA:
        “The town’s history dates to 1900, when Thomas Bordeaux became president of the newly incorporated Potlatch Commercial and Terminal Company. The company acquired timber lands and began construction of a logging railway to access them. Potlatch was built as a company town.”

        The actual name could have come from the use of the potlatch, but since Potlatch started as a company town, my point is valid.

        Potlatch, like Weyerhaueser, established itself in Washington state in 1900, AFTER they had perfected their tax dodges, financial shenanigans, and ability to exploit natural resources in northern Minnesota. Being from Minnesota originally, I am especially sensitive to this rape of the land that was perfected in the Land of 10,000 Lakes.

        As an interesting sidebar, here is a court case from 1900 in Itasca County, where I used to live. It foreshadows BP’s current efforts to shirk their taxes – which are already far too low.
        https://supreme.justia.com/cases/federal/us/176/550/

        It is a shame that Washington STILL kowtows to Eastern monied interests, like Peabody, SSA Marine, BNSF, etc. It really is just stupidity writ large. Rape the land and ship the money back East. What could possibly go wrong?

  4. I get awfully tired of the acid rain argument used as a rationale for cap and trade. There are many more nuances to the storied “reduction” in acid rain after cap and trade was implemented than just that single program. For example, if you go to the Wikipedia page for “acid rain” you find this:

    “Since the 1990s, SO2 emissions have dropped 40%, and according to the Pacific Research Institute, acid rain levels have dropped 65% since 1976.[37][38] However, although it reduced emissions by 40%, the US Acid Rain Program has not reduced SO2 emissions as much as the conventional regulation applied in the European Union (EU), which reduced SO2 emissions by more than 70%.[39] Therefore, the effectiveness of the emissions trading element as a mechanism has been criticised, since the EPA also used regulations to achieve the reductions, as all areas of the country “had to meet national, health-based, air quality standards that are separate from the Acid Rain Program’s requirements”.[40]”

    In other words, cap and trade is not a “silver bullet” which is how Inslee is marketing it. [And why in the hell does a Governor have to “market” something?] Another problem is the “windfall” generated by setting a free level based on current emissions production. Some of these questions are explained quite simply in Annie Leonard’s The Story of Cap and Trade.

    A better solution is what the EU came to after cap and trade did not work as well as expected. This is just carbon regulation – or “the polluter pays.” If Inslee really gave a rip about Washingtonian’s health, he would look at the mistakes of others and go for a carbon tax instead of cap and trade.

    • No disagreement from me. I didn’t intend this to be a story about the merits of “cap and trade” cause its beyond my ability to convey accurately. I’m with you on the carbon tax.

    • Thanks, Walter. Great video – easy to understand; I’m passing it on…

  5. I asked Chris Davis, the Governor’s senior carbon policy advisor, to discuss how Inslee’s cap and trade plan will not allow the corruption that took place with cap and trade in Europe.

    He replied, “No free allowances, buyers need to register and have ID, No single entity is allowed to purchase too many allowances, the trading is monitored”

    Kristin Eberhard of Sightline says Inslee’s plan has all the right stuff.

    • So, BP for instance, will have to pay for what they already pollute on a daily basis. Is that what Davis means by “no free allowances?”

  6. Pursuant to Don Steinke’s reply about Inslee’s plan, I got this off the Web. It was in the Seattle Times Feb. 5th.

    “The complexities of a cap-and-trade program have prompted some to favor a straightforward tax, without any cap on emissions.”

    “ ‘A carbon tax is clearer and easier to understand,’ said Yoram Bauman, a Seattle economist who heads up a Washington state initiative group that seeks to put a carbon tax on the 2016 ballot if the Legislature fails to act. That measure would be revenue neutral, cutting other taxes by amounts equal to the carbon tax.”

    “Inslee said he opted for the cap-and-trade approach because he wanted to let the market determine the price of carbon. He also wants assurances that state emissions would actually decline.”

    http://www.seattletimes.com/seattle-news/inslee-a-student-of-californias-carbon-cap-lessons/

    It seems to me that either: 1) Inslee has bought into the invisible-hand-of-the-market trope, or 2) he is confused. Specifically, conflating a state regulation with a non-state market approach shows confused thinking.

    Of course, if Jay Inslee just wants to kick the can down the road for another 10-20 years (which I suspect is his real motivation), a cap and trade is as good as any other policy. Meanwhile, the schools in Washington will wither and die on the vine, Bill Gates will make another $10 billion, the homeless problem will increase in Seattle and Bellingham, and we will all get asthma.

  7. BREAKING!!!!! Kremen not running for re-election!!!!! ________________________________________

    • Yaaaaaaaaaaaayyy!!!

  8. “There is an escape valve. Utilities do not need to spend more than 4 percent of their annual retail sales per year in meeting this goal. If the utility is in a no-growth situation with no need to acquire power, a 1 percent spending limit is set. This proviso ensures that rates don’t increase significantly as a result of the requirement.”

    As you say, the devil is in the details. Under the law, neither of these two escape valves gives the protection it appears to, however well intentioned they may have been.

    The 4% cap applies to the DIFFERENCE between the cost of the renewable resource and a “comparable” non-qualifying resource. For many utilities, this means comparing the cost of one resource it doesn’t need to another resource it doesn’t need, and applying the difference to the cap. It does not limit a rate increase to 4%.

    Similarly, the 1% cap requires that a utility’s sales in a given compliance year are less than the average for the previous two years. It’s easy to imagine a scenario where, on average, sales are trending downward, but in a given year may exceed the average for the previous two. If a utility relies on the 1% cap, it risks very substantial penalties for non-compliance in such a situation.

  9. […] See previous post for more details on the Energy Independence Act and SB 5735. […]


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