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Green Goldrush

BY LIZ FARMER | JULY 2018

Hanging on the wall just outside Bryan Kidney’s office in Lawrence, Kan., is the framed first page of a bond offering statement. Unlike most -- or really, any -- bond statements, this one required a color printer. It could even be described as cheeky: It’s for the sale of the city’s first green bond, and every reference to “green bond” or “green project” is printed in green ink.

Kidney, the city’s finance director who shepherded the $11.3 million sale last year, says the green ink originally started out as a joke.

But then, he thought, why not? When the projects are fully implemented, Lawrence is projected to save 3,201 tons of carbon dioxide equivalents (CO2e) annually, which is equal to burning 3.5 million fewer pounds of coal. “I get really passionate about this stuff,” Kidney says. “I was just so excited that Lawrence stepped up to be a leader in sustainability.”

Green bonds are an emerging category of finance. Their purpose is to fund projects with clear, definable and measurable environmental benefits. As the Trump administration has walked back federal climate change policy -- most notably, backing out of the Paris Agreement -- states and localities are increasingly taking charge of their own environmental strategies. Green bonds are a natural funding tool. The vast majority of them finance water-related projects, but they also are used to finance, for instance, solar and wind power or reduced methane emissions. In Lawrence’s case, they are funding a slew of energy efficiency projects identified by a state Facility Conservation Improvement Program audit. The audit determined that certain upgrades, such as energy-efficient lighting and heating and cooling systems, would reduce the carbon footprint for this city of 96,000 and save it money in the long run.

The concept of green bonds was developed a little more than a decade ago by a London-based group called the Climate Bonds Initiative. The idea was to help the world’s growing cadre of environmentally conscious investors identify climate-friendly investments. These are folks who aren’t only interested in a financial return on their investment. They want to know that their money has helped improve the environment. “If you’re doing a bond issuance that’s electric or coal generated, those investors don’t want to be part of that transaction,” says Tim Fisher, government affairs manager for the Council of Development Finance Agencies. “They’re putting their investments into securities that have a double- or even triple-bottom line.”

For the first few years, green bonds remained something that only large global institutions like the European Investment Bank and the World Bank dabbled in. It wasn’t until 2013 that the first green bond issuance made its way to the U.S. municipal market when Massachusetts sold $100 million in bonds to finance energy efficiency projects. The following years saw other large issuers like California and New York take part. To date, those three states -- Massachusetts, California and New York -- are by far the most frequent issuers, accounting for $2 out of every $3 of green bonds issued in the past five years. More recently, a few municipalities have begun to experiment with them. But even as muni market issuance of green bonds doubled last year to $11 billion and is predicted to almost double again this year, green bonds remain largely outside of the mainstream.

So it’s saying something when a place the size of Lawrence decides to jump in. The city may very well be a bellwether of the next big leap for green bonds. That would be good news for issuers since the bonds have the potential to attract a fresh set of investors at a time when tax reform has created fewer incentives for banks and insurance companies to buy municipal bonds. Some even think that green bonds will someday be cheaper for states and localities to issue than general obligation debt. But before any of that happens, there are underlying challenges with green bonds’ authenticity that have to be resolved first.

Since they debuted a decade ago, green bonds have been issued under a variety of names -- environmental impact bonds and climate bonds being among the most prevalent. Whatever their name, one of the biggest threats to the long-term viability of these bonds is a matter of meaning. The definition of what’s “green” seems to alter slightly with each issuer.

In recent years, some groups have taken a stab at narrowing down the variables in what makes a bond green. Moody’s Investors Service has come up with a green bond assessment tool, which looks at the likelihood that the bond money will go toward environmental improvements. S&P Global Ratings has also come out with commentary. But neither provides a rating or measurement of how environmentally positive a bond might be. Elsewhere, the Climate Bonds Initiative has released a set of green bond principles for issuers while state and local governments are increasingly seeking third-party certification for their green bonds.

Compounding matters is the reality that the investment community doesn’t agree on what’s green and what isn’t. Everything is optional. Julie Egan, director of municipal research at Community Capital Management, a major green bond investor, says her standard for “green” is that it has to be an innovative project. But that doesn’t always apply when she’s shopping for some of her clients who might not feel the same way. When she looks at a water and sewer system’s green bond sale, she often sees something that looks like “the exact same thing they’ve been doing for years. Is it green? Technically, for some people, it is: They’re providing clean water,” she says. “But there’s no new technology. It just is not something that would create a great deal of excitement at our firm.”

