Washington state's proposed carbon fee: What it could mean for agriculture

“What happens when extreme weather becomes more frequent? Laborers will lose work hours due to this,” a farmworker told Community to Community at a Vancouver, Washington listening session on climate change last year. That listening session, along with many others, aided the development of a carbon fee initiative that Washington state voters will decide upon this November.

Climate change is already becoming apparent to farmers and farmworkers. An estimated 79 percent of outdoor farmworkers in Washington, many of them Latino, have experienced some heat-related illness during the summer season. At another listening session, farmworkers raised concerns about poor air quality linked to increased wildfires. If passed, Washington’s will be the nation’s first carbon tax and will set a new path for state-based leadership on climate policy.

Washington Initiative 1631 would place a fee of $15 per metric ton of carbon on large sources of emissions in the state, such as power plants and utilities, beginning in January 2020. The fee would not apply to other greenhouse gases (GHGs), such as methane or nitrogen, that are closely linked to agriculture through synthetic fertilizers and animal production. The $15 fee will increase by $2 annually until the state meets its goal of reducing emissions by 20 million metric tons from current levels by 2035. Revenue generated from the fee will go into three funds: 1) 70 percent will fund air quality and clean energy programs; 2) 25 percent will fund water quality and healthy forest projects; and 3) five percent will go to investments for communities to adapt to climate change, much for wildfire resilience. Representatives from labor, environmental justice, and business groups and Tribal and state government officials will sit on panels that help oversee the funds’ spending.

Washington voters defeated a different carbon tax proposal in 2016—a political fight that created divisions among those pushing for action on climate. The 2016 carbon tax would have been revenue neutral, using the revenue from the tax to reduce sales and business taxes and to increase a low-income tax credit. After the failure of the 2016 initiative, organizations supporting climate action went through an extensive process to reform the proposal. The 2018 version uses the fee revenue for investments in clean energy, air and water, forest quality and community resilience. The lessons learned from 2016 have resulted in an impressive coalition of supporters in 2018, from businesses, environmental groups, and environmental justice organizations, to labor, faith, and tribal organizations.

The state estimates it will generate $2.2 billion in the first five years. Within the air quality and clean energy fund, resources will support carbon sequestration, including on agricultural land and soils, forestland and marine and freshwater projects. Washington’s Department of Agriculture will propose “procedures, criteria and rules for a program to increase soil sequestration and reduce emissions from the loss and disturbance of soil.” If the initiative passes, those specific criteria and rules for carbon sequestration will be developed over the course of 2019.

The approach to support farmers and landowners in sequestering carbon will build upon the use of conservation easements on farmland, a legal agreement where farmers are paid annually or in one lump sum based on permanent farm changes that bring environmental benefits such as increased wildlife or improved water quality. Under the initiative, such easements would be managed by county-level conservation districts, land trusts, state agencies and local governments. The easements would require land management practices that sequester carbon—such as no tillage, the use of cover crops or perennial crops, sustainably managed grazing or taking marginal land out of production.

Carbon sequestration in agriculture has been notably difficult to measure over varying conditions, particularly over long periods of time, and can be impermanent—meaning that carbon stored can later be released with a change in agricultural practices, like tillage. But the type of practices supported through the program can also bring important climate adaptation benefits by building soil health and improving the farmland’s ability to both absorb water or withstand drought. The fund will also support projects to prevent the conversion and fragmentation of working forests, farmland and natural habitats of all types.

Additional funds will go toward low-income communities for energy efficiency, job transition resources for communities affected by the carbon fee, clean energy investments, and new infrastructure to support projects like expanded high speed rural broadband. A portion of the funds, managed by an Environmental and Economic Justice panel, will be dedicated to communities hurt by either climate change or the transition away from fossil fuels—communities such as the Quinault Indian Nation, whose territory runs along the Pacific Coast, or Centralia, Washington, a town near the state’s only operating coal plant.

The initiative also identifies resources to support a transition from natural gas to gas not derived from fossil fuels, including, but not limited to, biomethane—which can be produced from landfills or animal waste. Methane production from manure linked to large-scale animal farms is increasingly seen as an additional revenue stream for big California dairies and multinational corporations like Smithfield at its North Carolina hog operations. Methane digesters have been highly criticized for their cost and lack of reliability in reducing emissions—while enabling a system of animal and dairy production that still creates a host of air, water and economic problems for rural communities. The emergence of large-scale dairy operations in Washington has previously drawn criticism for surface and groundwater water pollution. Washington’s Yakima Valley experienced nitrate pollution when dairy manure lagoons were found leaking in 2015, posing health risks to neighboring community members.

In response to concerns about how the carbon fee might negatively affect farmers, the initiative exempts diesel fuel used explicitly for agriculture. Other exempted sectors include high energy users like pulp and paper plants, aluminum plants and aircraft manufacturing (i.e. Boeing). The initiative also includes an exclusion for fossil fuels exported or sold for export outside the state. Washington is not a big producer of natural gas and coal, but rather a pass-through from other states and Canada to be exported to Asia. While diminishing the GHG reduction effect of the carbon fee, these exemptions are designed to protect jobs in these industries important to the state, including those linked to a proposed new liquified natural gas export terminal in Tacoma, and the largest proposed coal export terminal in the U.S. along the Columbia River.

Critics of the fee, like big oil companies, have seized on these exemptions, arguing that the fee unfairly picks winners and losers. Opposition to the initiative has raised more than $20 million and is led by the Western States Petroleum Association, which has the financial backing of BP, Shell, Chevron and Phillips 66. Three agriculture groups have also donated to “No on 1631”: The Potato PAC, the Washington State Tree Fruit Association and the Lewis County Farm Bureau.

Carbon taxes have been gaining support as an alternative to troubled carbon markets established in California and Northeast states. Earlier this month, former Chair of the Federal Reserve Janet Yellen, alongside a number of corporate backers in the Climate Leadership Council,  announced her support of carbon taxes. Carbon taxes have been criticized as a strategy by corporations to avoid tougher regulations and potential legal exposure. While carbon taxes generate valuable revenue to fund a variety of programs that respond to climate change, there are concerns that they have set the carbon price too low to reduce emissions. While the Washington carbon fee starts at $15 per metric ton (with that number steadily increasing each year), the High Level Commission on Carbon Pricing recommends prices start between $40-$80 per metric ton in order to effectively incentivize emissions reductions. British Columbia, just to the north of Washington, has raised revenue from a carbon tax since 2008. Despite the current carbon price at $27 USD per metric ton, recent data shows B.C. won’t meet its 2020 carbon goals, and emissions actually increased from 2009-2014, according to an analysis by Food and Water Watch. Canada will implement a coordinated $7.75 USD per metric ton carbon price this year.

But as Washington Governor Jay Inslee, a supporter of the initiative, has pointed out, “Frankly, this is an investment vehicle much more than a price signal.” And the investments in a host of climate-friendly programs project to be significant.

If passed in November, Washington’s initiative would be the first carbon fee in the U.S., signaling the growing power of states to lead on future climate policy. The initiative offers new thinking on how agriculture and rural community concerns would be reflected in a carbon fee. And the deliberative and inclusive process for developing the initiative, resulting in a remarkable coalition of endorsers, offers important lessons for other states considering climate policy.