Big Oil Has Spent Millions of Dollars to Stop a Carbon Fee in Washington State

Washington state voters will decide this November whether to approve the nation’s first carbon fee in what has become the most expensive ballot initiative fight in the state’s history and a referendum on the oil industry’s political clout.

If the measure passes, it will show that even as the federal government turns its back on the climate crisis, one state’s voters can make a difference.

If it is defeated, that will affirm the oil industry’s ability to marshal money for support to deflect challenges to its continued dominant role in fueling the nation’s economy.

The fee would be charged to large carbon emitters and fossil fuel sellers based on the carbon content of the fuels sold or used in the state. The costs would come back to residents, mainly at the gas pump, as companies pass those charges on to their consumers. Estimates of the annual cost to each Washington state household range from $159 to $440 in the first year of the fee.

By itself, that’s not enough to wean the nation, or even the state, off fossil fuels. But Washington’s Initiative 1631 could begin a movement in the U.S. to make the price of fossil fuels reflect their cost to the planet—a step economists believe would be the most effective market mechanism to reduce greenhouse gases.

Oil companies have contributed almost all of the $29.7 million that has been raised so far to defeat the ballot measure—more money than has been devoted to any ballot initiative campaign in the state’s history.

“If people from the ground up support taking on a challenge this significant, then we can do it at the national level, too,” said Julie McNamara, energy analyst at the Union of Concerned Scientists. “And of course that’s of concern to oil and gas companies.”

Carbon fee proponents have some heavy hitters on their side—software billionaire Bill Gates and former New York Mayor Michael Bloomberg each have donated $1 million to the campaign to pass the initiative. But altogether, the pro-initiative campaign, called Clean Air Clean Energy Washington, has raised about half as much money as the initiative’s foes—about $14 million.

Two years ago, a similar ballot measure to put a price on carbon in Washington state failed, with 59 percent of voters saying no. That plan would have returned all the proceeds to taxpayers, but it was unpopular with social justice groups, who felt the revenue should be used to assist Washington communities facing increased risks from wildfire, flooding and other climate impacts. Environmental advocates were bitterly divided and didn’t rally behind the measure.

This year, supporters have tried to build a much broader coalition. In addition to environmental groups, 14 Native American tribes and nations, the American Lung Association and other health groups, and activists for low-income and minority communities all support the proposal. The plan would put all revenue from the fee—an estimated $2.3 billion in the first five years—into clean energy and water and healthy forest investments, as well as addressing the concerns of disadvantaged communities.

“It started out as a values conversation among labor, environmental groups and communities of color,” said Nick Abraham, communications director for the coalition in support of the carbon fee. “That morphed to include health professionals, faith communities, big Washington state companies like Microsoft and REI. It’s broadened out to be the most diverse and largest coalition in our state’s history.”

Voters Are Feeling the Effects of Climate Change

The vote comes in a year when Washington state has been feeling the effects of climate change.

Seattle had its worst air quality on record in August due to smoke from widespread Western wildfires. Off the coast, the state’s beloved and endangered orca population reached its lowest level in 34 years—although many factors are to blame, the killer whales eat Chinook salmon, which are in decline due in part to stream warming in Northwest watersheds. Ocean acidification continues to take a toll on shellfish in Puget Sound.

An independent Crosscut/Elway poll of 400 registered voters reached by phone in early October showed 50 percent approved of the initiative, 36 percent opposed it, and 14 percent were undecided, with a margin of error of 5 points.

The measure would impose a pollution fee on power plants, refinery facilities, sellers of fossil fuels and other large emitters, starting at $15 per ton of carbon emissions and escalating by $2 per ton every year.

All revenue would go to a dedicated state fund (not the general state treasury—that’s why proponents claim it’s a fee, not a tax.) The fund would pay for projects to reduce dependence on fossil fuels, from renewable energy to electric car infrastructure. It also would go to efforts to mitigate climate change impacts, reduce forest fire risks, help low-income and Native American communities, and assist displaced workers.