Clearly, what some might see as environmentally forward-thinking in one place is just run-of-the-mill in another. It’s led to accusations of so-called greenwashing, a term originally coined in the 1980s and meant for corporations that present themselves as caring environmental stewards, even as they are engaging in environmentally unsustainable practices. Some governments are now being accused of slapping on a label to entice investors while doing nothing else to ensure the sustainability of a project. Case in point: In early 2015, the Climate Bonds Initiative’s CEO called out the Massachusetts State College Building Authority for its “pathetic” green bond sale that included funding a garage for 725 cars. Until these inconsistencies are resolved, the future of green bonds will remain in doubt.

For water utilities, green bonds have seemed like a natural fit. The reasons are fairly obvious. These authorities spend a lot of money on cleaning water -- a slam dunk of an environmental benefit if ever there was one. Water and sewer authorities have many ways in which they go about defining, packaging and communicating about their green bonds. That is, many green bond investors want additional reports on the environmental impact of the projects they’re financing. For issuers, that’s an additional process.

The way in which DC Water handled its green bond is an early model. DC Water, which serves the greater Washington, D.C., region, was the first water authority to issue green bonds, not just in the U.S. but globally. In July 2014, it sold $350 million in environmental impact bonds to finance a phase of its Clean Rivers Project. In part because the concept was so new -- it was only the third green bond issuance in the U.S. -- DC Water looked to Europe for best practices. Following the green bond principles outlined by the Climate Bonds Initiative, it opted to get a third-party verification and used that to both market the sale and offer a glimpse into the sort of annual impact reporting investors could expect on the bonds’ proceeds. “Quite frankly, for DC Water, we wanted to set a high bar because we wanted to distinguish ourselves from other issuers,” says Mark Kim, the authority’s former chief financial officer and now the chief operating officer of the Municipal Securities Rulemaking Board.

DC Water issued only the third green bond in the U.S. in 2014. (David Kidd)

The approach worked. In fact, DC Water upsized its issue by $50 million on the day of the sale thanks to the high demand from investors. Since then, the authority has issued more than a half-billion dollars in green bonds. It releases annual green bond reports that detail where all that money is being spent and gives updates on environmental outcomes. Investors who bought a DC Water green bond in 2014, for example, know that their money helped finance the first phase of the DC Clean Rivers Project, which has now helped significantly reduce nitrogen and phosphorus levels in the Anacostia and Potomac rivers.

That level of reporting isn’t for everyone. And that’s another challenge for the green bond movement. The additional reporting can be expensive, though it doesn’t necessarily have to be. In some cases, as in Lawrence, the impact reporting is already part of the project: Lawrence has a sustainability coordinator whose job includes reporting on the city’s energy savings and carbon emissions.

There are other strategies. In 2016, when the Massachusetts Water Resources Authority issued $682 million in green bonds, the first of what has been a handful of green bond sales for the authority, it took steps to avoid the extra cost of ongoing environmental impact reporting. All the bonds have been refinancings for projects completed under the federal Clean Water Act and Safe Drinking Water Act. “We thought it would be just as easy to issue refundings as green bonds because investors already know what that money was spent on,” says CFO Tom Durkin. “We have limited resources and try to be frugal here. To have to produce a glossy five- or six-page report seemed like one more burden we didn’t want to put on our Treasury Department.”

Cleveland, on the other hand, made no claims about impact reporting in its 2016 green bond sale. It offered up $32 million in green bonds for stormwater projects and sewer upgrades and repair, telling investors in its offering statement that the city assumes no obligation to ensure the projects comply “with any legal or other standards or principles that relate to Green Projects.” Instead, it committed to simply reporting on the use of proceeds until the bond money was spent. Investors bought them anyway.

Many issuers remain unconvinced of the advantage of green bonds. In part that’s because there has yet to be a proven pricing benefit. The bonds don’t win better rates from investors to justify the expense of the additional reporting, but Lawrence’s Kidney and others make the case that selling green bonds opens up governments to new institutional investors. These are people who sit on the environmental or social investing side of a firm -- nowhere near the municipal investor desk. For others, like the Eastern Municipal Water District in Southern California, that’s just not enough of a selling point. “[When] we start to see a pricing bump,” says Eastern’s Deputy General Manager Debby Cherney, “then we’ll certainly take a much more serious look at coming into the market.”

Without agreed-upon standards about what a green bond is and what the reporting requirements should be, some say it’s only a matter of time before an issuer falls out of favor by either using proceeds for a project that isn’t green, or by not delivering on the environmental impact reporting that’s expected. Until that happens -- and some believe it’s inevitable -- governments are likely to keep pushing the margins. “Not all green bond issuers are alike and I’d say some have not adhered to best practices,” says Kim, the former DC Water CFO. “Some have taken liberties with their designation.” But he thinks enforcement has to come from investors. “They need to do their due diligence and hold municipal bonds accountable for what they’re selling,” he says. “And if they don’t like what they see, don’t buy it.”

