Gov. Jay Inslee has vetoed a bill that would have allowed KapStone Paper and Packaging to potentially make millions of dollars by selling renewable energy credits.
Sponsored by state Sen. Dean Takko, Senate Bill 6166 would have updated a complex law to offer benefits for KapStone and other mills with recently upgraded biomass facilities. The bill had strong bipartisan support.
Proponents argued that the updated law would have encouraged industry to make investments to reduce greenhouse gas emissions. Opponents, including Gov. Inslee, said the change would undermine efforts to create new renewable energy resources, such as solar and wind projects.
“We believe that (Inslee’s) veto is a missed opportunity to create a more firm and uninterrupted supply of green energy within the state of Washington,” said Pat Ortiz, KapStone director of engineering, environment and safety, in prepared statement. “We are disappointed that it makes further investments in generating additional green energy at our Longview location more difficult to justify.”
Like many paper mills in Washington, KapStone generates much of its own power by burning wood chips and waste from paper making. This “biomass” power already is a considered a form of renewable energy under state law.
Under voter-approved Initiative 937, utilities this year must have 9 percent of their electric loads supported by renewable energy resources, or they can purchase renewable energy credits in lieu of that.
Mills can sell those renewable energy credits on the open market if their biomass facilities were built after 1999. This excludes KapStone, which has boilers and furnaces dating back to the 1950s and 1960s. Takko’s bill would have amended the law so that any mill that made significant upgrades to biomass facilities after 1999 could sell renewable energy credits.
In today’s depressed energy markets, KapStone likely would have only made a few hundred thousand dollars annually from selling renewable energy credits, but that amount could easily multiply if the energy prices recover, said Steve Kern, Cowlitz PUD general manager. KapStone could have also used the credits to comply with other aspects of the state’s renewable energy law, Kern said.
KapStone argued that it should be recognized for the major capital upgrades it made its Longview biomass facilities since 2007. These improvements enabled KapStone to generate an additional 25 megawatts of biomass energy, up from 15 megawatts originally.
Combined with other initiatives, KapStone cut its overall energy use at the Longview mill by 37 and reduced its greenhouse gas emissions by 72 percent in the decade leading up to 2013, according to to the company. It was a key reason why the company won an industry sustainability award that year.
However, opponents said those that the bill could squash incentives to build new renewable energy resources.
“We ask that you veto EHB 6166 and keep the pressure on industrial users of electricity to join us in supporting a comprehensive pathway towards a clean energy future in our state,” wrote Rep. Joe Fitzgibbon, D-Burien, and eleven other state representatives wrote in a letter to Inslee.
In a statement, Inslee spokeswoman Tara Lee said broadening the definition of what qualifies for renewable energy credits would undercut the competitiveness of new wind and solar energy projects.
“These include wind and solar generation built by utilities or renewable developers who invested based on expected demand from entities with a compliance obligation under the act,” she added.
Takko said Inslee’s veto could detract from mills’ efforts to further reduce greenhouse gas emissions.
“It kind of takes the incentive away from some other mills that might want to upgrade their facility because they aren’t going to receive credit for it,” Takko said Monday.
Before the veto, the bill had been approved by a 35-13 margin in the Senate and a 66-31 margin in the House.