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IPCC Report Sways Microsoft to Endorse Carbon Fee Initiative on Washington Ballot

A dire report on climate change issued by a United Nations panel influenced Washington-based Microsoft to take a position on a controversial state carbon fee, Initiative 1631. Oil companies are fighting back, citing wide exemptions from the fee.
October 22, 2018, 6am PDT | Irvin Dawid
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'"This week's endorsement [of Initiative 1631] underscored the political impact of the recent United Nations Intergovernmental Panel on Climate Change ['Special Report on Global Warming of 1.5°C'] which raised alarms over the increasing rate of planetary warming," writes E&E News reporter, Benjamin Storrow. "A Microsoft representative said the report played a large role in its decision to endorse the carbon fee."

"While there is room for debate on the details of this proposal, as there is with any policy, one thing is increasingly clear — we need to take urgent action to address climate change," wrote Lucas Joppa, the company's chief environmental officer, citing the IPCC's findings.

Exemptions to carbon fee give oil companies a strategy

One of those details on the November ballot measure is who pays the fee, and who is exempt. 

"Major greenhouse gas polluters in Washington—energy producers and suppliers—will have to pay the fee," write Kristin Eberhard and David Van't Hof for the Sightline Institute, a Northwest independent think tank, in a July article. "That includes electric utilities, natural gas utilities, petroleum refiners, and oil and gas companies."

Unsurprisingly, the oil and gas industry, has come out strongly against the measure. Their trade association, the Western States Petroleum Association, is sponsoring the No on 1631 campaign, reports Amanda Luhavalja for S&P Global Inc.

BP, which owns Washington's largest refinery, Cherry Point, and a subsidiary have contributed more than $6.0 million to the campaign.

While BP supports carbon pricing, its primary issue with the carbon fee is that it would exempt six of the 10 largest stationary source emitters in the state, including a coal-fired power plant, an aluminum smelter and a number of pulp and paper plants, BP spokesman Jason Ryan said in an Oct. 2 phone interview.

Eberhard and Van't Hof explain the basis for the exemption, rooted in legislation, given to what are called “Energy Intensive Trade Exposed” (EITE) industries, of which there are many, including:

  • Paper and pulp mills
  • Glass manufacturers
  • Certain food and juice producers
  • Iron
  • Aluminum
  • Steel producers
  • Cement refineries
  • Semiconductor and related device manufacturers
  • Aircraft and related aircraft part manufacturers 

"To safeguard the state economy and keep certain businesses from moving out of Washington, the bill protects some industries from increased energy costs from the fee," add Eberhard and Van't Huf.

These exceptions have been used in other jurisdictions that have adopted some form of carbon pollution pricing to ensure these industries don’t leave the state for places without carbon pollution pricing...I-1631 authorizes the state Department of Commerce to designate additional Energy Intensive Trade Exposed businesses as it deems necessary.

Comparison with 2016 carbon tax initiative

However, the EITC exemptions were not part of the 2016 carbon tax measure, Initiative 732, according to a comparison by Carbon Washington of the two initiatives and Senate Bill 6203, a carbon tax bill championed by Gov. Jay Inslee (D) that was withdrawn on March 2. 

Yet, the oil and gas industry also opposed I-732. "The American Fuel and Petroleum Manufacturers, the national trade group [of which BP is a member], led the late charge with a $250,000 donation," reported Marianne Lavelle for InsideClimate News in a Nov. 9, 2016 post-mortem on the initiative.

By contrast, Microsoft, "a powerful voice in Evergreen State politics, stayed on the sidelines in 2016," adds E&E News' Storrow. "That campaign was doomed in part by infighting among environmentalists and on the left more broadly."

Carbon Washington, which organized the campaign for Initiative 732, has endorsed I-1631. "As we said many times in our campaigns to pass I-732 and subsequent carbon tax legislation, we cannot afford to let perfect be the enemy of good," wrote the CarbonWA Team in April.

Most expensive campaign in state history

Microsoft co-founder, Bill Gates, and co-chair, Bill & Melinda Gates Foundation wrote in an Oct. 9 LinkedIn blog post that he endorsed I-1631 and would contribute to the Yes on 1631 campaign. The AP reported on Oct. 16 that the couple together donated $1 million, and former New York City Mayor Mike Bloomberg has also promised to donate the same amount in what is on track to be the most expensive campaign in the state's history, adds Storrow. "Nine oil companies have donated more than $20 million to the no campaign," while proponents to-date have raised $11 million.


"A Crosscut/Elway Poll [pdf], conducted from Oct. 5-9, found 50 percent approval among the 400 registered voters polled, reported Manola Secaira for Crosscut, a reader-supported, nonprofit news site. "Thirty-six percent said that they were against the initiative, while 14 percent were undecided. The poll has a margin of error of 5 points."

The Yes campaign received unfavorable news on Oct. 20 when The Seattle Times editorialized against the initiative, slamming it for a lack of accountability in how it spent the fee revenues to mitigate climate change within the state. The paper also opposed I-732 two years ago, claiming that the revenue-neutral carbon tax, according to a state government study, would have negatively impacted the state budget, among other reasons.

Correspondent's note: If the source article is paywalled, see the short Microsoft news blog on their endorsement of I-1631.

Hat tip to Tim Gould, Washington State Sierra Club Chapter.

Full Story:
Published on Thursday, October 18, 2018 in Climatewire
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