Economic Issues and Climate Mitigation
The 4th Learning Session focused on the cost of inaction and creating more sustainable economies and businesses, mitigation using economies, and carbon pricing solutions. After the Lands Acknowledgement, the Assembly reviewed the original question of “How can WA State equitably design and implement climate mitigation strategies while strengthening communities disproportionately impacted by climate change across the State.”
Matt Steuerwalt, from Insight Strategic Partners and the University of Washington, presented on The Economic Cost of Climate Change – What are the costs of not acting – and what will it cost to act? He noted the cost of doing nothing will be considerable and is real. As impacts become more severe, adaptation costs will become higher. He compared acting now and taking precautions to buying insurance, which you have and hope you don’t need to use. Economic design finds the balance where the benefits are slightly greater than the costs, and is a complicated formula. Acting now would cost 1% of the economy compared to 5-20% if we wait.
Research data doesn’t always measure the same things and may choose a wide range of costs. Steuerwalt noted carbon pricing alone wouldn’t solve the emissions problem and currently uses prices that are too low. Personal changes like buying solar panels and electric cars are still expensive but will become more affordable in the future. Benefits that will occur in the future are the hardest to measure.
Sound economic analysis is essential, but other tools are needed, such as deciding which discount rates to use for future returns. Costs today will not be realized until a time in the future we will not be here to see.
Moji Igun, Founder of Blue Daisi Consulting, explained The Circular Economy where everything is used, and there is no waste. Our economy is currently based on a linear design where most products end up in the landfill, which she said is not sustainable. Even in our current partial recycling economy, we can move towards being more waste free. Igun gave examples of a milkman bringing milk and reusing the bottles, and using a tool library instead of recycling. Evrnu in Seattle is trying to offset the $350 billion tons of waste produced by the fashion industry by transforming clothing into a renewable fiber resource. Denmark is increasing its waste-free economy to become a circular city.
Steps towards a circular future include:
- Designing out waste and pollution in cities.
- Keeping products and materials in use in cities longer.
- Regenerating natural systems in and around cities.
Of the current opportunities for Washington, Right to Repair, HB 1212 moves through this session’s legislative process . This bill will allow small businesses to access the information and tools to repair electronic devices that usually get thrown away.
Other opportunities for change would focus on big industries in Washington to make the greatest impact. Funding public-private partnerships to co-create solutions and design collaborative platforms at the regional and city level. Igun believes we need to update our regressive tax system regarding the carbon tax, create tax incentives for circular businesses, and add Circular Design to the public school curriculum.
Peter Godlewski, Energy and Environment Government Affairs Director at the Association of Washington Business, provided a business perspective on climate change and some of the challenges between balancing business and environmental interests. He stated carbon emission is a global problem with a global solution. Godlewski generally found a sharp increase in costs for the last 20% of improvements that businesses must make to reach compliancy.
Priorities for businesses include supporting a carbon tax, the costs involved and having a reliable energy source to avoid power outages. Figures on emissions showed transportation as the highest with building heating the second highest. The targets for emissions in 2020 were to be the same as in 1990 and for 2030, 45% lower than 1990 levels. This level would be just a little higher than taking all the cars off the road, and very difficult to achieve.
Godlewski reported that although Washington uses electricity for more tan half of its power, data shows we do not have enough electricity to power the entire state. This will become an even bigger issue when one million more people are predicted to move here by 2030.
Other concerns were the need for a backup energy source to balance renewables when they can’t operate, as when there is no sun or wind. A high land cost exists for renewables as well. Needing to build more transmission lines across the state presents an infrastructure challenge. One paradox is that industries in Washington that produce low carbon but are exposed to high energy prices may leave to take advantage of incentives in other states, and their absence might increase our emissions.
— Brad Warren
Brad Warren, Executive Director of National Fisheries Conservation Center and Director of Global Ocean Health, explained the broader definition of Price and Invest as an approach to carbon pricing different from a standard cap and trade policy. It uses the money from carbon taxes to fix the problem by giving some of it to the people to become the solution. “If you’re going to do carbon pricing, [the goal] is to raise the price until it hurts enough that people reduce their emissions,” said Warren, noting they spend all their money on cutting pollution. He believes a higher participation rate and more emissions reduction occur from helping people pay for cutting their emissions.
If you’re going to have a price on carbon, you want the money to go to something that works.”
— Brad Warren
Working with members in the fisheries industry, Warren reviewed the results of GHG emissions such as ocean acidification, toxic algae, fish-killing heat spells, thermal range shifts, low oxygen, and sea-level rise. In 2015 half of the sockeye salmon returning to the Columbia river died due to over-heated water.
A comparison of 18 systems to reduce greenhouse gas (GHG) emissions worldwide revealed three that stood out. British Columbia, Regional Greenhouse Gas Initiative (RGGI), of states on the east coast, and California. The ten RGGI states used more than half their revenue for energy efficiency, 18% for renewable energy investments, and 13% for direct bill assistance. In this group, Maine saw a four-dollar return for every dollar invested. They funded $260,000 towards a $1.4 million blueberry company’s high-efficiency cold stage system and created a $90K/yr savings. California reached their targets for emissions reduction four years ahead of schedule by switching to renewable energy using more solar panels on roofs, wind turbines, and hydroelectricity from increased rain.
Raising fuel prices doesn’t make people burn less fuel, so it’s better to look at strategies that help people afford to reduce their carbon emissions. Inequities can occur in either model, and care must be taken to make the division of limited resources fair.
Bob Hallahan, with Citizens’ Climate Lobby of Whidbey Island, presented on Pricing Carbon: the Essential and Obvious Thing to Do which he noted is a market based strategy for lowering emissions by putting a price on them to reflect the impacts of GHG pollution. Carbon pricing is popular because it is precise, fair, and understandable.
Hallahan explained the words “carbon taxes” tend to raise concerns because the word “taxes” is tied to the government, while carbon “fees” implies something that you pay and get something in return and people can opt-out of.
Typically carbon pricing starts low, but after waiting so long, it is now necessary to start higher to be effective. It also is inexpensive to administer, fair when combined with supportive policies, popular, and widespread as it covers all carbon sources; it is best done at the trans-national level. Hallahan emphasized it is not used to fund essential governance.
Developing this program at the state level is reasonable because of its urgency. Because the Federal government is slow to respond, states can put pressure on it while also providing research information. Some concerns exist regarding businesses leaving the state.
With revenue-neutral, either a dividend or a tax swap can be used. Supportive policies ease people’s adjustment to a low carbon economy. Project Drawdown was identified as an example of a complementary program. The World Bank tracks carbon pricing initiatives and has reported 61 in place or scheduled. The negative side of carbon pricing showed up strongly in 2016, and the initiative for it did not pass.