Exemptions, Opposition, and Labor on the Fence

Not all businesses would have to pay the carbon fee.

Washington’s one remaining coal plant, TransAlta’s Centralia generating station, would be exempt because it already is on track to be shuttered by 2025 under a settlement with the state. That one plant, accounting for 26 percent of Washington’s carbon emissions from large emitters, is the state’s largest greenhouse gas polluter.

Also, aluminum, cement, and steel producers, the aircraft industry, pulp and paper mills, and other so-called “energy-intensive trade-exposed industries,” accounting for 16 percent of the carbon emissions from the state’s large emitters, would be exempt. Proponents argue that makes sense for a Washington state-only policy, because of the risk of losing those industries to other states. But the initiative’s foes argue it’s unfair.

“Good for those who were able to cut a deal with the proponents that got them exempted, but then that leaves the burden all squarely on the families and small businesses and farmers who were not able to cut a deal,” said Dana Bieber, spokeswoman for the No on 1631 coalition.

The Washington Farm Bureau, the National Federation of Independent Business, and other business groups are opposing the measure.

Labor is divided over the initiative, with the largest public employees’ unions in support, but union locals representing construction and other blue-collar workers opposing the carbon fee. A University of Massachusetts study commissioned by the Washington State Labor Council and other labor groups concluded that a fee-and-investment program like Initiative 1631 would generate 40,000 jobs a year in the state. But a study commissioned by the “No on 1631” coalition projected skyrocketing future costs, job losses, and little impact on carbon emissions if voters pass the fee.

“The best argument we have against it is to encourage people to actually read the [initiative] agreement,” said Lee Newgent, a former head of the Seattle building trades council who retired from the ironworkers union early this year, and is working as a consultant for the No on 1631 coalition. “If you actually read the agreement, you will see it says that it’s going to kill a lot of jobs.” Union opponents do not believe that the worker assistance provisions offer any support beyond what they are already entitled to under Washington state law, Newgent said.

Oil Money Pours In

One impact of the fee is certain—the segment of the fossil fuel industry that would be hardest hit would be oil. Washington State, as the nation’s leading producer of hydroelectricity, already is among the 10 states with the lowest carbon emissions per capita due to its relatively clean electricity mix. Transportation, primarily fueled by oil, is by far the state’s largest source of emissions.

The largest contributors to the No on 1631 campaign—BP America, Phillips 66, and Andeavor (owned by Marathon Petroleum)—helped make Washington the No. 5 state in crude oil refining capacity. (Refiners account for 28 percent of Washington’s current greenhouse gas emissions from large emitters.) Koch Industries, the conglomerate of the billionaire libertarian Koch Brothers, which has Georgia Pacific facilities in the state and has been a leader in opposing climate action, has contributed nearly $1 million to the fight.

The oil industry’s role in the anti-carbon fee ads isn’t always apparent. In one commercial, former Washington attorney general and GOP gubernatorial candidate Rob McKenna appears, identified as a “consumer advocate.” It doesn’t mention he’s currently a lawyer for Chevron, defending the company in a climate lawsuit brought by King County, the most populous county in the state and home of Seattle.

The money poured into the initiative fight by the oil industry has shattered the previous record for Washington initiative campaigns, set in 2013 by the successful $24.5 million drive to fight labeling of genetically modified food in the state.

KC Golden, a longtime Washington activist, said he believes the carbon price fight will reverberate beyond the state’s borders—not because the plan will be a model or template for others, but because of what it says about climate advocates’ ability to face off against the measure’s powerful and well-funded foes.

“It’s less about the particulars of the policy design, and more about the ability to overcome the single biggest obstacle to climate policy, which is the concentrated economic and political power of the fossil fuel incumbents,” Golden said.

“We have all these elaborate psychological explanations about why we have failed these past 30 years to respond to the climate crisis,” he said. “We’d commit ourselves to the transition in a minute, if there wasn’t something stopping us, and that something is now spending $29 million to try to stop us in Washington State.