Will carbon tax Initiative 2117 lower gas prices? That’s debatable

Heywood, a Redmond hedge fund manager, formed Let’s Go Washington in 2022 to collect signatures for seven initiatives to date, including the one to repeal the Climate Commitment Act, which includes the carbon auctions.

During Thursday’s debate, Heywood, who doubts Washington needs to decarbonize, said the gas price increase caused by the carbon auctions will likely grow to $1 per gallon.

During the debate Heywood, who doubts Washington needs to decarbonize,  said the 21 cents to 50 cents per gallon added by cap-and invest will likely grow to $1 per gallon. After the debate, he repeated that claim, citing a 2022 state Ecology Department analysis. On page 212 of that analysis, Ecology staff calculated that auction prices would steadily increase to $100 per allowance by 2030. I-2117 supporters believe a $1 increase in an allowance price equals an extra 1 cent in pump prices — leading to the $1 figure showing up by 2030. However, this was one of 23 scenarios that were studied.

The 2022 analysis also did not take into account that Washington, California and Quebec hope to create a joint carbon market by 2025 to lower auction prices, which could lead to lower fuel prices. After the debate, Heywood called that plan flawed, saying he believes California is reluctant to enter the alliance.

But California has not publicly voiced any reluctance about teaming up with Washington and Quebec. The effort could even expand, as other states, such as New York, are watching closely as they consider setting up similar programs that would link up with the alliance.

After the debate, Carlyle disputed the $1 claim, saying he is not familiar with the study cited by Heywood. He said there is no evidence that keeping the cap-and-invest program would raise gas prices up to $1 a gallon.

Calculating cap-and-invest’s impact on Washington’s gasoline prices is extremely difficult because dozens of economic and geographical factors influence price fluctuations.

During the debate, Heywood also argued that the cap-and-invest system does not have any way to measure its effectiveness. Carlyle countered that such measurements are built into the regulations covering the program.

Since the program is less than two years old, the state has not yet measured its effects because meaningful data collection and analysis usually takes at least two years, Carlyle said. He noted that if cap-and-invest is repealed, Washington still faces a 2008 law requiring it to reduce carbon pollution to 5 percent of 1990 levels by 2050.

Heywood and Carlyle dueled over the popularity of the program and the effort to repeal it. Heywood cited the 460,000 Washington residents signing the petition to revoke the program. Carlyle said 500 organizations, tribes and other agencies have joined forces to preserve the system. Cascade PBS’s election polls have found waning support for the initiative to repeal. In early September, 46% of registered voters polled said they would vote No, thus keeping the program intact, and 30% said they would vote Yes to repeal it, with 24% undecided.

“They’re on the take,” Heywood said.”This is a huge grift.” He painted a picture of those 500 organizations receiving the cap-and-invest money mainly because they are political allies of Gov. Jay Inslee.

The initiative would also endanger Washington’s balanced state budget. Carlyle noted that repealing the cap-and-invest program “would blow a big hole” in the state’s long-term budgets, especially on transportation. He noted that Senate Minority Leader John Braun, R-Centralia, told The Seattle Times in a story published Wednesday that if cap-and-invest is revoked, he would consider floating a gas tax increase of less than 10 cents per gallon on top of the current rate of 49.9 cents. House Majority Leader Joe Fitzgibbon, D-West Seattle, told The Times that he doubted a gas tax increase would be politically feasible if Initiative 2117 passes.

“If John Braun brings us a gas tax, I may bring an initiative against that gas tax,” Heywood said.