By Cassandra Sweet

Voters in the state of Washington handily rejected a ballot measure that would have created the nation's first carbon tax as a tool to combat climate change.

The proposal, Initiative 732, would have imposed a new tax on gasoline and other fossil fuels and cut the state's sales tax and taxes on manufacturers, while giving tax credits to low-income earners. It only garnered 41.5% of the vote after encountering opposition from some environmental groups as well as energy companies and large power users.

The Sierra Club, the Union of Concerned Scientists and some other environmental groups said they opposed it because they didn't expect it to boost renewable energy. They also said the mix of tax increases and cuts would be a net negative for the state financially.

"A carbon price alone sends a signal, but there's no guarantee that it actually reduces carbon emissions," said Rich Stolz, executive director of OneAmerica, a Seattle-based group working with the Sierra Club.

The Audubon Society and thousands of individuals provided financial support to pass the measure, sponsored by a group called Carbon Washington.

"We have a moral obligation to take action on climate change -- for those of us here today, as well as our children and grandchildren," said Yoram Bauman, an economist and founder of the group.

The No on 732 campaign included Kaiser Aluminum, American Fuel & Petrochemical Manufacturers, utility Puget Sound Energy and Koch Industries.

Kaiser would have had to start paying carbon taxes on the natural gas that it burns to melt aluminum under the measure. In the first year, its carbon tax bill would have been $2 million, at a price of $15 a ton of carbon, Kyle England, a spokesman for the company said.

Opponents pointed to an August analysis by the state Office of Financial Management that predicted the measure would reduce state revenue by $797.2 million in the first six years.

Supporters cited a report by the Sightline Institute, a Seattle-based think tank, that the net impact of the total tax package would be plus or minus $80 million, making it close to revenue-neutral.

U.S. carbon dioxide emissions from burning energy fuels fell to 2.5 billion metric tons in the first six months of this year, the lowest level for that period since 1991, according to the Energy Department. The department is expecting full-year emissions of 5.18 billion tons of energy-related carbon, down 1.5% from 2015 and 4% lower than 2014.

(END) Dow Jones Newswires

November 09, 2016 11:20 ET (16:20 GMT)

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