New Clean Air Rule proposal could be costly for consumers

New Clean Air Rule proposal could be costly for consumers
Lawmakers have introduced a new version of a proposal that would grant the state Department of Ecology broad authority to regulate indirect carbon emissions. Photo: freepik.com

While scores of truckers, loggers and other stakeholders testified this week against ESHB 1110 which would create a low carbon fuel standard (LCFS), its sponsor Rep. Joe Fitzgibbon (D-34) has also sponsored a new version of previous Clean Air Rule legislation that would give the state Department of Ecology broad authority to authorize an LCFS—and more.

The proposal, HB 2957, was introduced on March 2, the same day it received a public hearing in the House Appropriations Committee and given a “do pass” recommendation.

Prior to the vote, Rep. Mary Dye (R-9) proposed an amendment that would have explicitly excluded  an LCFS from the bill, saying “by adding low carbon fuel standards and other standards to reduce carbon intensity of our transportation fuels in the state of Washington…it makes the policy really out of bounds of what the purpose (was).”

The amendment was not adopted, with Fitzgibbon saying, “if the legislation to adopt a low carbon fuel standard had moved forward in the other chamber, then we probably wouldn’t even have this bill before us today.”

Stakeholders opposed to the bill raised objections regarding how it still gives Ecology carte blanche to adopt its own carbon emission policy, with some warning it could ignite another legal battle that last year concluded with a State Supreme Court decision striking down most of the original Clean Air Rule adopted by Ecology.

“It would be difficult to overstate the impact this bill will have on Washington’s energy producing industries – as well as on consumers,” Western States Petroleum Association representative Greg Hanon told the committee.

Ecology’s Clean Air Rule, stemming from an executive order by Governor Jay Inslee, sought to regulate both direct and indirect carbon emitters. However, after business groups sued, the state high court ruled that the agency lacked the statutory authority to regulate indirect emissions that made up 85 percent of total emissions under the rule.

HB 2892, also sponsored by Fitzgibbon earlier this session at the request of Inslee, would have amended the state’s Clean Air Act to allow the regulation of indirect emissions and directed Ecology to adopt emission standards. However, the bill has remained in the Appropriations Committee since Feb. 7 after clearing the Environment & Energy Committee.

HB 2957 contains many of the same provisions as the previous version regarding indirect emissions and the adoption of a rule by Ecology starting in 2021. It also contains additional provisions that include:

  • Earning carbon credits for both biofuels and forest carbon sequestration;
  • Requiring Ecology to give “special consideration” to energy-intense and trade-exposed industries to prevent those employers from moving outside the state;
  • Suspending the 2018 state energy code if the state legislature funds certain housing retrofitting programs; and
  • Implementing a joint meeting by January 20, 2021 between the House and Senate to discuss with Ecology its rule.

Inslee’s Climate & Energy Affairs Senior Policy Advisor Chris Davis told the committee the bill’s provisions gives Ecology the ability to conduct rulemaking while still allowing the legislature to weigh in and provide input. He noted that the bill nullifies any rule adopted by Ecology if the legislature enacts its own carbon program.

In support was Kate White Tudor with the Natural Resources Defense Council, who said the bill would “ensure the state can regulate emissions related to transportation – our largest source of climate pollution right now.”

However, Isaac Kastama with the Low Carbon Prosperity Institute said the bill’s passage as written would be “pretty disappointing. What we have done over the years is focused on the enormous detail that it takes to craft an effective solution that takes in the concerns of businesses, as well as disadvantaged communities and low-income populations that could be impacted by the costs related to this. These are all the types of issues that have been addressed in the context of a legislative solution, and in this bill that direction is very light.”

Hanon said the bill as written is so broad it would allow Ecology to implement an LCFS in addition to the Clean Air Rule and gives the state agency too much control. “We strongly recommend that you retain your authority over policy issues that extend beyond the Clean Air Rule.”

He added that the major concerns with the bill “can be addressed by simple amendments that provide appropriate legislative direction. Failure by the legislature to provide this guidance results in a rule where implementation will be challenging, at best, and certainly expensive for consumers.”

The potential costs to consumers was underscored by Puget Sound Energy lobbyist Brandon Houskeeper, who said the original 2016 rule would have increased rates for 150,000 customers by 12 percent. He added that the Clean Air Rule lacked “enough compliance mechanisms available for natural gas distributors. We cannot turn down our gas system in order to serve less gas to our customers. In order to do that would be a huge expense for them and us. We think that more work needs to be done on the cost-benefit analysis.”

Citing talks in the city of Bellingham to shift homes to electric heating, Charlie Brown with Cascade Natural Gas and Northwest Natural Gas noted that “all consumers and users of natural gas pay into the system in order to keep the system whole. If certain localities were to decide to drop out of that system, then you’re shifting cost to other people. We believe that this does not provide for enough allowances for the system to actually work.”

HB 2957 has been referred to the Rules Committee for review.

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