Regulators: Cut carbon emissions, or buy credits

State lawmakers had their first chance Thursday to question the environmental regulators who are moving toward capping Washington’s largest sources of greenhouse-gas emissions.

Sen. Doug Ericksen objected to forcing the oil industry to make and sell cleaner fuels, saying lawmakers recently passed restrictions to stop just such a fuel standard.

But the state Department of Ecology said industry could also comply by buying credits from companies that lower carbon emissions or from cap-and-trade markets set up by governments such as California and Northeast states.

Gov. Jay Inslee proposed following the lead of those other governments with a cap-and-trade system, but the plan never gained traction in the Democratic House and faced outright opposition from the Republican Senate. So Inslee turned to administrative rule-making to create a cap.

Regulators say they plan to announce their proposal next month and adopt it next summer to be in place for 2017. They say it would cover 37 facilities run by 31 companies, including petroleum refineries and importers, natural gas distributors, power plants, industrial plants and landfills.

Washington’s emissions of carbon dioxide and other heat-trapping gases, now slowly declining, would drop more sharply under the plan — although not all the way to levels called for by state law. That’s because the rule would cover roughly 60 percent of Washington’s emissions, exempting, for example, farming and airplane fuel.

Unlike other states’ programs, Washington wouldn’t hand out or sell credits. The latest outline of the plan from Ecology sheds more light on how credits will be generated, including from:

▪ Emitters that do more than required to reduce output. They could sell their over-compliance credits or bank them for use in future years.

▪ Emitters that voluntarily participate in the program.

▪ Projects to reduce emissions anywhere in Washington.

▪ Cap-and-trade markets anywhere in the world.

To generate credits, reductions in heat-trapping gases that cause climate change would have to go above and beyond what’s required by other regulations or programs, with some exceptions where overlap would be allowed, such as with President Barack Obama’s restrictions on emissions by power plants.

For example, Ecology officials say they will consider allowing credits to be created by employers making their fleets more efficient or overachieving in the state’s commute-trip reduction program.

A nearly decade-old citizen initiative requires electrical utilities to produce a set share of their power through renewable resources and to become more energy-efficient where it’s cost-effective. Ecology officials say utilities would be able to generate credits by going beyond those requirements.

In response to questions from Sen. Ericksen, an Ecology official said Alcoa could generate and sell credits as part of a recently announced plan to shut down aluminum smelters in Wenatchee and Ericksen’s hometown of Ferndale.

Ericksen said that would give companies incentive to move production to other places where energy isn’t as green as in Washington, with its cheap and abundant hydropower, driving up global emissions. The Republican criticized Inslee, a Democrat, for bypassing the legislative branch through administrative action, much as Obama did at the federal level.

“You’re seeing executives who can’t get their way through the legislative process trying to do it all by rule,” Ericksen said after the hearing in the Senate Energy, Environment and Telecommunications Committee that he leads.

During the hearing, he questioned Ecology officials about the authority for their rule-making effort.

“There is strong authority in our statutes to be able to regulate greenhouse-gas emissions in the state of Washington because it is an air pollutant under the clean air law,” Ecology Director Maia Bellon said.

Sen. Kevin Ranker, D-Orcas Island, rose to the defense of the executive branch. He compared the latest spat over separation of powers to one in which the Legislature moved to implement the Affordable Care Act, while former Attorney General Rob McKenna joined in a lawsuit to block the federal law.

This story was originally published November 21, 2015 at 5:52 AM with the headline "Regulators: Cut carbon emissions, or buy credits."