Tensions, gas prices rise as Washington state auctions carbon

Washington state’s new cap-and-invest system is raising hundreds of millions of dollars for climate action while pricing emissions at a much steeper cost than California, the only other state with this kind of system.

Climate hawks are thrilled that — after years of failed proposals — the Evergreen State has a path to meet the Paris climate agreement’s goals. But anger is rising among other groups, including some that had supported passage of the climate law, which say Democratic officials did not prepare the public for the costs.

Since the law went into effect in January, Washington’s gasoline prices have climbed more steeply than neighboring Oregon.

Farmers and fishermen say they’re paying surcharges on fuel deliveries despite the law exempting them. And some Native American leaders are publicly clashing with Gov. Jay Inslee (D) over his refusal to exempt tribal gas stations from the law.

Meanwhile, Washington’s auctions of carbon allowances are selling out. Companies bought all 8.6 million allowances the state offered last week at its second-ever auction, after buying all 6.2 million allowances the state auctioned in February. And the latest settlement price of roughly $56 per allowance — compared with about $30 charged by California — was high enough to trigger an extra auction of allowances later this summer. …

Inslee last year predicted the climate law would have a negligible impact on gas prices. “We’re talking about pennies,” he said.

But the impact seems to be greater than that. …

Washington’s gas prices typically have moved in tandem with Oregon’s, but in January the two states started to diverge, said Patrick De Haan, head of petroleum analysis at GasBuddy. As of Wednesday, Washington’s average gas price had climbed to $4.73, about 41 cents higher than Oregon’s, according to AAA.

“I would blame Washington’s carbon tax, absolutely,” De Haan said, referring to the carbon cap. …

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