FOR IMMEDIATE RELEASE
October 31, 2024
Contact: Lee Keller
lee@thekellergroup.com
(206)799-3805

Nearly 30 Leading Economists Sign Open Letter Opposing Washington State’s Initiative 2117 & Warning of Its Costs to State

Economists Warn I-2117 Would Force State to Rely on “More Costly Policies Such as Direct Regulation” to Meet State’s Carbon Reduction Requirements

SEATTLE, WA – Nearly 30 leading economists have signed an open letter opposing Initiative 2117 and warning of its costs to Washington state, arguing that by repealing the state’s market-based cap-and-invest program, I-2117 would force the state to rely on “more costly policies such as direct regulation” to meet the state’s current carbon reduction requirements.  

“Reducing greenhouse gases without carbon pricing would leave Washington fighting climate change with one hand behind its back. Carbon pricing saves on costs because it marshals the entire economy in a collective search for reductions in greenhouse gases,” said Clayton Munnings, a signer of the open letter and a climate economist who has designed and researched carbon pricing programs on six continents over the last decade.  “It acts as a force multiplier to Washington’s existing portfolio of climate policies. Voting No on 2117 upholds Washington’s commitment to economically achieving its climate targets.”

“Smart designs like Washington State’s cap-and-invest program turn it into a win-win-win: for the climate, for people, and for businesses, the local economy, and jobs” said letter signatory Gernot Wagner, an economist at Columbia Business School, who’s research, teaching, and writing focus on climate risks and climate policy.

“2117 would roll back important environmental protections for clean air and clean water.  It would gut critical funding for wildfire funding, salmon restoration, energy efficiency, transit, sidewalks, ferries and more,” added Dr. Sharon Shewmake, State Senator, Washington State, and Associate Professor, Department of Economics, Western Washington University.

“This is important validation that the approach Washington is taking to address climate change is grounded in sound economics,” said Michael Mann, Executive Director of Clean & Prosperous Washington. “2117 would remove the most cost effective tool we have to solve this problem .”

Nearly 600 organizations and Tribal Nations – including small business, large employers, and business advocacy organizations – oppose I-2117 and have endorsed the No on 2117 campaign.

“Ultimately, from an economic perspective,” the letter concludes, “the question boils down to whether Washingtonians wish to achieve their state’s climate targets at the lowest economic cost.”

In September, a study by the Greenline Institute found that if passed, Initiative 2117 would cost Washingtonians an estimated 45,000 high-wage jobs. The report also found that I-2117 would cost Washington state approximately $9.1 billion in economic output over eight years. You can read the full study here.

FULL TEXT OF LETTER OPPOSING I-2117 AND SIGNATORIES CAN BE FOUND HERE.

An Open Letter in Opposition to Initiative 2117
Which Would Repeal Washington State’s Cap-and-Invest Program

The undersigned are economists writing in opposition to Initiative 2117, which would repeal Washington’s Cap-and-Invest Program. On November 5^th, Washington voters will decide the future of Washington’s Cap-and-Invest Program through Ballot Initiative No. 2117^[1] which would prohibit the state from implementing a carbon price and repeal certain provisions of the Climate Commitment Act, the underlying law that moves Washington forward in addressing the climate crisis. We ask Washingtonians to vote “No on I-2117” and thereby support the continuation of Washington’s Cap-and-Invest Program.

Importantly, even if the Cap-and-Invest program is repealed by Initiative No. 2117, Washington would still need to meet its statewide climate target of reducing overall greenhouse (GHG) emissions 95% by 2050 below 2005 levels. However, without the Cap-and-Invest program, Washington will only be able to meet its climate goals by relying on more costly policies such as direct regulation, fuel economy standards^[2], zero emissions vehicle programs, and subsidies for electric vehicles.^[3] Repealing the Cap-and-Invest Program increases, rather than decreases, the economic costs of achieving the state’s climate targets. Retaining the program by voting “No on I-2117” means Washington can continue to use carbon pricing as a critical cost-reducing element that complements Washington’s overall climate policy mix.

In the 1970s, economists showed that putting a price on emissions to be the most cost-effective approach to reducing emissions.^[4] Today, nearly one-quarter of the world’s GHG emissions are subject to a carbon price through 75 unique carbon prices^[5], with two of the more effective examples having been operating in California and the Northeast United States for over a decade.^[6] Many of the undersigned have contributed to designing these carbon prices. As such, many of us have been asked to tailor carbon pricing to local economies and economic circumstances. In that context, we appreciate that revenues from Washington’s Cap-and-Invest Program have already been used to launch an electric vehicle program for low-income households and to provide a rebate on the electricity bills of low- and moderate-income households.

Ultimately, from an economic perspective, the question boils down to whether Washingtonians wish to achieve their state’s climate targets at the lowest economic cost. The undersigned environmental economists ask Washingtonians to uphold the state’s commitment to economically reducing GHG emissions by voting “No on I- 2117”.

Sincerely,

^[1] Washington Initiative 2117, Prohibit Carbon Tax Credit Trading and Repeal Carbon Cap-and-Invest Program Measure (2024) – Ballotpedia.

^[2] Gillingham, K. and J. H. Stock. 2018. “The Cost of Reducing Greenhouse Gas Emissions”. Journal of Economic Perspectives 32(4): 53-72. Available here: The Cost of Reducing Greenhouse Gas Emissions – American Economic Association.

^[3] Xing, J., Leard, B., and S. Li. 2021. “What Does An Electric Vehicle Replace?”. Journal of Environmental Economics 107: 102432. Available here: What does an electric vehicle replace? – ScienceDirect.

^[4] For example, see David Montgomery. 1972. “Markets in Licenses and Efficient Pollution Control Programs.” Journal of Economic Theory (5)3: 395-418. Markets in licenses and efficient pollution control programs – ScienceDirect

^[5] The World Bank Group. 2024. State and Trends of Carbon Pricing Dashboard. Available here: Instrument Detail | Carbon Pricing Dashboard (worldbank.org).

^[6] Dobbeling-Hildebrandt et al. 2024. “Systematic Review and Meta-Analysis of Ex-Post Evaluations on the Effectiveness of Carbon Pricing”. Nature Communications. Available here: Systematic review and meta-analysis of ex-post evaluations on the effectiveness of carbon pricing | Nature Communications.