Initiative 1631: How does it work? And what is in it for Our Communities?

I-1631 starts by creating new, state-wide program called the Clean Up Pollution Fund. Major users of fossil fuels (including the oil industry and utilities that haven’t switched to clean energy) will pay into the fund based on how much pollution they emit. This carbon fee will increase incrementally each year until the State’s long-term, greenhouse gas reduction goals are met. State budget officials expect the fee to generate over one billion dollars a year by the year 2022.¹

Overall, the Clean Up Pollution Fund can only be used by state agencies to reduce the State’s carbon emissions and mitigate unfair burdens of pollution and the transition to clean energy. The Clean Up Fund will be split into three sub-funds, whose investments and programs will benefit all communities in Washington:

Clean Air and Energy Investments (70%). Examples include:

• Create new solar, wind, tidal, and geothermal power generation
• Increase energy efficiency of existing buildings, such as weatherizing homes and apartment buildings
• Replace dirty diesel trucks, buses, and equipment with clean energy vehicles
• Increase transit service and capacity throughout the state
• Decrease industrial pollution
• Support fossil fuel workers impacted by transition to clean energy

Clean Water and Healthy Forests (30%). Examples include:

• Restore shorelines and estuaries (like the mouth of the Duwamish) and prepare for sea level rise
• Reduce flood risk
• Reduce pollution draining into waterways and lakes
• Increase resilience to wildfires in the face of increased temperature and drought (which will also help reduce smoky air)

Healthy Community Investments (5%). Examples include:

• Wildfire preparedness and prevention
• Relocating communities on tribal lands impacted by flooding and sea level rise
• Community education on how climate change will affect places throughout the state and how we can prepare for it

I-1631 sets out clear equity guidelines to ensure that those most impacted by pollution benefit from I-1631, such as low-income communities, communities of color, rural communities, Tribal Nations, and others. These guidelines invest 45% of the Clean Up Pollution Fund in communities most impacted by fossil fuel pollution and climate change. Doing so directly reduces pollution at its source, in turn benefiting all communities.

Although 1631 does not specifically call out race as a factor for determining how to prioritize carbon fee revenue, people of color face many of the listed barriers and challenges more so than white people in Washington. They are more likely to live close to pollution, experience worse economic conditions, fare worse during climate events, and live with poorer health.

Pollution & Health Action Areas

In addition to the above groups, I-1631 creates a place-based focus for investment from the Clean Up Fund called “Pollution and Health Action Areas.” These action areas include urban neighborhoods, tribal lands, and rural areas where residents bear both a higher brunt of fossil fuel pollution and social and economic disadvantages.

This strategy parallels California’s climate policy, which directs investment of that State’s climate fund to “disadvantaged” communities, based on a similar combination of conditions.) The action areas have not been fully identified yet, but a group of researchers from the University of Washington and Front and Centered are already crunching the numbers to figure it out.

I-1631 establishes two ways for carbon fee revenues to lift up communities hit hardest by fossil fuel pollution:

1. The initiative requires that at least 35% of all carbon fee revenues “provide direct and meaningful benefits to pollution and health action areas.”
2. An additional 10.5% must be spent to “directly reduce the energy burden of people with lower incomes.”

In total, that’s over 45% of the funding, amounting to nearly half a billion dollars annually, once the fee has been in place a few years. We show how this works with a handy infographic, embedded further below. You can refer to it as we explain how the two mechanisms work together.

35% to Provide Direct and Meaningful Benefits to Action Areas

Over a third of I-1631 revenues will be invested in communities hit hardest by carbon pollution because doing so reduces pollution at its source.

Once the action areas are defined (for now, think about areas with higher than average poverty, unemployment, and pollution), State agencies will spend the 35% on programs, projects, and local efforts that benefit the people who live there. As an example, Sound Transit could use carbon fee revenue to establish a new bus rapid transit line that connects a health action area to good jobs elsewhere in the region. Even though the bus line would go well beyond the action area, the whole investment would count because it provides direct benefits to the people who live there.

10% of the total carbon fee has to be spent inside the boundaries of the action areas. For example, I-1631 revenue could be spent on a program to install solar panels on homes owned by low-income households, which would reduce electric bills. However, a project that just installs solar panels in neighborhood open space and only generates electricity for a utility would not directly benefit the community, so would not count towards the 10%.

In addition, 10% will be spent on activities or projects that have been prioritized by tribal communities. This priority recognizes that tribal communities have been leaders in addressing climate change, largely because they have the most at stake.

Note that the above 10% for tribal priorities and the 10% located within action areas stack towards the overall 35%. To illustrate, $35 out of every $100 dollars spent will go to action areas. Of that $35, $10 must be for projects located in the action areas, and $10 will go to tribal priorities.

Directly Reduce Energy Burdens

I-1631 recognizes that low-income households pay disproportionately for energy use, whether heating homes or paying for gas. The initiative requires that 10.5% of carbon fee revenues go to reducing energy costs for low-income households, by reducing existing disparities or addressing any new ones created by the carbon fee. (The 10.5% is another way to mathematically represent the 15% of the Clean Air and Clean Energy Fund dedicated to reducing energy burden. That fund will receive 70% of all carbon fee revenue. 15% of 70% is equivalent to 10.5% of the entire Clean Up Pollution Fund.) More importantly, this 10.5% is separate from the 35% directed towards health action areas. Households with lower incomes throughout the State can benefit, not just those in the action areas. I-1631 specifies the following uses for this set-aside:

• Energy affordability through bill assistance and rebates
• Reduction in dependence on fossil fuels for transportation, e.g., real alternatives to driving to work alone
• Reduction in household energy consumption - which ultimately reduces energy bills
• Community-owned renewable energy

Another provision in I-1631 makes energy bill assistance for low-income households an important outcome – utilities that owe carbon fees to the State can keep the money, as long as they make the same investments required under I-1631’s Clean Air and Clean Energy Fund. Let’s say a utility that provides natural gas owes the State $10 million for a given year. The utility can retain the $10 million, but must also use it on renewable energy projects, energy efficiency, and/or rebates on their energy bills for low-income households, just like the State. This includes the 10.5% set-aside for relieving disproportionate energy burdens. The good news is that utilities across the state already have bill assistance programs. In addition, I-1631 requires state agencies and utilities to create robust outreach programs that ensures all eligible households can benefit from rebates.

How it All Adds Up

The chart below shows how I-1631 funding would flow into action areas, tribal areas, and communities most at risk from pollution and climate change. Note that the initiative does not require that 35% of each of the three subfunds be spent on health action areas – most or all could come from the Clean Air fund, for example. (For the sake of simplicity, we assume in this chart that 35% is set aside in each of the subfunds).

How big a deal is 45%? By the year 2022, the Clean Up Pollution Fund will generate about $1 billion in revenue. That means $350 million will flow to health action areas and $100 million will be used to reduce energy burdens. Put another way, 2 out of every 5 dollars generated by I-1631 will be invested in communities most impacted by pollution and climate change because doing so reduces pollution at its source and benefits everyone.

You can see from the table below how all of the percentage requirements translate into scale of funding. Although we use the year 2022 as our example (because the revenue will be close to an even billion dollars), spending on community priorities will begin as soon as the first fees are paid into the Clean Up Fund.² Highlighted in the table is that more than $100 million will be spent on relieving energy burdens for low-income households. Note, again, that the 35% for action areas applies to the whole Clean Up Fund and not individually to each subfund. However, for simplicity, we show it coming out of each.