July 24, 2014 (Olympia, WA) – Gov. Jay Inslee came to AWB earlier this week to share with the business community his perspectives behind his climate initiative. Carbon reduction is a cornerstone of Inslee's administration, and he made the case that innovating toward a low-carbon future can boost Washington's economy.
That message was met with questions and skepticism by AWB members. They asked how can Washington maintain a competitive footing if rules imposed to reduce carbon emissions cause the costs of energy, fuel, and other business operations to rise.
Speaking to a full house at AWB's Olympia office, Inslee called for businesses to contribute their expertise, acumen, and knowledge of technological capacity to the formation of draft climate change policies.
"We need the business community to bring to this discussion a can-do attitude that we're going do something here, and an attitude of confidence and optimism and ability to recognize that the state that has led the world so many times is going to lead the world again," said Inslee. "Even if we reach a result that AWB or individual businesses don't think is the best result, I need your input. I need your criticism. I need your hopes for a better policy."
Gary Chandler, AWB vice president of government relations, noted that that business community has and will continue to work with the governor on moving forward — but that the costs of these policies, especially as they increase the price of energy and transportation, matter greatly to the state's manufacturers, agricultural producers and innovators as they compete with other states and nations.
Our biggest issue that you will hear us talk about is competitiveness. We've got to make sure that our manufacturers stay competitive with those in other states," said Chandler. "We know there needs to be change, but we need to make sure the change is done right, we need to make sure the technology is there before we make that movement."
Inslee, who majored in economics at the University of Washington, said he believes that markets operate most efficiently and effectively when the costs of a product are internalized. Inslee said that carbon emitted into the atmosphere has costs — whether it be increased risk of forest fire, loss of snowpack, or acidified oceans that harm oyster production.
"There are costs associated with it," Inslee said. "If those costs are not internalized to particular actors who are in fact responsible for carbon emissions, that economic model is a market failure."
Inslee added that reducing carbon emissions from vehicle traffic is important because Washington's electrical grid system, with its heavy use of hydroelectric power, is so clean that the state's carbon emissions are thus disproportionately produced by transportation.
Many in the business community remain concerned about the costs of those as-yet unreleased rules. One AWB member asked Inslee if he had decided the level of costs that would be acceptable to achieve success.
Inslee said the discussions are too preliminary to have set a per-watt price for carbon reduction, but he asked AWB to help discuss scenarios and costs.
In fact, the cost concerns are widely shared. In California, a number of legislative Democrats are fighting to delay low-carbon fuel standards because of their cost and impact on those with low incomes. Inslee was also asked about Australia's decision last week to drop an unpopular carbon tax that drove up consumer energy costs. While Inslee said he hasn't talked with Australian leaders yet, he said it would be interesting to hear about their experience and decision.
Inslee said his proposed carbon-reduction rules will be formulated over the coming months, and the governor's office plans several more meetings with AWB members to collect input on how those policies will work.
"I understand these rules have ramifications that may not be obvious to me sitting in a little office in the Capitol," said Inslee, "and I need you to tell me what the real world consequences of these rules are."
Inslee pledged a transparent, open discussion with the business community, saying he hopes that businesses respond by keeping an open mind.
"I look at this issue not just as a challenge," said Inslee, "but as a great economic opportunity for the state of Washington."
As Inslee left for his next meeting, AWB gave him a copy of the just-released 2014 Competitiveness Greenbook of key environmental statistics. The book notes that Washington is already one of the greenest states in the nation, with electricity that generates the fourth-lowest carbon emissions per capita. Washington drivers use less gasoline per capita than those in 38 other states.
AWB also asked that discussion of carbon emissions note that Washington contributed just 0.21 percent of the globe's total carbon emissions in 2011, down a third from its 1990 level. Work to further reduce Washington's carbon emissions should give credit for how far the state and its businesses have already come.
Watch Governor Inslee's talk at AWB