Yesterday, Shift reported that Jay Inslee proposed to help fund his $12 billion transportation proposal with a cap-and-tax scheme that would ultimately place a tax on gasoline and other fuels. Inslee called his cap-and-tax a “market-based carbon pollution charge” and claimed that it would “generate $7 billion over 12 years… the equivalent of a 12 cent gas tax without hurting consumers.”
The state’s foremost market-based energy expert, the Washington Policy Center’s Todd Myers, isn’t buying it. He presents five facts concerning Inslee’s cap-and-tax system.
First, Myers points out that, though Inslee would like everyone to call it a “charge on carbon pollution,” what he just proposed is a cap-and-tax system. Inslee “specifically mentioned California and the system in New England” as comparisons. Both those systems are, in fact, cap-and-tax.
Second, Inslee said that the cost of his cap-and-tax would be 12 cents per gallon. Myers writes that this “implies a cost per ton of CO2 of $12”—a very low projection. Additionally, cap-and-tax systems have a proven record of volatility, “so there will be times when the price is much higher” – which of course means higher gas taxes on people who drive cars.
Third, if Inslee is correct and the cost of his cap-and-tax plan costs $12 per ton of CO2 then there is no need for a fuel mandate. Myers points out that Inslee’s “own analysis shows the cost of an LCFS is $103-$131 per ton – ten times the projected cost of this cap-and-trade system.” In other words a fuel mandate, writes Myers, “would cost ten times as much (using the Governor’s previous analysis) to reduce the same amount of CO2” thus violating Inslee’s promise to reduce carbon emissions in the “most effective and efficient manner possible.”
Fourth, Inslee’s plan to reduce carbon emissions at a cost of $4.8 billion only applies to transportation emissions, which is 45% of Washington State’s total emissions. Myers points out that the cost of “cost of $4.8 billion, then, is for less than half the total emissions in the state and would not put us near the goals the Governor says are ‘legally binding.’” Inslee is set to announce the rest of his costly plans today.
Fifth, Myers predicts that Inslee’s cap-and-tax plan will “bring on the politics and complexity” due to wild cost fluctuations associated with the tax scheme. In Europe that meant failure to meet reduction targets because “free credits were given to politically favored industries.” What does it mean for Washington State? Myers concludes,
Governor Inslee today promised he’d address those problems. That means carveouts for politically favored industries. It also means he’ll change the rules to try and even out the variability. It means protections for industries that might leave the state and take their CO2 emissions with them. Of course, this will make it more difficult to “harmonize” our system with California, which the Governor says he wants.
Additionally, the Governor will have to use some of the non-transportation funding he’ll announce tomorrow to reduce the impact on low-income families, which he has also promised. All of that complexity will add problems and cost, as it did in Europe.
Ultimately, there are more shoes to drop, bringing more costs and more politics with them.
And ultimately, it means more taxes for people in the state of Washington, all to help provide the fuel for Jay Inslee’s ego trip.