Under grilling from Ericksen, Ecology rep admits targeting of oil industry is ‘political’

Inslee cap-and-trade bill would force billion-dollar burden on refiners, motorists, others

  • Bill gives a break to most big exporters – but not refiners
  • WA refiners export $2B of product annually, state’s 5th largest export
  • Decision to target refiners and motorists a “political call,” says Ecology rep

To see video of committee testimony, click here.

OLYMPIA – Under cross-examination from Sen. Doug Ericksen, an official of the Department of Ecology acknowledged that Gov. Jay Inslee’s billion-dollar cap and trade proposal makes “a political call” in targeting oil refiners and consumers, while denying the industry the same break as other major exporters.

Under the governor’s plan, other industries would be spared the billion-dollar burden of the new program, at least initially, if they are “energy intensive and trade exposed.” But it would not exempt Washington oil refiners, who every year export about $2 billion in fuel and other products internationally, nor would it exempt the millions of Washington motorists who buy their products.

During a work session Friday before the Senate Environment, Energy and Technology Committee, Ecology officials also said they are unaware of the large volume of exports from Washington refiners.

“We all ought to be troubled by the fact that the governor is planning to hammer the oil industry and consumers without understanding the nature of the business,” Ericksen said afterward. “If any industry can be called energy intensive and trade exposed, it’s oil refining. It would be more honest for the governor to explain what this is really about – a way to force everyone who buys gasoline to subsidize electric cars for the wealthy.”

Senate Bill 5126, scheduled for a vote Thursday in the Senate committee, would require industries that directly or indirectly emit carbon to pay for carbon-reduction efforts, including programs to encourage purchases of electric cars. But the bill contains “carve-outs” for some industries that must compete in world markets and would be rendered uncompetitive by the enormous new costs — upwards of $1 billion every two years once the program is fully implemented in 2023-25.

The bill doesn’t explain what it means by “energy intensive and trade dependent.” But it lists the industries that get the break, and oil isn’t one of them. Exempted industries include manufacturers of metal, paper, wood products, aerospace parts, minerals, chemicals, computer products and cement. The bill also exempts emissions from aviation and marine fuels, and from power plants governed by other clean-energy rules.

During Friday’s committee meeting, Ericksen asked Ecology special assistant Stuart Clark why oil is targeted while other Washington exporters are being let off the hook.

“It is a political call about who you want to have on the list,” Clark said.

In response to a question from Ericksen, Clark said he was not aware that Washington refiners are significant exporters. According to the U.S. Census Bureau, petroleum products are Washington’s fifth biggest international export, behind airplanes, soybeans, wheat and corn. A report by the Washington Research Council indicates that exports are about $2 billion a year, about half to Canada.

Ericksen said later that the exchange demonstrates that the Inslee Administration is singling out refiners and their customers for the lion’s share of the billion-dollar burden, without a clear understanding of the impact it will have on the economy. The Inslee administration’s “political call” would drive up gas prices, reduce jobs and increase the cost of food and of goods and services requiring transportation.

“The most important thing that came out of this discussion was the fact that the decisions are all about politics,” Ericksen said. “This isn’t about making industries pay. It’s about making consumers pay.

“We’re being asked to pass one of the most sweeping policies the Legislature has ever considered, yet Friday’s testimony showed the Inslee Administration and the Department of Ecology doesn’t even know the basics of the business. They don’t want to acknowledge that is this is going to drive up the cost of everything for everyone, so that we can encourage wealthy people to buy electric cars.”