Low carbon fuel standard proposal advances

Low carbon fuel standard proposal advances
A substitute version of HB 2338 creating a statewide low carbon fuel standard program narrowly passed out of the House Environmental Committee on January 23. Photo: ITS-Davis - UC Davis.

With a number of climate change proposals introduced this legislative session, Democrats may have to alter or yield on one to gain necessary Republican support for others. The compromise may occur with a bill implementing a low carbon fuel standard (LCFS) program through the state Department of Ecology, due to how it undermines a provision in the 2015 Connecting Washington transportation package.

A substitute version of HB 2338 was narrowly approved by the House Environment Committee during a January 23 executive session, setting the stage for perhaps a tougher battle in the House Transportation Committee. Sponsored by Chair Joe Fitzgibbon (D-36), the bill seeks to reduce 2017 fuel greenhouse gas emissions by 10 percent by 2028.

Proponents cited California’s LCFS program, which has increased the cost of a gallon of gas by a nickel since 2010, as an example of how it can be successfully implemented without adding financial burden to industry or drivers. However, industry members citing studies conducted on behalf of California’s program argue that it’s too soon to tell what the final cost may be.

One of the problems down the road could be a lack of sufficient low carbon fuel, which may force Washingtonians to meet California prices in order to compete for the same fuel supply.

This view is shared by Affordable Fuel Washington, a coalition of stakeholders that includes the Association of Washington Business. In a statement, the AFW said “that a LCFS could lead to fuel supply disruptions and market volatility that would negatively impact Washington families and businesses.”

AWB Government Director Mary Catherine McAleer wrote, “At a time when job creation and economic growth should be Olympia’s top priority, the state needs to be very careful in considering new regulations to address climate change. Experience elsewhere – especially in California – shows that LCFS regulations could drive up fuel costs and be difficult, if not impossible, to comply with. This could adversely impact the state’s economy, jobs and fuel markets.”

Washington Oil Marketers Association State Executive Lea McCullough wrote: “LCFS could increase fuel costs dramatically, and would seriously impact consumers, damage job creation and slow the state economy.”

Prior to the 5-4 vote, Fitzgibbon told colleagues: “The implementation of a low carbon fuel standard I think has great opportunities for Washington to reduce the pollution impact of our transportation system, to reduce both the greenhouse gas impacts and the local air quality impacts.

“I think it’s an exciting opportunity for producers of clean fuels in our state and outside our state,” he added. “This is an opportunity for their good work to reduce pollution from the transportation sector to be acknowledged.”

The substitute bill included some nuanced changes in wording that now reads: “The direction to the department to adopt rules under this section is not an acknowledgment, denial, or limitation of any authority of the department that existed prior to the effective date of this section.”

Prior, the bill had stated: “Nothing in this section provides new legal authority or limits existing legal authority for the department to adopt rules under this chapter.”

Another change to the bill affected how program credits are calculated by tying the carbon-intensity of a fuel unit to the standard ultimately created by Ecology for the program.

Comments by Ranking Minority Member David Taylor (R-15) prior to the vote indicated potential resistance could gain traction as the bill advances, due to how the bill alters Connecting Washington’s indirect prohibition on a state LCFS until 2023 (page 32-33 of 118).

If passed as written, HB 2338 would require Ecology to have the rule start in 2020.

“Among the concerns that we have on this side is the unwinding of critical agreement as part of the connecting Washington package,” Taylor said. “Hopefully our folks on the Transportation Committee will get a chance to have that discussion.”

Taylor told Lens that the “Connecting Washington package was a heavily negotiated piece of legislation. I firmly believe that that specific piece with regard to low carbon fuel was at least responsible for some Republican support of the overall package. Now two years later, we have a bill to repeal it. It’s more of the same, broken promises and changing the playing field whenever the majority feels it’s necessary.

“We have the B&O tax from last year that was suddenly vetoed by the governor,” he said. “It’s frustrating to me when we try to act in good faith and try to work through negotiations.”

He added that if passed as written, HB 2338 could have consequences for other Democrat legislation such as Inslee’s proposed carbon tax. “I’m not convinced that the Senate or the House can pass a carbon tax without Republican support. If they’re serious about moving their bills forward, the only way it’s going to happen is with Republican support which leads to negotiations. I would say it will be in people’s minds, if nothing else.”

The bill has not yet to be referred to its next committee.

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