Maybe. Perhaps this new breed of environmentally conscious buyers will be different, but relying on investors to police the muni bond market hasn’t worked before. It’s more likely that until there is a real cop on the beat to instill some kind of standard, the legitimacy of the green bond market as a whole will remain in question.

Green Bonds Are in High Demand, But Are They a Better Deal?

Green bonds help governments finance environmental projects. It's unclear whether they help governments' finances.

BY LIZ FARMER | JULY 11, 2018

West Union, Iowa, is installing green infrastructure, such as permeable pavement and rain gardens, along its main thoroughfares to become "rain ready." (Flickr/Center for Neighborhood Technology)

States and localities spend billions on infrastructure every year. Going forward, Christiana Figueres, the former United Nations climate chief, wants them to pay for it "whenever applicable" with green bonds -- an emerging way of financing projects with clear and measurable environmental benefits.

The push by Figueres is part of a new initiative called the "green bonds pledge" to ensure that all infrastructure built from now on is climate-resilient and low carbon. In her address at a Climate Bonds Initiative event in London earlier this year, Figueres promised the governments and corporations taking the pledge that "a wealth of opportunity will be unlocked."

But opportunity for who?

The New Gold Rush for Green Bonds Why Environmental Impact Bonds Are Catching On The Construction Projects Governments Are (and Aren't) Funding

While the benefits for the environment are clear, it's much less clear that governments issuing green bonds get any better treatment than those issuing other types of debt. Even the Climate Bonds Initiative has found no conclusive evidence that green bonds are cheaper for governments to issue. So far, it seems that any evidence of a rate advantage for green bond issuers can be accredited to unrelated factors.

One of those factors is supply and demand.

Green bonds are still a tiny part of the bond market, but more and more investors are being compelled to buy them to meet environmental mandates. Green bonds are often oversubscribed, meaning there are more orders placed to buy bonds than are available to sell. The average green bond sale in the U.S. is three times oversubscribed, according to research by the Climate Bonds Initiative.

Demand certainly helped DC Water when it issued the first-ever green bond by a water utility in 2014. The utility actually upsized its issue by $50 millionon the day of the sale thanks to the high demand from investors, says DC Water's former chief financial officer, Mark Kim.

Another factor driving better rates for some green bonds is the reputation and transparency of the government issuer.

DC Water, for instance, has a good reputation in the municipal market in part because it releases annual green bond reports that detail where all that money is being spent and gives updates on environmental outcomes. But that's not the case with every green bond issuance and, therefore, may affect what rate issuers get.

Overall, there is evidence that good transparency and reporting standards -- not just for green bonds -- can help government issuers get a better rate. The state of Massachusetts was one of the first major governments to embrace this idea when it began allowing investors to buy bonds directly from the state, rather than going through a broker, and launched an investor relations page where bond buyers could find all the state's financial and interim disclosures.

Colin MacNaught, who helped spearhead that effort and now runs a startup called BondLink that helps governments create investor relations sites, says any pricing bumps in the green bond market work the same way. "That granular detail is super important," he says. "Managers want to report back to their investors on the environmental impact their fund is having."

MacNaught adds that governments already do a lot of analysis on a project's expected impact before it sells the bonds. So committing to consistent impact reporting, he says, shouldn't be too much more of a stretch. "If an issuer can do that, you'll see an impact on pricing."

For these reasons, Dan Kaplan, who manages the $3.9 billion portfolio for the wastewater treatment division in King County, Wash., says green bonds are "much ado about nothing." Municipal bond sales in general are often oversubscribed, he says, so the notion that green bonds generate "extra" demand is misleading.

Kaplan agrees with MacNaught that better reporting, as well as a good credit rating, are what bring down the cost of issuance -- not some "external label" applied to projects that governments would be doing anyway. "What you're seeing is not even necessarily a bump from transparency," he says, "but the benefits of being a large, well-run and well-established organization."

POLITICS

07/05/2018 10:53 EDT | Updated 07/05/2018 12:07 EDT

Doug Ford Cancelling Ontario's Cap-And-Trade Program Puts $420M In Federal Funding Under Review

Catherine McKenna's office says the move is akin to pulling out of climate framework.

Mia Rabson, Canadian PressCanadian Press

PATRICK DOYLE/CP

Environment Minister Catherine McKenna speaks after a meeting with provincial and territorial environment ministers in Ottawa on June 28, 2018.

