Carbon ‘allowances’ twice as expensive as predicted two years ago
Sen. Drew MacEwen, R-Shelton, ranking Republican on the Senate Environment, Energy and Technology Committee, offered the following comment regarding Washington state’s first carbon-allowance auction. Results were announced Tuesday by the Department of Ecology, a week after the Feb. 28 auction. It was the first of a series of quarterly auctions under the Climate Commitment Act, the Washington-state cap-and-trade program that won narrow approval from Washington lawmakers in 2021.
“When the Legislature debated this program two years ago, its advocates told us it was going to be cheap and not harmful to consumers,” MacEwen said. “They sure got that wrong. The estimate in 2021 was that carbon ‘allowances’ under this program would cost $22.78 per metric ton of carbon. Instead, once the market had its say, these allowances cost $48.50.
“That’s a stunner. Bureaucrats missed the mark by a mile. This money comes from the businesses that keep our workforce employed, and from people like you and me, every time we fill up our cars and trucks. This $48.50 allowance cost translates to 39 cents a gallon for gasoline, 47 cents for diesel. No matter how many times advocates promise, ‘the big oil companies will eat it,’ those of us who live in the real world know most of these additional costs will be passed on to the people, one way or another.
“With these new allowance figures and the state’s latest plans for sales volume, a program that was supposed to take $1.1 billion from the Washington economy will instead extract at least $2.7 billion. As inflation hits 8 percent and our economy shows great weakness, this program will hobble Washington all the more.
“I also am concerned with how the money will be spent. The governor has proposed large expenditures for feel-good studies at just about every state agency. Instead, we should utilize this money to improve our infrastructure, grid stability and power generation so that we minimize the impact on Washington residents. I hope budget writers will do so.”