Key Findings

1. The Climate Commitment Act imposed a carbon tax and requires the Washington State Department of Ecology to ensure fuel taxes on food production and transportation are exempt from the tax.

2. The Washington State Department of Ecology officials claim that creating an exemption mechanism is not their responsibility.

3. At the rates of the first carbon emissions offset auction, food producers and transporters will be illegally charged $33 million for diesel purchases. Purchases of gasoline, natural gas, and propane are also exempt and currently being illegally taxed.

4. The Washington State Department of Ecology should establish a refund mechanism before even more illegal taxes are collected on the purchases of agricultural fuels.

Introduction

The “Climate Commitment Act” imposed a broad-based energy tax and it was signed into law by Governor Inslee in 2021.1 The act created a cap-and-trade program for carbon emissions offsets to be auctioned to businesses on a quarterly basis. To protect consumers, the legislature exempted a few groups paying fuel taxes based on the first carbon emissions auction. These included food producers and transporters, to help keep grocery prices down.

The anticipated carbon tax began earlier than expected in 2023. In fact, at the beginning of the year, fuel prices rose and have continued to rise for 11 consecutive weeks this year.2 In addition to general fuel prices increasing, agricultural producers and transporters report they are being charged an additional tax for the fuel they purchase – despite the carbon-tax exemption being provided in the law.

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