OTTAWA — The federal government is interpreting Ontario's cancellation of its cap-and-trade program as equivalent to withdrawing from Ottawa's national climate change framework — and is reconsidering more than $400 million in funding as a result.

A spokeswoman for Environment Minister Catherine McKenna says the $420 million earmarked for Ontario under the Low Carbon Economy Leadership Fund is under review, since funding is contingent on agreeing to the framework, which includes imposing a carbon price.

Newly elected Ontario Premier Doug Ford has rescinded the previous Liberal government's regulation that established the cap-and-trade program in 2017, withdrawing from an arrangement with Quebec and California that established a joint carbon market to buy and sell pollution credits.

As a result, Canada has hit the brakes on Ontario's portion of the $1.4-billion climate change fund.

"By cancelling Ontario's cap-and-trade plan, the Ontario government is making it clear that it is not taking climate action, and is effectively withdrawing from Canada's national climate change plan without a plan of their own," McKenna spokeswoman Caroline Theriault said in a statement.

Ottawa had already approved funding for seven Ontario programs under the fund, but all of that money is now on hold. One particular program cancelled by Ford, the Green Ontario Fund, means the province has, forfeited $100 million in federal money.

Ford called the cap-and-trade program little more than a "government cash grab" when he cancelled it on Tuesday as one of the first actions of his nascent government.

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A small but growing number of utilities, including Consumers Energy, are beginning to offer green tariffs, utility-created programs that allow eligible customers to buy bundled energy and renewable energy credits (REC) from specific renewable energy projects. Green tariff designs can vary — from subscriber programs, sleeved power purchase agreements (PPAs), to market-based rates — but the end goal is the same: create opportunity for large customers to buy renewable energy, especially in regulated markets where it can be difficult to directly procure renewable energy.

Well-designed green tariffs are a welcome opportunity for corporate customers who are setting ambitious targets to buy renewable energy. General Motors, in particular, shared in its blueprint “Accelerating and Scaling Corporate Renewable Energy” that it views green tariffs “as a significant part” of its renewable energy procurement strategy moving forward.

PROCURING FROM REMOTE WIND FARMS VS BUYING LOCAL

A recent trend has been that corporate customers have signed physical or virtual PPAs with wind projects outside of their local utility. In February, Nike signed a virtual PPA with Avangrid Renewables to purchase 86-MW of the output of the Baffin Wind Farm in South Texas and AT&T made two agreements with subsidiaries of NextEra Energy Resources to buy 520 MW of wind energy from wind farms in Texas and Oklahoma. (See Table, below)

Non-utility wind power purchases 2008-2017. Credit: AWEA.

However, some corporates prefer to procure wind energy in grids where they have operations. That was that case with the U.S. arm of Nestlé, which signed a 15-year PPA with EDP Renewables to meet approximately 80 percent of the electricity load for five Nestlé facilities in southeastern Pennsylvania through energy generated at the Meadow Lake VI wind farm.

“Because the wind farm and the recipient facilities are located on the same regional grid, the power purchase agreement provides traceability from the Pennsylvania facilities back to the wind farm,” the company pointed out in its press release.

The Corporate Renewable Energy Buyers’ Principles, a set of guidelines developed by large energy buyers to spur progress on renewable energy and to add their perspective to the future of the U.S. energy and electricity system also encourages local procurement and utility partnerships. One of the six principles states that “procuring renewable energy in partnership with local utilities may be a more efficient and cost-effective option.”

Another principle states that corporations need access to new renewable power generation.

“Where possible, we would like to procure renewable energy from projects near our operations and/or on the regional energy grids that supply our facilities so our efforts benefit local economies and communities as well as enhance the resilience and security of the local grid.”

The bottom line is that renewable energy is so attractive to Fortune 500 companies because it’s now the cheapest source of new electric generating capacity in many parts of the country, and its fixed cost helps businesses plan for the long term. After all, the fuel cost of the wind and sun never changes.

UTILITY GREEN TARIFF PROGRAMS ON THE RISE

Consumers Energy’s Large Customer Renewable Energy tariff allows large non-residential customers, or those with at least 1 MW of annual maximum demand, to buy wind power directly from Consumers Energy-owned wind projects. Consumers’ tariff is currently a pilot program, with General Motors and Switch fully subscribing the level of renewable energy authorized for the pilot.

Facebook’s Prineville data center. Facebook is buying renewable energy through a utility green tariff. Credit: Facebook.

As of last September, 17 green tariffs in 13 states have been proposed or approved. The GE, Switch, Consumers Energy announcement was the fourth where a green tariff translated to wind energy procurement. The first came in 2016, when Facebook announced wind and solar would power 100 percent of the Los Lunas data center in New Mexico, thanks to Public Service Company of New Mexico’s Green Energy Rider.

