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In Washington state, a ballot initiative could affect climate policy nationwide. It asks voters to repeal the state's cap-and-trade program, one that other states might seek to replicate. Keith Romer from NPR's Planet Money team reports.
KEITH ROMER, BYLINE: Initiative 2117 asks voters to take stock of Washington state's ambitious new cap-and-trade plan to bring down carbon emissions. A couple of years ago, the government put a cap on the total amount of carbon big polluters were allowed to put into the atmosphere. Every year, that cap goes down. To determine who can emit that carbon, the state created an allowance system. For each metric ton of carbon you want to emit, you need one allowance, which can be bought and sold like stocks or bonds. That is the trade part of cap-and-trade.
REUVEN CARLYLE: So a cap on emissions allows for companies to make choices.
ROMER: Former state senator Reuven Carlyle helped design Washington's plan.
CARLYLE: Should I just purchase allowances, or should I go out and decarbonize my actual footprint?
ROMER: The price for one of these allowances gets set on the open market, and then individual companies figure out what makes sense for them. For one company, it might be cheaper to find ways to pollute less. Another might just keep paying for allowances.
CARLYLE: So those are economic choices that individual companies can make in a more efficient way.
ROMER: While still allowing the state as a whole to lower its carbon emissions over time. But efficient or not, cap-and-trade doesn't come for free. Last year, Washington started holding auctions where companies could buy the allowances they needed. Luke Martland oversaw the program. He says at the first auction, an allowance to emit one ton of carbon went for $48. At the second - $55.
LUKE MARTLAND: When prices began to go up to the level of $63 in August of 2023, I think that raised concerns for a lot of people. Is this politically sustainable? Is it sustainable in the market?
ROMER: Big gas distributors like BP and Phillips 66, they needed to buy millions of these allowances, and they passed on some of these new costs to consumers at the pump, which gave opponents of the plan a big stick to wave around. Opponents like libertarian hedge fund manager Brian Heywood.
BRIAN HEYWOOD: Immediately after the cap-and-trade went into effect, we hit number one in the nation for gas prices for a while. We're generally about number three. Hawaii and California are still above us.
ROMER: Heywood describes cap-and-trade as a tax on consumers, and he spent millions to get an initiative on the ballot this fall to repeal the plan. To Heywood, Washington unilaterally limiting its carbon emissions is just political theater.
HEYWOOD: If you're on an airplane full of smokers, and you're the one nonsmoker, your nonsmoking doesn't do anything at all for that airplane or for the clean air.
ROMER: Luke Martland, who ran Washington's cap-and-trade program, he thinks the state should do its part on climate regardless. But also because doing so could convince other states to join the nonsmokers on that metaphorical plane.
MARTLAND: So Washington State was a proof of concept, a great example of what could be done. And other states are looking at Washington state.
ROMER: Next month, they will be looking to see whether voters there like their ambitious climate policy enough to keep it.
Keith Romer, NPR News.
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