LCFS, round three

LCFS, round three
For the third year now, state lawmakers are trying to enact a statewide low carbon fuel standard (LCFS). Photo: freepik.com

Though state lawmakers for the past two years have unsuccessfully tried to enact a low carbon fuel standard (LCFS) in an effort to reduce transportation sector carbon emissions, some have decided to take another run at implementing the policy.

A Jan. 16 public hearing of the previous proposal’s companion bill SB 5412 in the Senate Environment, Energy & Technology Committee featured similar arguments for and against the program. Proponents say the program is necessary to reduce Washington’s greenhouse gas (GHG) emissions, identifying the transportation sector as the largest emitter in the state. However, critics say it is a costly, ineffective method to reduce carbon that would raise both the price of gas as well as any goods or products that rely on trucking.

Simultaneously, another argument against the LCFS is that it could make another transportation package politically unviable by raising gas prices. Capitol observers have noted that legislators are already working on a package for a possible vote next session. The 2015 Connecting Washington package raised the gas tax by around $.12 to generate $16 billion.

What’s more, an independent analysis of the Puget Sound Clean Air Agency’s (PSCAA) of its own regional proposal found that it could raise gas prices by $.57.

Testifying at the Jan. 16 public hearing, Jerry VanderWood with the Associated General Contractors of Washington called the proposal “a virtual gas tax…without providing additional funding for transportation improvements like the I-5 Columbia River crossing…to all the unmet needs.”

SB 5412, introduced by Senate Majority Deputy Leader Rebecca Saldaña (D-37), is less ambitious than PSCCA’s program. The bill would have the state Department of Ecology set up an LCFS program with the goal of reducing GHG per unit of transportation fuel to 10 percent below 2017 levels by 2028 and 20 percent below 2017 levels by 2035. Exempt from the program would be exported fuels, electricity, vessel fuel, railroads, trains and aircraft fuel. It would also eliminate a provision within the Connecting Washington package diverting money from flexible funds to Connecting Washington if an LCFS were adopted by 2023.

Testifying at the Jan. 16 hearing, Saldaña told colleagues that “the way that we’re doing business in the way that we fuel our economy is unsustainable. Business and the jobs don’t have to change that much – it’s how we fuel them.”

Chair Reuven Carlyle (D-36) told colleagues “the momentum for meaningful climate action is impacted by the transportation sector in disproportionate ways. Our work this year around the transportation sector is more important than ever.”

While advocates point to California and Oregon’s LCFS programs as a model for Washington to follow, critics contend that an LCFS is a costly way to reduce emissions. Washington Policy Center Environmental Director Todd Myers told the committee: “from an environmental standpoint, this is very ineffective – there are better ways to reduce CO2 emissions,” such as routes taken by Seattle City Light..

Others argue that the policy is difficult to implement. Under an LCFS program, credits are generated when the fuel provided by an entity is below the carbon intensity level set by the state agency, while deficits are created by entities with fuel above that level.

California’s LCFS was first created in 2009, then frozen by the state Court of Appeals in 2013. A revised program was adopted in 2015, only to have the diesel standard frozen. As of 2017, the credit program has generated deficits. According to the latest LCFS reporting from California, in the second quarter of 2019 the program generated 3.67 metric tons (MT) of credits compared to 3.92 million MT of deficits. That program has also raised the price of gas by at least $.16 per gallon.

Although the hit to gas prices by Oregon’s LCFS has been minimal, it is still in the early implementation stage. Myers conservatively estimates that when fully implemented in 2025 the added cost per gallon of gas will be around $.16.

Washington Trucking Association President Sheri Call told the committee that any gas price increase will inevitably hit the average resident’s wallet. “When the cost of truck transportation goes up, the cost of everything goes up. This means increased costs for Washington’s manufacturers, retailers, mom and pop shops, service providers, home builders, farmers and consumers.”

Private sector union representatives such as Billy Wallace said that tradesmen would also experience the negative effects of such a policy. Wallace is the political and legislative director for the Washington-North Idaho District Council of Laborers. “This affects our members the most, especially eastern Washington. We have to put gas in our cars, we have to travel where the jobs are…even more so now that there’s no affordable housing. It amounts to a regressive tax.”

No further action is scheduled for SB 5412 at this time.

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