Last year, Facebook worked with Omaha Public Power District (OPPD) to design Rate261M, a green tariff that ultimately allowed Facebook to sign a 200-MW PPA with the Rattlesnake Creek wind farm, and Puget Sound Energy’s Green Direct program will be supplied by the planned Skookumchuck wind farm in Washington.

Hannah Hunt is the deputy director, electricity policy and demand with the American Wind Energy Association (AWEA).

To:you Details

CAN THIS STATE FINALLY PUT A PRICE ON CARBON?

STEVE SATUSHEK/GETTY IMAGES

This story originally appeared on Grist and is part of the Climate Desk collaboration.

Beth Brunton’s magenta umbrella shields her from the weather on an April afternoon in Seattle. It’s a curious sight, because today is the first day in months without a drop of rain. It’s 75 degrees, and there’s not a cloud in the sky.

“It gets their attention,” she says about her umbrella, as a diverse array of bare-armed people wearing sunglasses pass by on the brick-red campus of Seattle Central College. Brunton stops a young black woman.

“Have you signed to put clean energy on the ballot?” Brunton asks.

The woman stops to listen to the pitch, then shakes her head: No, she can’t sign, because she’s not registered to vote. A lot of people Brunton approaches aren’t—too young, no home address, just a tourist passing through. One man had a felony conviction and hadn’t yet registered to vote again.

Brunton got 40 signatures in the two hours she spent hunting down voters on a street corner at the edge of campus. It’s a sliver of the 260,000 that the initiative, also known as the “Protect Washington Act,” needs in order to appear on the ballot this November. If it passes, Initiative 1631 would become the first fee on carbon in the country—and the first law adopted by a state that looks anything like a carbon tax.

Beth Brunton poses with a friend at Seattle Central College.

KATE YODER/GRIST

Just two years ago, Washingtonians rejected a “carbon tax” initiative, which would have initially charged businesses $25 per metric ton of emissions before ramping up over time. The debate over I-732 drove a rift between progressives. While it found some high-profile supporters, from Leonardo DiCaprio to the state’s Audubon Society, it was criticized by activist author Naomi Klein, the Washington Sierra Club chapter, and the Seattle Times editorial board.

This time around, the coalition behind the Protect Washington Act is taking a different tack, rebranding the effort to put a price on carbon and bringing the climate conversation to the streets in hopes of generating broad support. The initiative proposes a “fee on pollution” that would put a $15 charge on each metric ton of carbon dioxide emitted in Washington starting in 2020. That charge would rise by $2 plus inflation every year until the state meets its climate goals, which include cutting its carbon footprint 36 percent below 2005 levels by 2035. The revenue raised would go toward investing in clean energy; protecting the air, water, and forests; and helping vulnerable communities prepare for wildfires and sea-level rise.

The groups behind the proposal are “hands-down the most diverse coalition I’ve seen in 20 years,” says Aiko Schaefer, director of Front and Centered—an alliance of organizations advocating for low-income residents and people of color that played a key role in drafting the new initiative.

Experts agree that putting a price on carbon is one of the best ways for a government to act on climate change. And public opinion polls have found that almost 70 percent of Washington voters—including a solid majority of the state’s Republicans—would support a measure to regulate carbon pollution. But no one has successfully managed to craft a policy that satisfies the whole environmental movement or the electorate.

There are reasons to believe that this time could be different. If I-1631 passes, it could serve as a template for an approach that could one day go national, state by state. Groups in Oregon and in Northeastern states have reached out to the initiative’s backers, inspired by Washington’s approach. And you can bet that they—and others—will be watching this fall.

IN THE DAYS following the elections in November 2016, as progressives grappled with the idea of President-elect Donald Trump, an opinion research firm interviewed Washington voters to find out what went wrong with I-732. It’s not that the electorate didn’t want action on climate change—67 percent said they did. But almost 30 percent of respondents said they saw the carbon tax as “too flawed” and wanted to wait for a better measure to come along.

That failed initiative was criticized for its lack of ambition. Opponents argued that it wouldn’t curb emissions, improve Washington’s budget mess, or provide much help to the state’s vulnerable populations. Others complained that groups representing low-income communities and people of color had been left out of the drafting process. Proponents acknowledged all the criticism, but countered that these weren’t good enough reasons for environmentalists to thwart an ambitious effort to tackle climate change.

Earlier this year, State Senator Reuven Carlyle, who represents neighborhoods in Northwest Seattle, proposed a carbon tax that would fund clean energy initiatives and assist low-income residents by offsetting their utility bills. But the bill lost the support of groups like the Quinault Indian Nation on Washington’s Olympic Peninsula. Matthew Randazzo, the Quinault’s policy representative, says the tribe thought that its needs weren’t addressed. In the end, Carlyle’s bill fell short of passing on March 1.

