Washington State Is a Weirdly Good Place for a Carbon Vote

(Bloomberg Opinion) -- Voters in the state of Washington will make history on Tuesday if they back Initiative 1631. They would be the first in the U.S. to impose a direct “fee” (don't call it a tax) on carbon-dioxide emissions, starting at $15 a ton and rising gradually from there. Almost $46 million has been spent by committees supporting or opposing the measure, according to Ballotpedia.com, a staggering sum for this state.

Win or lose, though, 1631's significance has less to do with what it means for Washington and more with how it is viewed outside the state's borders.

One criticism of 1631 is that, if implemented, Washington likely won't make a direct dent in emissions, largely because it already emits little compared to other states. Carbon emissions per capita or dollar of GDP rank way below the national average, in large part because about two-thirds of the state's power comes from hydroelectricity.

But this actually makes Washington an attractive place to push for carbon pricing in one important respect: cost. Back in June, when I wrote about the interplay of gasoline prices and income across different House races, Washington was one of a handful of states characterized by relatively low per capita fuel demand but relatively high disposable income. The chart comparing states is reproduced below – though many races have moved around in the meantime – and you can see Washington in the bottom right:

ClearView Energy Partners, a DC-based research firm which provided much of the data for that chart, ranks the states by “Consumer Carbon Leverage” – a measure of how much a $10 per ton carbon price would erode disposable personal income, excluding industrial emissions. All states either already using carbon prices of some sort or contemplating them rank in the lower half of the table, but Washington is lowest of all.

On that basis, if you're going to get carbon pricing passed anywhere, Washington's lower emissions make it an easier sell.

The flip side of that, however, is that it can also make Washington a special case. Besides the state's own characteristics, 1631 is unusual in that it dispenses with the idea of a revenue-neutral carbon tax – where proceeds are reimbursed via lowering other taxes – in favor of using the money for various clean energy and climate-change mitigation efforts. That inevitably opens it to criticism of government “picking winners” and hitting lower-income households hardest. Conventional wisdom says the revenue-neutral approach is more palatable to voters, especially in redder districts. But that approach was tried already in Washington in 2016, with the unsuccessful Initiative 732.

So 1631 will not necessarily set a template to be replicated elsewhere. That doesn't make it just a curio of the Pacific Northwest, though. And that's because of context.

This comes back to that argument around insignificance: How can a state with 2 percent of the U.S. population (and 0.01 percent of the global total) make a difference on global emissions? But such thinking encourages the status quo of drifting toward climatic catastrophe. We are where we are, and where we are is that we have a federal government, in the other Washington, populated by a critical number of players who prefer to ignore, belittle, or smear overwhelming scientific consensus rather than grapple with its implications. By definition, if the feds won't act, then it's up to those further down the chain to do so.

In that sense, the symbolism of what is decided in Washington state is undeniable. Initiative 1631 isn't the only climate or energy-focused measure on the ballot today, with voters being asked to decide in several other states, including California, Colorado, Florida and Nevada. Importantly, some of those measures, such as California's Proposition 6 or Washington's own Initiatives 1601 and 1602, oppose climate activists' desires.

As I wrote here, from California's State Capitol to the New York Attorney General's office, America's political and legal battle over climate change has devolved onto myriad fronts. Similarly, the extent to which Washington's results have a wider impact depends partly on what happens in polling booths elsewhere. 

To contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.

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