SEATTLE — Washington Gov. Jay Inslee’s biggest anti-global warming measure — and probably greatest political legacy — remains intact after the state’s voters on Nov. 5 rejected a ballot initiative to repeal the nation’s second cap-and-trade program.
The Republican-led Initiative 2117 would have eliminated the cap-and trade program while also forbidding its revival, with supporters arguing the system has increased the state’s gasoline prices. But Washingtonians voted 62%-38% to keep the program. (See Wash. Voters Resoundingly Reject Cap-and-Invest Repeal Attempt.)
“That was a fanny whipping,” Inslee said at a Nov. 6 press conference.
“Legislatures around the country have been watching this. States have never mattered more than now,” Reuven Carlyle, former Democratic state senator and architect of Washington’s “cap-and-invest” program, told NetZero Insider.
New York and possibly other states are considering implementing their own cap-and-trade programs and have watched the Washington referendum to see how the state’s voters reacted to it, Inslee noted.
“This win is doubly important because we’ll have a person in the White House who denies climate change,” Inslee said.
In a separate press conference, Washington’s current Attorney General and Gov.-elect Bob Ferguson and Attorney General-elect Nick Brown said the attorney general’s office has been preparing for months to do battle with the Trump administration on numerous issues, including climate change.
As attorney general, Ferguson — frequently in collaboration with other attorneys general — filed several dozen lawsuits against the first Trump administration, losing only two or three.
“No one has a record like that except Perry Mason,” Inslee said.
However, Carlyle noted that the first Trump administration’s legal efforts were sloppy, leading to failures. “This administration may be better prepared,” he said.
‘Immovable Force’
After 12 years as governor, Inslee leaves office in January. For about eight of those years, he worked to get the cap-and-invest through the state’s legislature, which approved it in 2021. Since 2023, he has fought to save it from elimination.
The concept of using cap-and-trade measures to deal with corporate pollution has been around for about 100 years, but it did not begin to receive serious consideration until the 1980s, when American power plants were emitting vast clouds of sulfur dioxide, which was falling back to earth in the form of acid rain.
Congress wrestled with acid rain, and roughly 70 bills to deal with it were proposed in the 1980s, only to all die. In 1988, the Environmental Defense Fund (EDF) proposed a cap-and-trade system that would have a market to determine the costs of the permits to emit sulfur dioxide, while allowing polluters to figure out on their own how to accomplish reductions.
EDF convinced the then-new George H.W. Bush administration to try the cap-and-trade approach. The proposal became law in the Clean Air Act of 1990. The concept proved its effectiveness in 1995, when acid rain-related emissions fell by 3 million tons, ahead of the 1990 law’s schedule. Europe soon began adopting the concept.
Meanwhile, in the early 1990s, Carlyle, then a Harvard master’s degree student in public administration, wrote a paper on the topic, but was not yet passionate about it. In 2007, Inslee, then a congressman from Western Washington, wrote about the concept in a book on clean energy called Apollo’s Fire.
A 2008 Washington law mandated that the state reduce its carbon emissions to 5% of 1990 levels by 2050. In 2009, then-Gov. Christine Gregoire first proposed that Washington set up a cap-and-trade system for carbon dioxide emissions, but it went nowhere.
Beginning in his first term in 2013, Inslee began proposing a cap-and-trade system on CO2 emissions, with the details taking years to hash out. But Washington’s legislature became divided between a Democratic-controlled House and a Republican-dominated Senate that opposed almost everything Inslee wanted, including cap-and trade.
“We faced an immovable force which was the Republican caucus,” Inslee said.
In late 2017, the Democrats took control of the Senate, opening the way for to cap-and-trade to make it through the legislature. But several Democrats in the House and Senate had to be convinced to support cap-and-trade to ensure the proposal would get the majority of the votes in both chambers. That took a while.
Carlyle introduced the bill in 2020, intending to get it passed in 2021. “I wanted ample time for public discussion,” he said.
‘Grand Bargain’
The environmental justice legislators had to get buy-in for the plan. They had to address concerns about Washington industrial companies spending money to cut carbon emissions while keeping up with foreign competitors who wouldn’t face those extra costs. Carlyle met with BP, which owns one of five oil refineries in Washington, to ask it what it wanted in a cap-and-trade program. BP’s answer: predictability.
The bill’s designers addressed how to spend the money raised through the carbon allowance auctions: The cash would go to numerous programs that addressed climate change, including building hybrid diesel-electric ferries for Puget Sound, plus provide electric vehicle chargers, electric fire engines, buses and other government vehicles. The money would also be used to pay to preserve forest lands, build trails, and make public schools and universities more energy efficient. It would fund purchase of solar panels to generate electricity in public and private buildings and salmon recovery efforts and many health programs.
Thirty percent of the revenue would go to helping low-income communities affected by carbon pollution. Also, Washington’s cap-and-invest architects in 2021 already wanted to link their program with those of California and Quebec to lower allowance and gasoline prices. That alliance is expected to be solidified in the second half of 2025.
“This was more comprehensive than anything we considered before,” House Majority Leader Joe Fitzgibbon (D) — the former chair of the chamber’s Environment and Energy Committee — told NetZero Insider.
“We came up with the concept of a grand bargain to get it over the line together. Most serious challenge at the time is that it had to be technically perfect,” Carlyle said.
Drafting and tweaking Carlyle’s bill — the Climate Commitment Act, with cap-and-trade dubbed “cap-and-invest” — took two years. The bill had 10 times as many pages as the bill that created California’s carbon cap-and-trade program in 2012. Washington’s legislature passed the bill in 2021 with Democrats supporting it and Republicans opposing it.
‘On the Take’
The cap-and-invest program began auctioning allowances in February 2023. By June, Washington posted the highest gasoline prices in the nation. Many people pointed to cap-and invest as the culprit, claiming the program added 50 cents per gallon to the price of gasoline. (See Cap-and-trade Driving up Washington Gasoline Prices, Critics Say.)
Writing for Seattle-based news organization Cascade PBS, this author examined what caused Washington gas prices to rise and concluded numerous factors contributed to the fluctuations, making it difficult to pinpoint any single cause. The analysis concluded that the cap-and-invest program could be adding 21 to 50 cents per gallon at the pump.
Meanwhile, the state Republican Party and a new conservative initiative organization, Let’s Go Washington, gathered signatures to include I-2117 on the Nov. 5 ballot.
Supporters of that initiative and seven other conservative measures spent $12 million to gather signatures and get placed on the ballot. Most of the money came from one individual, hedge fund manager Brian Heywood of Redmond, who also founded Let’s Go Washington. The organization had little money left in 2024 to spend on campaigns to pass the four initiatives that made it to the ballot, including the one repealing cap-and-invest.
Meanwhile, supporters of cap-and-invest raised $35 million to campaign for maintaining the program, swamping television stations with ads saying the program had raised $2.1 billion to fund over 100 projects. Supporters included billionaire Bill Gates, several Seattle business leaders, labor unions, environmental groups and BP — about 500 entities in all. The companies owning the four other Washington oil refineries were neutral on this issue.
“They’re on the take,” Heywood told Cascade PBS in October. “This is a huge grift.”
He painted a picture of those 500 organizations receiving the cap-and-invest money mainly because they are political allies of Inslee.
“We took [the repeal effort] very seriously,” Fitzgibbon said.
“There was no guarantee that [repeal] would make gas prices come down,” Carlyle said, adding that Washington’s gasoline prices have dropped by more than $1 per gallon since the summer of 2023.
