With the passage of E3SHB 1091 in the state House earlier this month, the debate over its proposed low carbon fuel standard (LCFS) continued during a March 10 public hearing in the Senate Environment, Energy & Technology Committee. Much of the testimony from both industry and environmentalists centered on the effectiveness of the program and its potential to spike gas prices.
The LCFS program would operate by setting carbon intensity level limits that increase over time, allowing entities that provide fuel below that level to generate credits purchased by entities that sell fuel above the limits. Entities can also generate credits through zero-emission vehicle refueling infrastructure and approved carbon, capture and sequestration projects. Entities that provide fuel exempt from the program would still be able to generate credits if those fuels are below the carbon intensity threshold.
One of the main points of contention between supporters and opponents is the effect an LCFS program will have on the cost of fuel. Proponents of an LCFS have sought to downplay its effects in California and Oregon, both of which have had their own LCFS program for several years.
Bill sponsor Rep. Joe Fitzgibbon (D-34) told the committee that “we’re not picking the winners or losers, we’re just identifying the goal, which is a reduction in the greenhouse gas emissions from our most emitting sector.” He added that the economies in states or regions that have adopted an LCFS “continue to thrive even as they reduce the emissions from their most polluting sector.”
One of the debates has been over the reliability of other states’ data regarding greenhouse gas emission reductions and the effect on fuel prices. A 2019 analysis by the Puget Sound Clean Air Agency (PSCAA) provided an additional glimpse into the costs, concluding that a regional program could raise gas prices by up to $.57 per gallon by 2030.
A presentation by Committee staff member Bryon Moore offered another estimate on the price impact based on California data. Depending on the agency source, a 20 percent reduction in carbon fuel intensity levels could raise gas prices between $.23-$.46 cent per gallon. However, Moore said “we really don’t know what the impact would be,” adding that the cost impacts are “highly dependent on the credit prices. He added that the estimate “assumes prices or costs are pushed back to the consumer through a direct increase on the price.”
A 2018 report by California’s nonpartisan Legislative Analyst’s Office (LAO) found that “most or all of the costs of purchasing credits and allowances are likely passed on to fuel consumers in the form of higher retail prices.” Critics of Fitzgibbon’s bill have also noted that its implementation timeline is twice as fast as California’s program.
Another argument made against the LCFS by critics such as Washington Trucking Association Vice President Sheri Call is that while the proposal would raise the cost of fuel, unlike a gas tax increase it does not provide additional revenue needed for transportation infrastructure. The state is also expected to spend $3 billion replacing fish culverts on highways managed by the Washington State Department of Transportation due to a U.S. court order.
Fitzgibbon argued that an LCFS’s nontax status is something “I see as a benefit, not a downside of this program. The benefits of the program accrue to fuel producers, not to the state of Washington.”
Those environmental benefits cited by proponents have also come under scrutiny. While Climate Solutions argues that “emissions from our transportation fuels like diesel and gasoline worsen our air quality and make us sick,” the PSCAA analysis did not examine the potential carbon reduction of a regional LCFS, and concluded it would not affect particulate matter levels in the air.
While advocates say an LCFS would also spur further clean energy development in the state, the same PSCAA analysis also found that “the potential for new (alternative fuel) facilities is limited given the high upfront capital costs for fuel production and competition from existing producers.”
Testifying at the March 10 public hearing, Washington State Association of UA Plumbers and Pipefitters Government Affairs Director Neil Hartman compared the bill unfavorably with the 2019 Clean Energy Transformation Act (CETA), saying the LCFS bill is “weak in all the ways that CETA was strong.” That law puts utilities in the state on a pathway to be carbon free by 2045.
International Union of Operating Engineers Local 302 Government Relations Josh Swanson told the committee that any fuel cost increases means less taxing capacity for future transportation funding. “We do not believe the time is right. We do not have the infrastructure to meet the demand (for clean fuel).”
E3SHB 1091 is not scheduled for any further committee action.