H-0753.1
HOUSE BILL 1513
State of Washington 67th Legislature 2021 Regular Session
By Representatives Lekanoff, Shewmake, Wicks, Valdez, Thai, Ramel,
Peterson, Dolan, Goodman, Taylor, Kloba, Slatter, Frame, Hackney,
Wylie, Pollet, and Harris-Talley
Read first time 02/09/21. Referred to Committee on Environment &
Energy.
1 AN ACT Relating to improving environmental health by reducing
2 carbon emissions through increasing climate resilience and mitigating
3 the effects of climate change by levying a carbon pollution tax,
4 authorizing a climate finance bond program, and investing in clean
5 economic growth; adding a new chapter to Title 82 RCW; adding a new
6 chapter to Title 70A RCW; and creating a new section.
7 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
8 NEW SECTION. Sec. 1. (1) The emission of greenhouse gases, such
9 as carbon dioxide, is a significant contributor to anthropogenic
10 climate change, and has devastating adverse impacts on Washington's
11 economy, environment, natural resources, and communities. Our state
12 is already experiencing rising sea levels, depleting snowpack,
13 increased flooding, acidifying oceans, and more frequent and severe
14 wildfires. These impacts impair our prosperity and impose burdensome
15 costs on our businesses and communities.
16 (2) Climate risk is economic risk, and it is imperative that
17 Washington act now to safeguard the state's communities and
18 industries against future shocks and disasters by putting a price on
19 practices that increase the state's exposure to risk and investing in
20 those that increase resilience. From farmers whose business is
21 directly threatened by the climate crisis, to coastal communities at
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 1 risk of outright displacement, the state must act now by investing
2 locally at the scale needed to move all Washingtonians toward a
3 future of shared prosperity as we build the clean economy here in
4 Washington state.
5 (3) Washington state is home to some of the world's most
6 innovative companies, a highly skilled workforce, and important
7 industries. As our state transitions away from a fossil fuel-based
8 economy, we must do so in a way that protects these assets and allows
9 our businesses to thrive. By launching a comprehensive fiscal program
10 that incentivizes and invests in resilient infrastructure and
11 climate-smart investments across all areas of development, we can
12 reduce our state's carbon dioxide emissions while preparing our
13 economy for the future.
14 (4) Washington is home to more than 10,000,000 acres of working
15 forestlands, including private lands and state trust lands. These
16 lands represent the foundation of a forest products industry that
17 sequesters massive amounts of carbon dioxide from the atmosphere
18 simply through its standard, baseline operations. These working
19 forests are one of the state's greatest natural assets in combating
20 global greenhouse gas emissions. A statewide carbon policy must
21 support and maintain the ecosystem values provided by the forest
22 products industry. Healthy, sustainable, working forests maximize the
23 forests' ability to absorb carbon dioxide with lumber and other
24 forest products continuing to sequester that carbon dioxide in their
25 useful life. For these reasons, this chapter exempts certain timber-
26 related uses of fuels subject to the carbon pollution tax imposed
27 under this chapter.
28 (5) Washington is also home to one of the most productive and
29 innovative agricultural sectors in the world. Agriculture is not only
30 critical to our economy, but it is integral to our culture. With
31 farmers and farmworkers on the front lines of climate-related
32 disruption such as wildfire, flooding, drought, pests, and other
33 threats to the land, labor, and the business of farming, investing in
34 practices that increase the natural and economic resilience of and
35 decrease the greenhouse gas emissions from Washington agriculture is
36 critical. Farmers have been leading the way on land stewardship and
37 soil health for decades, while operating in a highly trade-exposed
38 and price-constrained industry that imposes singular economic
39 challenges. For these reasons, this chapter exempts certain
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 1 agricultural uses of fuels subject to the carbon pollution tax
2 imposed under this chapter.
3 (6) Fossil fuel combustion is also responsible for other
4 pollutants, such as nitrous oxide, carbon monoxide, benzene,
5 particulate matter, and others that contribute to respiratory
6 diseases like asthma and lung cancer, which compromise public health,
7 shorten life expectancy, and strain our public health system. This
8 pollution affects all Washingtonians, but falls disproportionately on
9 low-income communities, communities of color, and the most vulnerable
10 of our population. Reducing our reliance on fossil fuels will
11 therefore contribute to improved air quality and improved public
12 health outcomes.
13 (7) The legislature recognizes and finds that the public interest
14 includes, but is not limited to: The equitable distribution of energy
15 benefits and reduction of burdens to vulnerable populations and
16 highly impacted communities; long-term and short-term public health,
17 economic, and environmental benefits and the reduction of costs and
18 risks; and energy security and resiliency. It is the intent of the
19 legislature that in achieving this policy for Washington, there
20 should not be an increase in environmental health impacts to highly
21 impacted communities.