Governor Jay Inslee says he’s more optimistic that his state’s voters will approve the Protect Washington Act than the state legislature will manage to pass a carbon tax. “Frequently, the public transforms faster than politicians recognize,” he tells Grist. “I think that is true on climate change.”

Inslee has endorsed the initiative but says that if it fails, the legislature will be back working on another carbon-pricing proposal next session. “One way or another,” the governor explains, “we’re going to get this job done.”

Legislative failures have stymied efforts to curb carbon emissions across the country for more than a decade. An attempt to pass a national cap-and-trade program, the Waxman-Markey bill, passed a Democrat-controlled House in 2009, then failed to come up for a vote in the Democrat-controlled Senate. Its demise ushered in a “bleak time” for environmentalists, says Gregg Small, executive director of the Climate Solutions, a Pacific Northwest-based clean energy nonprofit.

Although California and Northeastern states have since figured out how to get regional cap-and-trade schemes rolling, Washington and Oregon—two reliably progressive states—have struck out. (Earlier this year, Oregon ditched its plans for a cap-and-trade program.) The blame falls not on the usual suspects—Big Oil, Big Coal, Keyser Söze—but on environmentalists themselves. The groups working to protect mountains and rivers, promote climate action, and advance social justice often disagree about how things should be done.

Small says that after some post-Waxman-Markey soul-searching, Washington’s climate groups realized the issue: Their makeup was too white and white-collar to build the sort of support needed to pass ambitious legislation. So they began to reach out to grassroots organizations around the state to form a broader coalition that could wield more political power.

“This went from relatively a small handful of predominantly white-led environmental organizations,” Small says, “to a table of shared power and decision-making between labor and environmental organizations and communities of color.”

The ultimate goal wasn’t just to develop relationships with these communities and get their votes on the ballot. It was to create climate legislation that filled in the gaps of previous bills, benefiting the widest swath of people possible and representing voices that often get ignored. The thinking was that such a measure could be bulletproof against attacks from the left—and as a result, more likely to win over blue voters in Washington.

This new coalition started work on crafting legislation in late 2014. First, it looked south, borrowing lessons from California’s cap-and-trade program, which went into effect more than a decade ago. Although that bill, AB-32, passed with bipartisan support in 2006, grassroots advocates opposed it, arguing that it wouldn’t decrease pollution in low-income areas and communities of color.

A couple years after the program went into effect, that criticism looked prescient. Emissions had risen in some parts of California where air quality was already bad, says Manuel Pastor, director of the Program for Environmental and Regional Equity at the University of Southern California. That put people at even greater risk for asthma and cancer. California has since introduced legislation addressing local pollution problems, thanks largely to a growing number of Latinos from those polluted neighborhoods winning seats in the California State Assembly.

Seeing what happened in California, Washington groups working on the proposal that would become the Protect Washington Act sought to bake justice into their climate-legislation recipe, starting the conversation with communities that suffer the most from carbon emissions. A unique mishmash of businesses, labor unions, faith communities, environmental organizations, public health groups, and communities of color fused in January 2015 into a formal organization committed to developing the then-budding climate policy: the Alliance for Jobs and Clean Energy. Members say they hope to show other states that a grassroots coalition is the way to win.

BUT BEFORE IT could become an example for the other 49 states, the Alliance needed to make amends with a group that was key to the success of its climate proposal: the Native American tribes of Washington.

Last summer, the Alliance met with tribal leaders asking them to endorse the carbon fee. According to Fawn Sharp, president of both the Quinault and the Affiliated Tribes of Northwest Indians, the Alliance hadn’t sought meaningful feedback from indigenous communities at that time. Sharp says that’s not surprising, since tribes had not been seriously consulted in any previous carbon pricing proposals in Washington state, either.

After that meeting, Sharp and other tribal leaders announced they were considering putting their own carbon tax on the ballot in 2018. Climate change is an urgent matter for the Quinault Indian Nation, which is frantically drawing up plans to relocate from its ancestral villages because of sea-level rise.

They later scrapped their proposal after reaching an agreement with the Alliance. Six months of discussions with 29 different tribes brought forth what Matthew Randazzo, the policy consultant for the Quinault, calls “the most rigorous and extensive tribal consultation anyone I’ve been working with has ever encountered.” And as a result, I-1631 addresses myriad tribal issues, from generating aid to assist with the coastal relocation of the Quinault to mitigating the wildfire threats faced by tribes in eastern Washington.

