Legislature knocks it out of the park with Climate Commitment Act

Our legislature just passed the Climate Commitment Act (SB 5126), a program that “could be the new gold standard for other states to follow,” according to the Environmental Defense Fund, an expert in greenhouse gas (GHG) control policy.

Now that this new law is emerging, people are asking what is it, and how do we make the best of it.

I’ve worked climate change policy and technology for about 10 years, and our Low Carbon Prosperity Institute has collaborated with the legislature on just about every major climate legislation in the past five sessions.  From my perspective, the Climate Commitment Act (CCA) deserves this praise.

The CCA deals deftly with the complex web connecting GHG emissions to economic vitality, public health, and social justice. It smartly uses a highly effective regulatory method, Cap & Invest, to reduce emissions certainly and economically.  The US used a cap system on acid rain with remarkable success in the 1990s.  California applied it to GHG emissions, in 2008, adding a critical component — major investments with revenue raised with the Cap to complement what the market mechanism could accomplish.  Cap systems are now used to control a quarter of global GHG emissions.  We studied and learned from this experience.

The CCA covers about 75% of our state emissions with a finite number of large emitters or fuel suppliers, sparing most businesses from compliance requirements.  Covered entities need state-issued emission permits or face significant penalties.  The number of issued permits decreases each year, aligned with legislated limits, forcing total emissions downwards.  Covered entities buy permits at a state-managed auction.  Those that can reduce carbon more at lower costs than others can do so and sell unused permits to others, reducing the collective cost burden and rewarding innovation.

This alignment between business and public interests is key — when companies find lower cost ways to reduce emissions, it minimizes economic impact on consumers.  It’s Win-Win for the environment, business, and society.

California has been operating their system for about 5 years, which contributed to achieving their 2020 goals 2 years early and maintaining the fastest growing economy on the West Coast.  Costs at the pump have been about 15 cents per gallon of gas.

Investments from the auction proceeds are critical.  These environmentally directed state investments target long-term public infrastructure, complementing shorter term investments undertaken by covered entities. Improving forest health will benefit naturally occurring GHG processes, and  salmon ecosystems.  Half of the funding is dedicated to reducing emissions in transportation projects, our largest source of emissions.  One good example is electrifying our ferry fleet, a major emitter of diesel pollution.

The CCA includes a number of ways to center overburdened communities in program design and outcomes, including:

• Investments in overburdened communities, with a minimum of 35% investments proceeds, and an additional 10% for tribes.
• An Environmental Justice and Equity Advisory Panel to advise on CCA funded investments.
• Limits to the overall use of offsets to prevent any increases in emission, including from priority emitters located in overburdened communities.
• A separate regulatory mechanism to assure that health-harming air pollution in overburdened communities reduces. The CCA deals with two types of pollutants — atmospheric damaging pollution from Greenhouse Gases (GHG) via Cap & Invest, and localized health harming pollution, often more severe in overburdened communities. The CCA requires the Department of Ecology to measure and monitor health-harming air pollution in connection with the Washington Environmental Health Disparities Map.  If pollution is not declining in overburdened communities to match levels in neighboring communities that aren’t identified as overburdened, then Ecology must take action.

This last provision, installing a complementary control system protecting human health in overburdened communities, is a major advance over other cap systems.

Fawn Sharp, the President of National Congress of American Indians, stated: “Today marks the passage of the most important law in the history of Washington, as it finally confronts the existential crisis of our generation and begins the process of truth and reconciliation with its Tribal Nations.”

What’s also remarkable about the CCA is the legislative process that produced it. Senator Carlyle and Representative Fitzgibbon were indefatigable in engaging other legislators and stakeholders for several years.  Business leaders, environmentalists, tribes, justice advocates, energy companies, and labor rose to the occasion to tune the CCA,  balancing their interests with the greater good. Changes made in the House were especially helpful — the bill picked up an additional 2 Senate concurrence votes upon final passage.

In my years as an entrepreneurial CEO, I’ve seen teams rise to deliver breathtaking peak performance.  We applaud all those who rose to produce the Climate Commitment Act, which will lead Washington and perhaps America to a cleaner and more prosperous future.

David Giuliani
Co-Founder of the LCP Institute, & Board Member and
Co-Founder of the Washington Business Alliance