22 (8) The legislature finds that Washington is leading the
23 transition to a clean energy economy, and in 2019 the state adopted
24 the Washington clean energy transformation act, chapter 19.405 RCW,
25 to eliminate coal-fired electricity, ensure that all retail sales of
26 electricity to Washington customers are greenhouse gas neutral by
27 January 1, 2030, supply 100 percent of all retail sales to Washington
28 customers with nonemitting and renewable resources by January 1,
29 2045, and established strong compliance and enforcement mechanisms.
30 Because of the stringent requirements of the Washington clean energy
31 transformation act, the electricity sector is exempt from the carbon
32 pollution tax established in this chapter.
33 (9) The legislature recognizes the concern from imposing the
34 requirements of this chapter on energy-intensive, trade-exposed
35 industries in our state and the possibility that these requirements
36 might provide a comparative disadvantage to producers in unregulated
37 states or counties, leading to a migration of manufacturing to
38 unregulated states or countries and thereby generating a
39 corresponding increase in greenhouse gas emissions, which would
40 undermine the purposes of this chapter. Because of the concern of
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 1 leakage, the department of ecology must provide a report to the
2 governor and the appropriate committees of the legislature by July
3 30, 2026, with recommendations on imposing the requirements of this
4 chapter on energy-intensive, trade-exposed entities as identified in
5 section 3 of this act.
6 (10) This chapter establishes a carbon pollution tax to account
7 for a significant share of the economic and environmental impacts of
8 greenhouse gas emissions. The revenue from the tax will facilitate
9 the transition from fossil fuels to clean energy and fund investments
10 that will benefit our businesses, our families, and our communities.
11 (11) Furthermore, this act establishes a ten-year, climate
12 finance program that provides much needed additional capacity to
13 invest in a just transition that protects our communities and our
14 economy from future disasters and builds the low-carbon future here
15 in Washington state. This finance program mandates that investment
16 decisions are made in a manner that provides accountability in
17 government spending through a fiscally responsible bond program that
18 invests at scale in climate priorities and delivers maximum returns
19 in the forms of both economic activity and carbon pollution
20 reduction. These investments will not only save Washington taxpayers
21 billions of dollars in avoidable future costs, but also foster growth
22 and stability for rural and urban communities alike, across diverse
23 economic sectors.
24 NEW SECTION. Sec. 2. The definitions in this section apply
25 throughout this chapter unless the context clearly requires
26 otherwise.
27 (1) "Biogenic fuel" means any liquid or gaseous fuel that is not
28 a fossil fuel.
29 (2) "Carbon calculation" means a calculation made by the
30 department of ecology, in consultation with the department of
31 commerce, for purposes of determining the carbon dioxide emissions
32 from the complete combustion or oxidation of fossil fuels for use in
33 calculating the tax imposed under section 3 of this act. The carbon
34 calculation also includes the life-cycle analysis of emissions
35 associated with such fuels.
36 (3) "Carbon content of fuels" means the greenhouse gas emissions
37 generated by the combustion or oxidation of fuels.
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 1 (4) "Carbon dioxide equivalent" means a metric measure used to
2 compare the emissions of various greenhouse gases based on their
3 global warming potential.
4 (5) "Carbon pollution tax" means the tax created in section 3 of
5 this act.
6 (6) "Coal" means coal of any kind, including anthracite coal,
7 bituminous coal, subbituminous coal, lignite, waste coal, syncoal,
8 and coke of any kind.
9 (7) "Consumer price index" means, for any calendar year, that
10 year's annual average consumer price index, for Washington state, for
11 wage earners and clerical workers, all items, compiled by the bureau
12 of labor and statistics, United States department of labor. If the
13 bureau of labor and statistics develops more than one consumer price
14 index for areas within the state, the index covering the greatest
15 number of people, covering areas exclusively within the boundaries of
16 the state, and including all items must be used for the adjustments
17 for inflation in this section.
18 (8) "Department" means the department of revenue.
19 (9) "Direct access gas customer" means a person who purchases
20 natural gas for consumption from any seller other than a seller
21 registered with the department for purposes of paying taxes due under
22 chapter 82.04 or 82.16 RCW.
23 (10) "Facility" means any physical property, plant, building,
24 structure, source, or stationary equipment located on one or more
25 contiguous or adjacent properties in actual physical contact or
26 separated solely by a public roadway or other public right-of-way and
27 under common ownership or common control, that emits or may emit any
28 greenhouse gas.
29 (11) "Fossil fuel" means petroleum products, motor vehicle fuel,
30 special fuel, aircraft fuel, natural gas, petroleum, coal, or any
31 form of solid, liquid, or gaseous fuel derived from these products,
32 including without limitation still gas, propane, and petroleum
33 residuals including bunker fuel.
34 (12) "Fuel" means a fossil fuel or biogenic fuel. "Fuel" does not
35 include electricity.
36 (13) "Gas distribution business" has the same meaning as defined
37 in RCW 82.16.010.
38 (14) "Greenhouse gas" and "greenhouse gases" have the same
39 meaning as defined in RCW 70A.45.010.
