Washington is leaning into the fight against climate change.
Seattle-area tech giants Microsoft and Amazon have set ambitious carbon reduction targets and invested millions to meet those goals. The state is home to a multitude of climate tech startups tackling batteries, nuclear power, green aviation, hydrogen fuel and other clean energy challenges. Elected leaders have vowed to cut the state’s carbon emissions and passed groundbreaking policies to hit those targets.
An initiative on Washington’s ballot this November threatens those efforts.
Initiative 2117 would strike down regulations requiring most of the state’s largest greenhouse gas emitters to pay for their pollution — and prohibits the creation of similar efforts to control carbon dioxide in the future.
On Wednesday, the No on 2117 campaign launched with more than $11 million in its coffers and the support of Microsoft, Amazon, REI, the Seattle Metropolitan Chamber of Commerce, and more than 100 other businesses, unions, tribal and environmental organizations.
Opponents of I-2117 make dire warnings about the measure, saying it will undermine the state’s burgeoning climate technology sector and slow decarbonization efforts across the regional economy.
If the initiative passes, “we’re going to slam the brakes on all of this accelerated investment in clean energy and technology innovation,” said Michael Mann, executive director of Clean and Prosperous Washington.
I-2117 targets the state’s Climate Commitment Act, a measure passed by lawmakers and backed by Gov. Jay Inslee, that created a cap-and-invest market in which oil refineries, utilities and others participate in quarterly auctions, bidding on carbon pollution permits that decrease in number over time.
Initiative supporters say the program amounts to a “hidden gas tax” that is harming Washington residents by raising prices at the pump and jacking up electric bills.
“The crux of the issue is just that it’s unaffordable for people, and it’s something that they’re not willing to be paying into at this point,” said Hallie Balch, spokesperson for Let’s Go Washington, the group backing the initiative.
Auction expenditures
There have been five auctions so far under Washington’s Climate Commitment Act, raising nearly $2.4 billion.
More than $400 million of those funds go to utilities to shield their customers from higher costs. Almost $2 billion of the proceeds are earmarked for specific climate initiatives, including roughly one-third of the amount designated for communities and tribes hardest hit by the impacts of climate change. The funds are also covering a significant share of the state’s transportation infrastructure projects.
And the auctions pay for programs that directly and indirectly benefit the tech sector, supporting job creation and climate tech companies working on decarbonization. Examples of these expenditures from the state’s 2023-25 biennium budget include:
- $60 million for the state’s Clean Energy Fund, which helps pay for grid modernization, clean energy deployment and other efforts
- $20 million for the Pacific Northwest’s hydrogen hub, a coalition working to develop the region’s hydrogen economy
- $7.5 million for University of Washington’s Clean Energy Testbeds, which supports clean energy startups
- $7.2 million for Washington State University’s Institute for Northwest Energy Futures, which is partnering with industry to develop energy solutions
Millions of additional dollars are being allocated for solar power; initiatives to improve the permitting process for clean energy deployment; port decarbonization, including electrifying drayage trucks that move cargo; and railway electrification.
“You have a whole economy based on the Climate Commitment Act,” said Sen. Joe Nguyen, D-West Seattle.
State funding for clean energy programs has given Washington an advantage in securing federal dollars, Nguyen said. The $20 million the state provided for the nascent hydrogen sector helped the region land one of the U.S. hydrogen hub designations — which comes with roughly $1 billion in federal funding.
“Washington state has become a leader in the most innovative and important sectors of addressing climate change and creating clean energy jobs.”
– Michael Mann, executive director of Clean and Prosperous Washington
“Washington state has become a leader in the most innovative and important sectors of addressing climate change and creating clean energy jobs,” Mann said. “And the Climate Commitment Act as accelerated that massively over the past two years.”
The act also supports a needed increase in clean energy deployment. Artificial intelligence, including generative AI chatbots such as ChatGPT, require large amounts of computational power.
To meet that demand, Amazon, Microsoft and others are building more data centers, which require more energy sources and a robust electrical grid.
McKinsey projected that data center power demand in the U.S. will more than double from an already massive 17 gigawatts in 2022 to 35 gigawatts by 2030.
Amazon and Microsoft are working to cut their carbon footprints, so that energy needs to be clean and the concrete and steel used to build the facilities need to be low-carbon. Amazon in particular is also investing in decarbonized transportation solutions, which ties into public infrastructure for EV charging.
