New State CO2 Emissions Tax Expected to Add 46 Cents Per Gallon to Gas Cost » Publications » Washington Policy Center

Key points to remember:

  1. New state CO2 emissions tax expected to add 46 cents per gallon to gasoline prices in 2023
  2. An increase of 56 cents per gallon is expected for diesel prices in 2023
  3. By 2030, the new tax is expected to add 80 cents per gallon to gasoline
  4. By 2030, the new tax is expected to add 97 cents per gallon of diesel
  5. The current state gasoline tax is 49.4 cents per gallon, so the new tax is expected to nearly double the gasoline taxes paid by Washington residents.
  6. The tax memo on the cap and trade bill projected a cost of $20.60 per metric ton of carbon emissions, a fraction of what the state ecology department now predicts
  7. Environmental activists seek to remove cap and trade bill protections for energy-intensive and trade-exposed industries (EITE)
  8. Until 2026, EITEs are exempt from the tax on CO2 emissions. From 2027, 97% of their emissions would be exempt. Denying the exemption schedule could mean business failure and reliance on Chinese alternatives that pay little and cause environmental and human rights damage

Washington state’s new CO2 emissions tax is expected to add 46 cents to the cost of a gallon of gasoline as early as next year, the state Department of Ecology reports.

The Washington Research Council noted that an analysis by Vivid Economics and McKinsey & Company for Ecology predicted the cost of one metric ton (MT) of CO2 to be $58.31 next year. This would add a tax of approximately 52 cents per gallon or slightly more than 46 cents per gallon for fuels required to contain 10% ethanol under Washington State Law. For diesel, the CO2 emissions tax would increase the cost of a gallon by about 59 cents per gallon, or 56 cents per gallon for fuels that include 5% biodiesel.

This amount would climb to $100.23 per MT in 2030, which equals 89 cents per gallon, or 80 cents per gallon for the 10% ethanol blend. For diesel, that would add more than a dollar, $1.02 per gallon, or 97 cents for diesel blended with biofuel.

That’s significantly higher than the $20.60/ton used in the previous projection given to lawmakers in the state’s tax memo on the cap-and-trade bill, which agency staff called of “conservative” at the time. Rather than a CO2 tax, the state system would sell permits to emitters for each MT of CO2, thus creating an artificial market. Therefore, prices can fluctuate significantly, as these new estimates demonstrate.

The current gasoline tax is 49.4 cents per gallon, which would nearly double the amount of taxes Washington residents must pay for gasoline.

These high costs also indicate how foolish a proposal to eliminate protections for energy-intensive and trade-exposed industries (EITE) would be. Under Washington’s CO2 tax law, industries facing global competition and likely to be hurt by high energy prices, such as food production or semiconductor manufacturing, are being phased in . Until 2026, EITEs are exempt from paying the tax on CO2 emissions. From 2027, 97% of their emissions would be exempt from taxes.

These rules not only protect jobs in the state, but prevent efficient and environmentally friendly manufacturing from moving to countries like China, where manufacturing is much more harmful to the environment and can include serious violations. human rights.

For example, REC’s plant to produce solar-grade silicon is expected to restart production in late 2023. Based on past emission levels, without the exemption, REC could have to pay up to $9.2 million in taxes on the plant’s CO2 emissions. If these taxes force the factory to close again, the demand for solar panels could be met by Chinese manufacturers, some of whom use forced labor by Uyghur minorities.

The EITE exemption is not only good for Washington’s economy, but also for the environment and human rights.

Despite this, Front and Centered, a left-wing climate activist organization, recently published a report calling for the removal of protections for EITEs. The most likely outcome of this approach would actually be to increase global CO2 emissions, which would increase the damage to the groups Front and Centered claims to care about. We’ve seen it before with the Ferndale aluminum plant idling due to international competition.

Manufacturers of solar panels and aluminum are not the only ones affected. Using data from past emissions, several industries would see huge new tax bills.

  • Tyson Foods would be hit by $7.6 million in new taxes next year.
  • Darigold would face a hit of nearly $2.4 million.
  • The Camas-based WaferTech semiconductor plant would see $6.8 million in new taxes.
  • CertainTeed, which manufactures building products in Seattle, would pay nearly $3 million more.

Currently, all of these industries have time to gradually integrate the impact of energy taxes, keep jobs here, and responsibly find ways to be more energy efficient.

Even with the transition period, industries will need to start preparing to comply with the law. And the big jump in the projected cost of CO2 emissions taxes means that all businesses and families in Washington will see big increases in transportation costs next year.

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