Senator says Ecology must be open about program driving up fuel prices

OLYMPIA… While raking in more than $1 billion from the carbon-pricing program that is behind Washington’s crushingly high fuel prices, the state Department of Ecology isn’t being fully open about who is buying and holding the carbon credits. A state senator says that has to change.

The state’s Climate Commitment Act requires Ecology to post information about carbon-allowance holding accounts on a searchable public website. In a Sept. 26 letter to agency director Laura Watson, Sen. Perry Dozier points out how what is believed to be the first post fails to include names of account holders, making it “useless” to the public and lawmakers.

“To be clear, the very information that the Legislature intended to make available when it enacted the CCA is being withheld by the department as it enforces the CCA,” wrote Dozier, R-Waitsburg.

While Dozier is not a member of the Senate Environment, Energy and Technology Committee, he notes the CCA is the lone topic on the agenda for the committee’s Monday meeting and expects concerns about the agency’s inadequate reporting will also be raised then. Ecology’s lack of openness is particularly troubling to Dozier because the agency has already broken the promise that farm diesel and fuel used by Washington’s maritime industry would be exempt from the CCA fuel surcharge.

Dozier’s request comes as Gov. Jay Inslee clings to a claim that his long-desired cap-and-trade policy is not the reason Washington motorists continue to pay more than $5 for a gallon of gasoline or diesel while prices are far less in neighboring Oregon or Idaho.

Carbon allowances function like permits to emit carbon, and may be bought, sold, traded, or transferred to another registered entity. Under the CCA, the allowances are held in accounts, and information about the contents of each holding account is to be public.

By providing the public with what his letter calls “the bare minimum” of information about those accounts, Dozier says, Ecology is adding to the controversy that has hung over the CCA since Democrat lawmakers pushed it through during the pandemic-lockdown 2021 legislative session. The distrust has increased as Washington gas prices began to soar this year.

“Unfortunately, the department’s holdings report is not searchable, does not allow the public to follow along, and provides no insight into the participation of various entities in the program, including general market participants…  In the presence of incessantly high gas prices, public perception of the CCA going forward will heavily depend on the program’s transparency,” Dozier’s letter continues.

In 2022 policy analysts outside the Inslee administration predicted the CCA would cause a significant increase in gas prices once the auctions of carbon allowances began this year. Inslee responded with the now-infamous claim that the new law would add “pennies” per gallon and might even lead to lower gas prices – yet the cost associated with the CCA is now estimated at 51 cents per gallon, as fuel suppliers continue adjusting their prices to recoup the growing cost of the allowances they purchase.

Dozier explained his request to Ecology is driven by a general interest in government transparency and holding state agencies accountable, plus his particular concern for how the CCA is being implemented.

“This is not about outing the private companies and public institutions that have been put over a barrel by the CCA and given no real choice except to pay up,” Dozier said. “At a fundamental level it’s about ensuring public access to the details of transactions involving government, the same way we should be able to see who holds any government-issued permit. These aren’t Swiss bank accounts, but Ecology is treating them that way.

“The CCA deserves special attention because it’s causing more pain at the pump and adding to the affordability crisis in our state while becoming a golden goose for state government. Turning carbon emissions into a commodity has enriched the state by over a billion dollars in a matter of months, with more sales to come this year. When a new line of business becomes that lucrative so quickly, it’s even more important to see the details so the public can keep a close eye on who is doing what.

“Instead of pushing for legislation to force a closer look at the oil industry’s finances, the governor should be more concerned that his own agency is flouting the law he wanted by failing to fully open its own books.”

Dozier noted the mandate for transparency was added to the CCA when it first came before the Senate, through a Republican amendment that was publicly endorsed by the bill’s Democratic prime sponsor.

“The senators who spoke in favor of this reporting requirement wisely said we need to follow this very confusing and cumbersome system to understand its full implications. Ecology is obstructing the public’s view. It needs to do better by following both the letter and the spirit of the law,” he said.

Dozier’s letter concludes by encouraging the agency director to reevaluate the holding-accounts report and upgrade the next version. While he did not ask for a direct response, the 16th District lawmaker said it’s disconcerting that more than a week has already passed without Ecology offering any meaningful response to his request, considering the agency is already in hot water over the fuel-surcharge issue and the public outrage over how the CCA is driving up fuel prices.

“I’m not expecting a thank-you note from Ecology for pointing out where it’s falling short. But seeing how the agency keeps fighting us on the fuel-surcharge promise, despite my proposing a bill, I hope my letter is enough to fix this new issue. There’s something very wrong when you keep needing more legislation just to get the executive branch to follow the law.”