“Every single challenge that we face has a direct nexus associated with the need for clean energy,” said Reuven Carlyle, a tech entrepreneur and former state senator who led the passage of the climate act.
Costs for Washingtonians
The central pitch for the I-2117 campaign is the Climate Commitment Act and carbon market amount to a gas tax because petroleum producers that participate in the auctions pass their costs onto drivers filling up at the pump.
“The main point of 2117 is to reduce costs for consumers,” said Balch, of Let’s Go Washington. “That was the main rallying cry around why people wanted this to be an initiative in the first place.”
The state-run auctions have included more than 200 qualified bidders, including oil companies such as Exxon Mobil, Phillips 66, BP, Marathon Petroleum, Shell, Conoco Phillips and others.
When asked who should bear the cost of addressing global warming, Balch said it should be oil and gas companies — which is how the carbon permit market is designed.
“It is unfair to tax people for the climate crisis that has largely been created and continued by these corporations,” she said.
Gas prices did increase following the initial carbon permit auction in February 2023. In January 2023, the average price of gas in Washington was $4 per gallon. By August it reached $5 a gallon, but by January 2024 was back to $4, according to the U.S. Energy Information Administration. In March it rose to $4.23 per gallon.
Gas prices, however, fluctuate for a multitude of reasons and routinely increase in the spring and summer as producers move to more expensive summer fuels and demand rises with vacation travel.
“This is a made-up construct to blame 100% of Washington state’s and the Pacific Northwest’s high gas prices on one state climate bill, when we have a 30-year track record of being among the highest in the nation,” Carlyle said.
The nonprofit Clean and Prosperous Washington compared the prices of gas in Washington and Oregon to try to tease out the impact of the carbon policy. Before the February auction, gas in Washington was about 23 cents more expensive than in Oregon, and in April and May it spiked to 47 cents more. The difference dropped back to about 23 cents by June and stayed relatively steady until January of this year, when it started shrinking again, hitting 12 cents last month.
Opponents of I-2117 say the carbon market is becoming more stable, and the state is exploring the possibility of linking Washington’s market with one operated by California and Quebec, which could further improve its efficiency and predictability.
While the inflation of Washington’s gas prices due to the climate policy appears to have declined, initiative supporters blast Inslee for his original assertion that the carbon permits would have a minimal impact on consumers. He claimed it would cost people “pennies on the dollar,” Balch said.
Inslee last summer accused petroleum companies of gouging consumers by raising prices while they were making record profits.
Let’s Go Washington is behind three initiatives that will go to voters in November, including one that aims to repeal the state’s capital gains tax. The group is backed by Seattle-area hedge fund manager Brian Heywood. GeekWire requested an interview with Heywood for this story but he was not available.
Rep. Jim Walsh, R-Aberdeen, also supports the initiative and spoke to a crowd after the measure qualified for the ballot.
“This cap and trade scheme, it does nothing to reduce carbon outputs,” he said. “It doesn’t stop pollution. All it does is run up taxes.”
Another concern for I-2117 supporters are rising energy bills, which they’re also pegging to the carbon market.
However, research shows that power bills are on the rise nationally due to a variety of factors. The state is providing utilities with $150 million from the auctions to provide low-income customers with credits of $200 to help pay their energy bills.
Future impacts
A feature of I-2117 that most worries opponents is its ban on future carbon cap systems, which many climate experts view as an important tool for limiting greenhouse gas emissions.
But initiative backers explain that if voters reject the approach, “it isn’t right” that the government can return to the policy, Balch said. “If it’s bad now, it can only get worse.”
Mann, of Clean and Prosperous Washington, rejects that view. He and other I-2117 opponents said the market has only operated for a little more than a year and deserves the chance to be tested.
“Our goal in supporting the Climate Commitment Act has always been to achieve our environmental policy goals at the lowest possible price,” he said. “And that’s what led us to a cap-and-invest system, a market-based system.”
Independent research continues to warn how close the world is coming to worsening climate impacts, including more severe droughts, wildfires, flooding from sea level rise, extreme heat, and other challenges. A report this week in the journal Nature estimates that climate change’s global economic burden will hit $38 trillion annually by mid-century. That is six times the cost of reducing greenhouse gas emissions, the researchers found.
“There is,” said Nguyen, “a cost of doing nothing.”
