A study published by the Low Carbon Prosperity Institute (LCPI) offers new insights into the investment performance required for Initiative 1631 to achieve its carbon-reduction goals. A proposed carbon fee on the ballot in Washington state, I-1631 aims to use clean-energy investments to eliminate 20 million tons of carbon pollution annually by 2035, triggering a freeze in the policy’s fee-rate increase.
LCPI does not take a position on ballot or legislative initiatives in order to provide unbiased, data-driven analysis pertaining to climate reduction. This analysis provides voters with a clearer understanding of how the initiative can achieve its goals and has important implications for the design and strategy of I-1631’s investment plans should it pass in November.
LCPI applied its proprietary Greenhouse Gas Reduction Explorer, a modeling tool used extensively by lawmakers to project outcomes of proposed carbon reduction policies, to evaluate possible investment scenarios that would achieve the policy’s carbon reduction goals and commitment to supporting causes and communities not directly related to reducing carbon emissions.
“Our report concludes that achieving the I-1631 fee-freeze is only possible with two strict conditions,” said David Giuliani, director and co-founder of LCPI. “First, all available Clean Energy Account revenue generated by the initiative needs to go into carbon-reducing investments, avoiding diversion to other priorities. Second, investments must perform with best-in-class cost-effectiveness like what we’d expect from commercial investment funds.”
LCPI’s analysis found that investments would also need to average in the range of $15 to $45 per ton of emissions reduced. The high-end estimate assumes that nearly all funds in the Account would be applied toward goal attainment, while the low-end estimate assumes a greater share of Account money is diverted to programs with minimal carbon-reduction capacity, such as transition assistance for displaced fossil fuel workers. By comparison, the California Climate Investments program, a statewide program with similar spending priorities launched in 2014, has spent on average, $67 per ton of emissions reduction.
Beating California’s investment performance can be achieved by harnessing emerging and rapidly cost-declining technologies, maximizing state investments with private dollars, factoring in the impact of the fee on project economics, and focusing on budget-friendly projects in the state such as capturing methane from waste, smart meters, electrification or biomass fuel switch, organics and recycling programs, cellulosic ethanol, bus fuel efficiency, increasing forest lands, and heating/cooling upgrades.
I-1631 would not achieve the fee-freeze if it invests too heavily in projects with costs well above $15 to $45 per ton plus the fee-rate, such as certain types of low carbon biofuels, wind turbines, home solar panels, urban forestry and transit and intercity rail.
The full report, citations and analysis can be found at: https://www.lowcarbonprosperity.org/2018/10/17/the-prospects-for-i-1631-20-million-tons-carbon-pollution/.
About the Low Carbon Prosperity Institute
The Low Carbon Prosperity Institute was launched in 2018 as a project of the Washington Business Alliance and its PLAN Washington agenda. The Institute’s system design approach delivers the strategic guidance needed for states and countries to achieve long-term success in reducing greenhouse gases, reducing other waste, and building an even more powerful economy. LCPI uses a modeling system, the Greenhouse Gas Reduction Explorer, considered the “Gold Standard” for evaluating strategies proposals for managing climate-sensitive waste reduction. With powerful entrepreneurial management skills, LCPI believes in the power of business leadership, bipartisan problem solving, and data-driven public policy. Learn more at https://www.lowcarbonprosperity.org/.
Copyright Business Wire 2018