“We said, ‘Look, for us to endorse this, tribal nations need to have a role—we need to have a voice, we need to be consulted, ” Sharp tells Grist. “And to their credit, they responded right away.”

Other groups were also wary at first. Getting approached by predominantly white environmental groups “almost felt like being tokenized,” says Edgar Franks of Community to Community, which works with immigrant farmworkers in northwest Washington. So Franks and leaders of other grassroots groups formed their own partnership, Front and Centered, to figure out how to negotiate with the traditional greens.

Last summer, Front and Centered held a series of “listening sessions” where people voiced their concerns about climate and environmental burdens. Across the state, people of color, low-income households, immigrants, and refugees took part. Franks then took the ideas he gathered from this extended community back to the Alliance.

When talking to agricultural laborers about climate legislation, Franks says, representatives from Community to Community eschewed scientific facts and figures in favor of asking about people’s perceptions of the world around them. They posed questions like: Have you noticed it’s been getting hotter? Have you been getting headaches? Do you think higher temperatures have anything to do with you getting sick?

“The science is important,” Franks explains. “But in our community, if you talk about science, it’s a way to not get invited back into the conversation.”

From an environmental standpoint, the main concern among Franks’ constituency is pesticide exposure, which many farmworkers say causes headaches. Although I-1631 doesn’t address pesticides, it’s safe to say that climate change is making their lives more difficult. After all, they toil long hours to meet harvest quotas and don’t get breaks or days off when ambient conditions become dangerous—like when temperatures soar over 100 degrees Fahrenheit or when wildfire smoke hangs heavy in the air.

Another concern is that higher fuel prices could hurt the agriculture industry. Thus, the carbon fee is designed to exempt diesel fuel used solely for agricultural purposes, like transporting produce from a farm.

It also exempts some industries, like aluminum. These so-called “energy-intensive, trade-exposed” industries have prices for their commodities set by international markets. Some worry that if they’re charged extra to operate in Washington, they could pick up shop and pollute elsewhere.

Schaefer from Front and Centered says she hopes Washington can work with these industries to bring down emissions while also keeping them in the state. “We want to hold large corporate polluters responsible for the mess they’re creating,” she says. “But we don’t want to make people poor or have workers lose their jobs in the process.”

As a result, the Protect Washington Act includes a provision to set aside a minimum of $50 million a year to help protect workers “who are affected by the transition away from fossil fuels to a clean energy economy.” That money would go toward protecting incomes and benefit plans for everyone from farm workers to refinery workers, as well as supporting job retraining.

These accommodations for labor, Franks says, are a big reason why he thinks farmworkers are supporting the initiative. That along with the feeling that their concerns were heard for once.

“It’s not just a policy for us,” Franks says. “It’s personal.”

TODAY, THE LARGER environmental movement is in the bumpy process of shifting from a campaign led mainly by white people to one that prioritizes diversity. This undertaking of building relationships and trust between communities takes a long time, as environmental advocates in Washington have discovered in their nearly decade-long quest to put forward a carbon-pricing measure that disparate groups could support.

While people like Matthew Randazzo and Aiko Schaefer laud the Protect Washington Act, there are some who think it has plenty of flaws. Critics like the duo behind the 2016 carbon-tax proposal, economist Yoram Bauman and environmental activist Joe Ryan, argue that the proposal’s approach is likely to turn off Republicans, independents, and anyone who instinctively votes against taxes.

“What’s fundamentally important about climate action in Washington state, which accounts for about 0.3 percent of global carbon emissions, is increasing the odds of climate action in Washington, DC,” the pair wrote in the Seattle Times in April. “That will happen under the Alliance’s unite-the-left approach only if the Democrats can build a national majority considerably stronger than the one currently led by the Republicans. That’s a tall order.”

Small of Climate Solutions says that “uniting the left” is not a fair characterization of the Alliance for Clean Jobs and Energy. While he admits it is “fundamentally an alignment of progressive voices,” the broader coalition behind the initiative includes representatives people from across the political spectrum, including businesses.

“I think it’s a very well balanced proposal,” says Governor Inslee, siding with Small. “It’s moderate in the sense that it responds to the needs of a broad spectrum of people, not one ideology or one ethnic group.”

The first words that the Washington electorate read when it voted on the 2016 ballot measure were “Initiative Measure No. 732 concerns taxes.” The new proposal avoids the dreaded t-word. After all, it’s technically a fee—like a highway toll. Whereas revenue from a general tax might go toward whatever the government decides to spend it on, a fee ensures that funds go straight to a designated purpose. In the case of I-1631, that means 70 percent goes to investing in clean energy and clean air, 25 percent goes to maintaining water sources and forests, and 5 percent goes to helping communities throughout the state prepare and adapt to challenges caused by climate change.

