Rep. Fitzgibbon Proposes New Carbon Tax Draft

Representative Joe Fitzgibbon  has developed a new draft of his carbon tax bill based on HB 1646, but with a number of major changes. He is interested in feedback on the draft.


He says, “There are several other changes that I am contemplating but felt that it was time to get this draft out widely for your review.  I am continuing to work on this with an eye towards have a carbon tax in the mix as an option when the operating budget discussions turn to revenue.  Here are some of the changes from HB 1646 as introduced that I’d like to highlight. Some come from your suggestions, some are drawn from the various other carbon tax bills that have been introduced, most recently Sen. Palumbo’s bill.”


This draft:

  • Adds a statutory exemption for energy-intense, trade-exposed (EITE) industries, including pulp & paper, steel, aluminum, food processing, cement, glass.
  • Allows electrical utilities to retain 60% of tax paid on electricity for utility-directed projects with a benefit to that utility’s ratepayers.
  • Allows natural gas utilities to retain 30% of tax paid on NG prioritized for utility-directed projects that promote fossil fuel alternatives.
  • Exempts aviation and maritime fuels from tax (as opposed to original draft which exempts them until 2022 and retains the exemption if international standards are enacted by then).
  • Exempts fuels used in forest management from the tax, in the same manner as applies to agricultural fuels.
  • Imposes tax at the ‘rack’, rather than at the first point of taxation in the state.
  • Exempts exported electricity from the tax.
  • Phases in the tax on electricity and residential natural gas; 25% in 2018, rising 25% per biennium to 100% of rate in 2024.
  • Prohibits Ecology from enforcing the Clean Air Rule (CAR) until 2021 unless Washington is not on track meet current state GHG goals
  • Adds an additional “overlay” requirement that 5% of projects or activities benefit low-income communities of 60% of the state median income.
  • Funds:
    • The replacement of up to $300M of the general fund components of 10 natural resource agencies
    • The low-income tax grant program, and requires excess funds due to under-utilization by eligible recipients to be reinvested in consumer outreach, up to $10M per year
    • An Alcoa greenhouse gas reduction project at $15M; and
    • $20M per biennium in funding for water resource mitigation required under the Hirst decision.
  • Funds the forest riparian easement program (FREP) before allocating funds to forest health investments.
  • Specifies that forest health funds may be used to fund forest health treatments of state lands prioritized consistent with HB 1711 and private lands consistent with SB 5546.
  • Clarifies that payers of the carbon tax are eligible to receive grants from the various carbon reduction accounts, so long as the project meets the other project funding criteria in the bill.

You can find the draft here.