Building Back Better with Cap & Invest
The Low Carbon Prosperity Institute (LCPI) has served as a key source of information and counsel in the development of carbon policy in Washington State for over five years. Our recently published report Building Back Better is a guide for state lawmakers to consider environmental stimulus investments in response to the COVID-19 pandemic.
Based on prior outreach and advocacy, we believe a Cap & Invest program as part of the Building Back Better framework can be a unifying policy for the 2021 Legislative Session and resolve a critical gap in the state’s climate strategy.
Rural Economic Development
Rural Washington communities are experiencing demographic transformation as economies based on natural resources face greater regulatory challenges and slimmer margins. Washington’s forests absorb as much as 30% of our state’s carbon emissions annually, and working forests sustain the state’s third largest manufacturing industry. Our forests are experiencing more prevalent and catastrophic wildfire. Pulling carbon out of the atmosphere and locking it away in wood products, managed forests, and soils can boost rural economies while improving carbon outcomes. Other opportunities favoring rural economies include leveraging low-carbon public utility power resources for low carbon manufacturing, more suitable zero-carbon generating capacity locations, and opportunities for advanced biofuel production.
Transportation Electrification and Congestion Relief
The transportation sector dominates as the largest share of Washington’s greenhouse gas (GHG) emissions profile. Light-duty vehicles are one-third of total statewide CO2 emissions with an annual fuel cost of $13 billion, $9 billion of which is wasted as heat loss. Fully leveraging Washington’s hydro-based and low-cost electricity to electrify light-duty vehicles could reduce consumer fueling costs and wasted energy by three-fourths (75%). The population is forecast to grow 25% through 2040, placing increased strain on the efficiency of supply chains in urban areas, where passenger vehicles and commercial freight compete for roadways. Carbon reduction through electrification and enhanced multimodal transportation as part of a broader Automated, Connected, Electric and Shared (ACES) vehicles agenda can enable decreases in congestion and increases in quality of life.
Carbon Reduction Investments
LCP Institute research into Marginal Cost Abatement Curves intends to answer the question about the availability and cost-effectiveness of investment opportunities within Washington State. Incentives can complement private funds to accelerate market transformation and distribute the risk of making investment in low carbon alternatives. Incentive programs based on pay-for-performance criteria (e.g. a technology neutral competitive marketplace purchasing reductions on a $/ton basis) offer a more effective mechanism for reliable success than incentives focused on co-benefits without clear abatement goals. Private and utility investment is determined through a process that accounts for reliability, cumulative emissions impacts, and cost-sensitivity. Entrepreneurs who can leverage new technology and efficiency improvements which align with these various requirements stand to profit handsomely in a lower carbon future.
Energy Waste and Efficient Carbon Use
Money spent on energy that does not go to productive use, also known as “energy waste” costs our state economy $13 billion each year. The opportunity is to recognize and seize on projects that may require a higher upfront investment, but lead to lower operating costs and less risk exposure to fossil fuel price volatility and supply disruption. A prioritization framework for efficient carbon use is: (1) Promote carbon avoidance solutions (ie, density planning decreases the need for energy consumption), (2) Consume energy efficiently (ie, reuse wasted thermal energy), (3) Shift to lower carbon fuels (ie, replace combustion with high-efficiency electric technologies), and (4) Efficient supply of fuels (prioritize plentiful in-state resources and avoid reliance on a single fuel source supply).
Innovation and Economic Opportunity
Worldwide, $329 Billion was invested in advanced energy in 2015. Estimates suggest Washington’s share of the CleanTech sector could reach $60 billion annually by mid-century. Future outcomes will be the result of decisions we are making today on deploying long-life items, plus research in laboratories, and innovations producing future game-changing inventions. A strong innovation ecosystem with predictable incentives and public private partnership provides the best shot at seizing the full scale of the economic opportunity. Aggressive research and development can help resolve system challenges and avoid longer-term lock-in of carbon emissions.