Low carbon fuel standard proposal advances

Low carbon fuel standard proposal advances
SHB 2338, which would create a statewide low carbon fuel standard, has cleared the House Transportation Committee and could be headed to the House floor. However, stakeholders are reiterating their warnings from a February 5 public hearing, stating that the program could harm their ability to compete with out of state businesses and may also create a gap in the state’s transportation budget. Photo: learner.org

A bill calling for a low carbon fuel standard (LCFS) program in Washington has cleared the House Transportation Committee and is on its way to a possible House floor vote, despite a February 5 public hearing at which stakeholders reiterated warnings about the economic harm the program could cause to farmers, ranchers and truckers competing in regional, national and global industries.

SHB 2338 would require Ecology to have the LCFS program start in 2020, with the goal of reducing 2017 fuel greenhouse gas emissions by 10 percent by 2028. This would be accomplished by shifting away from fossil fuels in favor of fuels generated from lower carbon intensity sources such as ethanol.

Policy experts are also cautioning that the program could harm transportation project funding by reducing gas tax revenue.

“We don’t fully understand the impact a low fuel standard would have on a transportation program that is completely reliant on people driving cars,” Association of Washington Business Transportation Director Mike Ennis said. “Regardless of how anyone feels about the policies of adopting a low carbon fuel, we owe it to our constituents who are now paying the second highest gas tax in the country to fully understand the potential impacts in these other states.”

The bill is supported by King County Metro, Futurewise and the Port of Seattle. Many proponents of a low carbon fuel standard have cited California’s program, started in 2011, as a model of how it can be accomplished with little fiscal impact. However, AWB Environmental Policy Director Mary Catherine McAleer told panel members that not only has California frozen its carbon reduction goals when industry was unable to meet it, but the program has actually added 10 cents to every gallon of fuel.

“For 10 cents, we could have another transportation package,” she said. “Before we can move forward with an LCFS mandate, we’ll have to address infrastructure related problems both for alcohols and biodiesels. The technology isn’t yet feasible to address the fact that biomass fuels need a lot of water to grow, then have to be dehydrated later. These feedstock supply issues present price volatility, translating to higher prices.”

Adding to that is a 2013 University of California Davis study conducted for the California Air Resources Board that found insufficient fuel stock exists to meet the state’s program requirements.

The low carbon fuel required could also cause inefficiency in the state’s agricultural industry, says Dan Coyne, executive director for the Northwest Agricultural Cooperative Council. He told lawmakers that the bill would “in essence, increase costs for an industry that is globally competitive” as well as “competitive with industry and facilities in Washington and Oregon” and “cause us by government regulation to be less efficient and therefore less competitive in the world market. A gallon of fuel will not harvest as much wheat or process as much grain as it does currently, because of the lower carbon intensity.”

“Ag is a trade dependent industry in Washington, there is no question about that,” he added. “Perhaps that’s the understatement of the day. To compete in the world, we need to be more efficient over time, not less.”

A similar viewpoint was shared with panel members by Sheri Call, executive director of the Washington Trucking Associations. “No industry is more price sensitive about fuel than trucking. Even a one or two cent fluctuation in fuel price causes disruption in our industry. Our trucks average six and a half miles-per-gallon, and we buy hundreds of thousands of gallons of fuel per year.

“As with all carbon policies affecting Washington-based carriers, our out of state competitors can travel in and through the state without having to fuel up here,” she added. “This creates unfair competition and advantage to carriers based outside the state.”

The bill has been referred to Rules.

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