Cap-and-invest approach good for environment and economy

Forward-looking business leaders in Washington should support Gov. Chris Gregoire's cap and invest bill. This legislation tackles three critical issues — our economy, our national security and our environment — all in ways that will benefit the business community.

First, green energy and clean technology present an unprecedented growth opportunity for our local economy. Venture and growth-capital investment in green technology was $8.4 billion in 2008, a 38 percent increase from 2007, according to the Cleantech Group.

This growth bucked the trend in overall venture investments in 2008, which fell by 8 percent nationally. The sector is intensely competitive though, and Washington needs to act to ensure we get our share of these investment dollars. We have not attracted our fair share to date.

Passing the cap and invest bill would erect a big, neon sign in front of this burgeoning subsector of venture and growth capital: Invest in Washington! The investments businesses make to comply with the new law will save on energy costs, increase efficiency and provide companies with a first-mover advantage to profit from the implementation of any national carbon-emissions cap.

By tackling the challenging issues involved in developing a workable system, Washington stakeholders also gain a real seat at the table and valuable experience as a national climate program is being developed.

One important outcome improving energy efficiency will be to lower our dependence on foreign oil. In 2008, Washingtonians spent $16.6 billion on fossil fuels — that's $2,500 for every state resident. While the price of oil has dropped, its volatility is sure to cause another spike as the economy begins to recover.

Less reliance on oil means lower input-cost volatility for many businesses, as well as less money lost to funding unstable dictatorships.

Cap and invest will keep more of our energy dollars in-state. By capping and reducing carbon emissions, companies will find incentives for cleaner technologies, thus reducing our state's dependence on fossil fuels. By auctioning emissions permits, the state can reinvest revenues that would otherwise have padded the coffers of oil giants and OPEC countries.

We can use that money to invest in new clean technologies, weatherize low-income homes, "green retrofit" our buildings, provide tax credits and subsidies to green tech, help taxpayers deal with rising energy costs, or any combination of these.

A well-designed and well-regulated auction can prevent market abuse while reducing our exposure to inherently unstable fossil-fuel markets. This would allow us to regain control of our energy system, returning our energy dollars and emission-permit fees into our local economies.

In short, our economy has everything to gain from investing the money we save from dirty energy into ever more clean energies. This creates a virtuous cycle which leads to wealth creation.

The final, most important benefit is that it addresses the root problem of climate change: unrestrained emissions of greenhouse gases. Unlike a carbon tax, which merely puts a price (set by politicians) on emissions, this approach gradually and transparently reduces the level of emissions.

The costs of not acting against climate change are severe. Less snowpack in the mountains means less electricity generated by clean hydropower, and more we have to buy from dirtier sources. Longer and drier summers create tinderboxes of our forests. Rising seawater threatens our shorelines. Dirtier air leads to higher health-care costs from asthma. As estimated in a recent study doing nothing will cost the state more than $4 billion a year by 2040.

The old economy has left us in dire straits. The transition to a new, cleaner energy system is the largest global trend of the 21st century, and the cap and invest bill is our greatest opportunity to lead the transformation. The end result will be a cleaner, healthier and more prosperous Washington.

Michael Butler is chairman and CEO of Cascadia Capital, a national investment-banking firm focused on supporting sustainable industries and innovative technology in the region.

Tomorrow: Todd Myers of the Washington Policy Center makes the case for a different approach that would set a carbon price for emissions while cutting other taxes.