We have many concerns about the proposed rule, but we focus on just two areas of contention.

The Regulatory Approach

The choice of a regulatory approach itself is a mistake and is likely to fail to meet carbon reduction targets. The proposed rule assumes state regulators can judge the energy efficiency of facilities on an individual basis and compare it effectively to competitors in the same category, taking into account the risk of international competition and other non-energy factors. Business owners themselves, who have the best knowledge and incentives, cannot predict or correctly ascertain that combination of factors.

Building regulation based on the notion that regulators can make occasional visits and correctly balance emissions reduction while reducing the risk that emitters will simply leave the state is a recipe for failure.

The rules as proposed use a similar theory about rating efficiency as used in the U.K. to protect trade-exposed industries. The poster child for the success of that approach was Tata Steel, which argued it was meeting energy efficiency standards while competing internationally. Then they announced bankruptcy earlier this year. Ultimately, that is the problem. The failure of any complex regulatory scheme to adjust to dynamic international trends is only apparent when the damage has already been done.

Rather than ignoring the obvious difficulties of writing a rule that is economically and environmentally effective, the Department of Ecology should honestly highlight the large gap between available information and the information necessary to make the rule work and suggest an approach that is more simple and transparent.

Carbon Offsets/Allowances

The one area of policy we will address is the inclusion of carbon offsets, called “allowances” in the rule. The rule sets arbitrary limits for the number of allowances that can be used for compliance, ramping down to five percent in 2035. There is simply no justification for these limits.

The concern about allowances is that they must prove additionality, permanency and other attributes. As the rule notes, there are methodologies to ensure compliance with these goals. As long as carbon reduction efforts meet those standards there is no reason to count the reduction of a metric ton of carbon in 2022 differently than 2023.

Imagine the following two projects:

·         Capture of agricultural methane by a covered emitter.

·         Capture of agricultural methane by a non-covered emitter across the border in Idaho.

According to the current rule, the reductions in the first instance would always count toward meeting reduction targets. The second, however, may or may not be counted after 2022. There is no difference in the environmental benefit provided by the two equivalent actions.

Elsewhere, the Department understands this. For example, it requires the proposed export terminals to consider induced carbon emissions in China and elsewhere in its environmental impact. However tenuous that calculation may be, it recognizes that emissions anywhere are equivalent. For some reason, however, in this rule, the Department takes the opposite position, arguing that carbon emissions reductions are location dependent.

The only difference comes from a political slogan, claiming “we can’t offset our way out of the problem.” There is no more logical basis for requiring covered entities to meet an arbitrary percentage of reductions on site than there would be to require people grow a certain percentage of their own food, write their own software or any other activity.

Either our focus is on reducing carbon or it is on requiring symbolic acts of environmental penitence, regardless of effectiveness. The current rule is, simply, at odds with a science-based approach.