The Washington Policy Center reports on the effects of a new CO2 emissions tax on the price of gas.
State’s new tax on CO2 emissions is projected to add 46 cents per gallon to 2023 gas prices
An increase of 56 cents per gallon is projected for 2023 diesel prices
By 2030, the new tax is expected to add 80 cents per gallon of gas
By 2030, the new tax is projected to add 97 cents per gallon of diesel
Current state gas tax is 49.4 cents per gallon, so the new tax is projected to nearly double taxes on gasoline paid by Washington residents
Fiscal note on the cap-and-trade bill projected a $20.60 cost per metric ton of carbon emissions, a fraction of what the state Department of Ecology now predicts
Environmental activists seek to remove protections from the cap-and-trade bill for energy-intensive, trade-exposed industries (EITE)
Through 2026, EITEs are exempt from the tax on CO2 emissions. Starting in 2027, 97% of their emissions would be exempt. Denying exemption timeline could mean business failure and reliance on Chinese alternatives that pay little and cause environmental and human rights harm
Washington state’s new tax on CO2 emissions is projected to add 46 cents to the cost of a gallon of gas as soon as next year, the state Department of Ecology reports.
The Washington Research Council noted that an analysis from Vivid Economics and McKinsey & Company for Ecology projected the cost of a metric ton (MT) of CO2 to be $58.31 next year. That would add a tax of about 52 cents per gallon or just over 46 cents per gallon for fuels required to include 10% ethanol in accordance with Washington state law. For diesel, the tax on CO2 emissions would increase the cost of a gallon by about 59 cents per gallon, or 56 cents per gallon for fuels that include 5% biodiesel.
That amount would climb to $100.23 per MT in 2030, equating to 89 cents per gallon, or 80 cents per gallon for the 10% ethanol mix. For diesel, it would add more than a dollar, $1.02, per gallon, or 97 cents for diesel mixed with biofuel.
This is significantly higher than the $20.60/MT used in the previous projection given to legislators in the state’s fiscal note on the cap-and-trade bill, which agency staff called “conservative” at the time. Rather than a tax on CO2, the state system would sell permits to emitters for each MT of CO2, creating an artificial market. As a result, prices can fluctuate significantly, as these new estimates demonstrate.
The current state gas tax is 49.4 cents per gallon, so this would nearly double the amount of taxes Washington residents have to pay for gasoline…(article continues)