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Economic impacts of the Clean Air Rule

In March 2018, Thurston County Superior Court ruled that parts of the Clean Air Rule are invalid. The Superior Court's ruling prevents us from implementing the Clean Air Rule regulations that cap and gradually reduce major sources of carbon pollution. This means that compliance with the rule currently is suspended. On May 14, 2018 we published a media release and filed an appeal with the Washington State Supreme Court.

Under a separate Ecology rule, facilities covered by the Clean Air Rule still are required to report their emissions for the Greenhouse Gas Reporting program.

When we adopt rules that could increase costs for businesses, governments, or individuals, we evaluate the economic impacts. When writing the Clean Air Rule we looked at benefits and costs.

Benefits of the Clean Air Rule

The impacts of climate change are being felt globally and locally. The state’s environment, people, industry, agriculture, and infrastructure are susceptible to economic damage from climate change. It's estimated that climate change will negatively affect agricultural productivity and human health. It will also cause property damage from increased flood risk and changes in energy costs.

By implementing the Clean Air Rule we'll contribute to slowing the effects of climate change. We estimate that we'll prevent $9.6 billion in negative economic impacts by 2036. To learn more about the costs and benefits of the Clean Air Rule read the Cost-Benefit and Least-Burdensome Alternative Analysis.

Impacts to small businesses

We assessed the impact the Clean Air Rule may have on small businesses. This evaluation looked at whether small businesses have more challenges complying with the rule than larger businesses. To learn more about our evaluation read the Small Business Impact Statement.

Costs to regulated businesses

Businesses can comply with the rule in a variety of ways. They can reduce emissions directly at their facility and/or they can get emission reduction units from another approved source. How businesses choose to comply will determine their costs. We evaluated the various ways to comply and projected a range of costs over 20 years.

We found that the less expensive compliance option is projected to cost $410 million over 20 years for all businesses combined. The more expensive compliance option for all businesses combined is projected to cost $6.9 billion over 20 years.

Effects on Washington's jobs

We looked at two scenarios to see the effects the Clean Air Rule may have on Washington jobs. One scenario assumed energy and fuel businesses would pass on 50 percent of the costs to comply with the rule to consumers and the other scenario assumed they would pass on 100 percent.

If companies passed on 50% of the costs we projected:

  • 2020 job losses: 30 – 430 jobs (0.001 to 0.1 percent of total jobs in the state)
  • 2035 losses: 200 – 3,270 jobs (0.004 to 0.071 percent of total jobs in the state)

If businesses pass on 100 percent of costs we projected:

  • 2020 job losses: 40 – 730 jobs (0.001 to 0.017 percent of total jobs in the state)
  • 2035 losses: 280 – 4,560 jobs (0.006 to 0.1 percent of total jobs in the state)

Impacts on fuel and energy prices

We evaluated potential impacts the Clean Air Rule may have on electricity, natural gas, and gasoline prices. Businesses covered by the rule have several options to comply. Some compliance options cost more money than others. We looked at the least expensive way to comply and the most expensive way to comply and how each may affect costs to consumers of fuel and energy. Read the report to see what we found.