Climate Commitment Act impact: $30 million refunds fall short of farmers’ $150M estimate

OLYMPIA — Budget writers in both the Senate and House have suggested allocating $30 million for refunding farmers impacted by the Climate Commitment Act. With the climate program, fuel used for agricultural purposes was supposed to be exempt. 

According to farmers and truckers in Eastern Washington, that proposal refund falls short. 

“The $30 million is a start, but it is only a temporary solution to a much larger problem. It is estimated that the amount paid in taxes, yet eligible to be paid back, is over $150 million and of course, every day that keeps increasing,” Jon DeVaney from the Washington Tree Fruit Association. 

The provision in this year’s budget bill aims to offer financial support to farm-fuel users who face surcharges on fuel purchases due to the state’s cap-and-trade law known as the Climate Commitment Act. However, $30 million refunds do not match the over $150 million farmers paid when the cap-and-trade began, according to an estimate by the Washington Farm Bureau.

The Climate Commitment Act took effect in Jan. 2023 a program intending to cut the state’s greenhouse gas emissions. 

“We have not seen any data that would support the estimates the farm bureau is providing. It would require an unrealistically high assumption about fuel use that does not match any state or national data regarding agriculture,” a statement from Gov. Jay Inslee’s office said.

The statement said a Washington conservative think tank had estimated about $33 million in added expenses for the state's ag professionals.

Senators Perry Dozier, R-Waitsburg, and Mark Schoesler, R-Ritzville, question the timing and purpose of the payments and say they are not labeled as rebates or reimbursements. 

“I don’t know anyone in the agricultural sector who would view this as a solution to the fuel-surcharge issue we’ve been fighting for more than a year since cap-and-trade was fully implemented,” said Dozier.

Schoesler agreed with Dozier’s concerns. 

''These payments wouldn’t come close to making up for what farm-fuel users have been forced to pay because the executive branch of state government failed to uphold the promise made in the cap-and-trade law that farm diesel and fuel used by the maritime industry would be exempt from the surcharge this new program would create,” Schoesler said. 

The cap-and-trade law sets up a carbon emissions auction wherein companies that emit carbon or produce carbon-emitting products such as fuel have led to an estimated 50-cent increase in the cost per gallon for gasoline and diesel, both of which are vital for agriculture. 

The proposed refunds range from $600 to $3,400 based on fuel consumption. The proposed payments, potentially only amount to pennies per gallon for many farmers. 

Additionally, the funds would be directed through the Department of Licensing despite the Department of Ecology being assigned the responsibility of implementing the CCA.

The Department of Licensing is expected to begin issuing refunds Sept. 1, with the department retaining up to 5% to allocate the refunds. 

“Refunds need to happen because that was a deal with the Climate Commitment Act,” said Rep. Tom Dent, R-Moses Lake. 

Dent has previously said he was frustrated with the lack of foresight in the CCA with regard to ensuring a mode of reimbursing agriculture professionals was included in the original legislation.

Many growers in Washington said they are in a position where they are not making substantial revenue and additional costs are making it difficult to keep their farms open. According to the 2022 Census of Agriculture report by the U.S. Department of Agriculture, Washington state lost more than 3,700 farms between 2017 and 2022. 

The Washington State Food Policy Forum, a coalition of stakeholders established by the legislature to advise on issues affecting the state’s agriculture and food system, is urging the full implementation of agricultural exemptions in the CCA. This effort aims to streamline protections for farmers.

“Unfortunately, challenges with implementation have resulted in fuel surcharges being collected across the food system, contrary to the intention of the Legislature and the language of the CCA. These costs are indeed significant, causing unintended economic burden on the agricultural industry as the details of the exemption are sorted out,” said members of the WSFPF. 

As the debate unfolds, the farmers said they need a budget that respects the needs of agriculture and addresses concerns related to the cap-and-trade law. In response, lawmakers claim they are working together to solve this issue. 

“It's an encouraging sign that the legislature is looking for a pathway to address this and I think we’re going to keep talking about what the final number looks like and how we can get more of a permanent solution. Seeing a number in the budget to try to work on this issue is helpful and appreciated,” said DeVaney. 

Renee Diaz is a graduate of the University of Washington and is the Columbia Basin Herald’s intern covering the 2024 Washington Legislative Session.