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 1 (15) "Highly impacted community" means a community designated by
2 the department of health based on cumulative impact analyses
3 conducted under RCW 19.405.140, or a community located in a census
4 tract that is fully or partially located on "Indian country," as that
5 term is defined in 18 U.S.C. Sec. 1151.
6 (16) "Light and power business" has the same meaning as defined
7 in RCW 82.16.010.
8 (17) "Motor vehicle fuel" has the same meaning as defined in RCW
9 82.38.020.
10 (18) "Natural gas" means naturally occurring mixtures of
11 hydrocarbon gases and vapors consisting principally of methane,
12 whether in gaseous or liquid form, including methane clathrate.
13 (19) "Person" has the same meaning as defined in RCW 82.04.030.
14 (20) "Petroleum product" has the same meaning as defined in RCW
15 82.23A.010.
16 (21) "Special fuel" has the same meaning as defined in RCW
17 82.38.020 and includes fuel that is sold or used to propel vessels.
18 (22) "Taxpayer" means a person subject to the carbon pollution
19 tax imposed under section 3 of this act.
20 (23) "Tribal lands" has the same meaning as "Indian country" as
21 provided in 18 U.S.C. Sec. 1151, and also includes sacred sites,
22 traditional cultural properties, burial grounds, and other tribal
23 sites protected by federal or state law.
24 (24) "Vulnerable populations" means communities that experience a
25 disproportionate cumulative risk from environmental burdens due to
26 adverse socioeconomic factors and sensitivity factors.
27 (25) "Year" means the 12-month period commencing January 1st and
28 ending December 31st unless otherwise specified.
29 NEW SECTION. Sec. 3. (1)(a) Beginning January 1, 2023, a carbon
30 pollution tax is imposed in the state at a rate of tax equal to $25
31 per metric ton of greenhouse gas emissions. The tax rate
32 automatically increases on January 1, 2024, and each year thereafter,
33 at a rate of five percent per year, and is adjusted for inflation
34 using the consumer price index.
35 (b) As of January 1, 2030, if the department of ecology, based on
36 data collected by the department on total fuels subject to the tax in
37 (a) of this subsection in the previous year, determines that the
38 sources of emissions covered by the tax are not predicted to achieve
39 their combined share of the emissions reductions necessary for the
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 1 state to achieve the emissions limits established in RCW 70A.45.020,
2 the tax rate established in (a) of this subsection increases by $10
3 effective as of January 1, 2031. Each year thereafter, the tax rate
4 continues to increase by five percent per year plus inflation, with
5 an additional increase of $2 per year until the department of ecology
6 determines that the sources of emissions covered by the tax rate are
7 expected to meet the limits established in RCW 70A.45.020, at which
8 point the additional $2 per year increase is retired, and the annual
9 rate of increase returns to five percent plus inflation. Every two
10 years between the years 2030 and 2050, the department, in
11 consultation with the department of ecology, must reevaluate the
12 necessary tax rate to ensure the state achieves a goal of net-zero
13 emissions by 2050. The department of ecology must make the
14 determinations required under this subsection (1)(b) and notify the
15 department by April 1st of each odd-numbered year.
16 (2) The carbon pollution tax created under this section is
17 imposed on taxable persons for the following fossil fuels at the
18 following points of taxation:
19 (a) For motor vehicle fuel, in accordance with and at the
20 intervals provided in chapter 82.38 RCW;
21 (b) For special fuel, in accordance with and at the intervals
22 provided in chapter 82.38 RCW;
23 (c) For every other petroleum product, in accordance with and at
24 the intervals provided in chapter 82.23A RCW;
25 (d) For fossil fuels not listed elsewhere in this subsection, in
26 accordance with chapters 82.08 and 82.12 RCW unless expressly
27 provided otherwise in this section; and
28 (e) For fossil fuels consumed in refineries, in accordance with
29 the requirements of section 6 of this act.
30 (3) The carbon pollution tax created under this section is
31 imposed on taxable persons for the sale or use of natural gas as
32 follows:
33 (a) Natural gas transported through the state that is not
34 produced or delivered in the state is exempt from the carbon
35 pollution tax. Natural gas possessed or stored in the state is exempt
36 from the carbon pollution tax unless the tax is otherwise applicable
37 under (b), (c), or (d) of this subsection;
38 (b) For natural gas sold by a gas distribution business to a
39 retail customer in the state, the carbon pollution tax is imposed on
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 1 the gas distribution business upon the sale of such natural gas to
2 the retail customer;
3 (c) For natural gas sold to a light and power business for the
4 purpose of generating electricity in the state, the carbon pollution
5 tax is imposed on the gas distribution business upon the sale of such
6 natural gas to the light and power business; and
7 (d) For natural gas sold to a direct access gas customer in the
8 state, the carbon pollution tax is imposed on the direct access
9 customer upon the use of such natural gas by the direct access
10 customer.
11 (4) The department must determine the tax liability for each
12 taxable person by applying a carbon calculation using methodologies
13 adopted by the departme