Moneys in the account must be used for programs, activities, or projects to prepare communities for challenges caused by climate change and to ensure that the impacts of climate change are not disproportionately borne by certain populations.

But tweaking the language from “tax” to “fee” isn’t a magic trick that will finally make a climate bill appear in Washington state, says Anthony Leiserowitz, director of the Yale Program on Climate Change Communication. He warns that the Alliance can’t run away from the t-word.

“As soon as the opponents start organizing,” Leiserowitz says, “they’re going to call it a tax.”

What’s more, detractors are likely to point out that while a carbon price will be charged to polluters—an idea Americans broadly support—Washington residents are likely to pay part of the costs when they fill up their cars with gas or pay their utility bills, Leiserowitz says.

For now, I-1631 just needs to win over the people of Washington state, which has looked like a progressive stronghold in recent years. The state legalized same-sex marriage ahead of the curve in 2012 and became the first to legalize recreational marijuana. Two years later, Seattle was among the first cities to adopt a $15 minimum wage.

“This is a place of innovation, a place where broad and progressive ideas spread across the country,” Schaefer says. “And we believe this initiative will be the same.”

The Protect Washington Act is on track to exceed its goal of 260,000 signatures before the end of June, according to Nick Abraham of Washington Conservation Voters. That’s despite just clearing the halfway mark by the end of May.

Even if the Protect Washington Act fails, the groups who feel like people are finally involving them in the democratic process are going to hold down that space and fight for it. In that respect, Franks of Community to Community says many of state’s residents, like the farm workers he represents, have already won.

“Being treated with respect and dignity and being heard, that goes further than any policy.”

POLITICS

05/07/2018 19:54 EDT | Updated 10 hours ago

Jason Kenney Calls Carbon Tax A 'Frog In The Pot’ Situation For Canadians

He warned the $50 fee is just a hop, skip, and jump to $300.

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By Zi-Ann Lum

PARLVU

Jason Kenney appeared before a parliamentary finance committee to talk about the federal carbon tax on May 7, 2018.

OTTAWA — Jason Kenney arrived on Parliament Hill Monday ready to pick a fight against Liberals over the federal carbon tax.

"This is a frog in the pot syndrome," the Alberta United Conservative Party leader told a House of Commons finance committee meeting. He accused advocates of a carbon tax of "trying to get people used to paying more to heat their homes and to drive to work."

THE CANADIAN PRESSJason Kenney speaks to the media at his first convention as leader of the United Conservative Party in Red Deer, Alta., on May 6, 2018.

Conservatives are fighting a provision in the government's budget bill that would give Ottawa the authority to impose a carbon price on provinces and territories that don't have one. It proposes an initial $10 per tonne fee, increasing to $50 in 2022.

But Kenney warned the $50 fee is just a hop, skip, and jump to $300. He likened the tax as a vehicle for the federal government to assert "more control" and an opportunity to relay "more revenue to politicians."

The former MP found himself grilled by Liberal MP Jennifer O'Connell, who accused the Alberta politician of saying things about climate change "for political attention."

She asked him if he believes in climate change and if it is caused by human activity. Kenney said "yes," but hedged the strength of the correlation between the two is arguable.

Watch: Jason Kenney Grilled By Liberal MP For Climate Change Views

US Tax Credits Finally Extended for ‘Orphaned’ Clean Energy Tech

February 9, 2018

By Jennifer Delony
Associate Editor

With the news Friday morning that Congress passed a spending bill to keep the U.S. government open through mid-March, representatives of what have been dubbed “orphaned” clean energy technologies breathed easier knowing they finally won tax credit extensions as part of the bill.

Extensions were included in the spending bill for a variety of technologies, including small wind, geothermal heat pumps (GHP), fuel cells and biomass-based diesel.

Those technologies were left out of the bill passed in 2015 that secured tax credit extensions for solar and utility-scale wind. Some members of Congress have said that the omission was in error, but industry representatives have struggled over the past two years to find a pathway to reinstate the tax credits for the orphaned technologies that were left to expire.

Representatives of the Geothermal Exchange Organization (GEO) said the association worked with other industry groups to fix what it calls an inequity created two years ago, when Congress appeared to pick winners and losers in renewable energy through tax policy.

“Our hard-fought victory for the GHP industry helps ensure a bright future for our technology,” GEO President and CEO Doug Dougherty said in a statement. “It will stem the loss of jobs we now face, provide more time to overcome market barriers, achieve economies of scale, and help spread the environmental and economic benefits of GHPs across America.”

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