Clean fuels bill gets yoked to transportation plan
Clean fuels bill gets yoked to transportation plan
Mullet amendment also limits carbon reduction, caps credit prices
The much-discussed low-carbon fuel standard picked up some strings and limitations on its way out of the Senate Ways and Means Committee this week.
House Bill 1091, originally sponsored by House Energy and Environment Chair Joe Fitzgibbon, is perhaps the most controversial of Gov. Jay Inslee’s climate proposals still alive in the Legislature. The oil industry and its allies have been fighting it for years, thus far successfully. One of their tactics is to enmesh the proposal in the complex politics of transportation spending, where it has frequently been strangled.
To review, Fitzgibbon’s original bill called for reducing the overall greenhouse gas emissions from transportation fuel by 10 percent below 2017 levels by 2028 and 20 percent below 2017 levels by 2035. Think more ethanol blended into gasoline, biodiesel blended into regular diesel, and a credit system that would reward biofuel producers as well as electrical utilities that provide low-carbon power to run electric vehicles. We reported on the dicey politics of this after it narrowly passed the House earlier this year.
The bill now has an explicit link to the passage of a transportation spending package of at least $500 million for the 2024-25 budget cycle. The timeline to get to the 10 percent reduction has been pushed out to 2031, and the 20 percent reduction would need to be reauthorized by the Legislature before then. The new version also limits how much holders of clean fuel credits can charge for them, and sets a minimum requirement for how much of the raw materials for biofuels need to come from Washington.
Most of those changes came from a sweeping amendment offered by Sen. Mark Mullet, the business-friendly Issaquah Democrat who occupies the rightward political end of the majority caucus in the Senate. Mullet survived a tough challenge from the left in last year’s election, thanks to massive independent political spending by political action committees funded in part by the oil industry and its allies. His challenger, meanwhile, had the full-throated support of the environmental community and Inslee, who took the unusual step of endorsing a challenger to an incumbent of his own party.
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The link to the transportation budget is likely in lieu of sending the bill to the Transportation Committee, where it has died in each of the two years, partly because the chair of the panel, Sen. Steve Hobbs of Lake Stevens, a frequently Mullet ally, isn’t a fan. It also increases the possibility that the low-carbon fuel standard passes only as part of some overarching deal that includes a carbon pricing scheme and a major transportation spending package, something Hobbs, many other lawmakers, and a large number of interested parties care about. The standard’s backers had hoped to keep it separate from that bargain, which could well collapse.
Passing a transportation spending package is always difficult because it involves balancing the competing and overlapping interests of business, labor, and the environmental community, addressing a handful of mind-bogglingly expensive big projects, finding the proper mix of highways, transit, and other transportation modes, raising enough gas tax and other revenue to pay for it all, and then finding the votes in the House and Senate.
Supporters of the low-carbon fuel standard argue it’s essential to promote adoption of lower-carbon fuels and electric vehicles, and that it would stimulate a homegrown biofuel industry while reducing carbon emissions and other pollutants. Opponents contend it’s an expensive and ineffective way to reduce carbon that would drive up fuel prices and enrich mostly out-of-state biofuel producers.
The idea has been the subject of intense lobbying from all sides. The Western States Petroleum Association and its allies in trucking, agriculture, logging, and other fuel-intensive industries have been running a campaign against it for years. Environmental groups are lobbying hard for the idea both in Olympia and in the public square.
And those out-of-state biofuels companies, including a certain Finnish oil company we wrote about a while back, are beating the clean-fuels drum hard, selling a vision of clearer skies and greener jobs.Phasing in the first 10 percent of carbon reduction more slowly and requiring the Legislature to vote again for the second 10 percent, likely in 2029, is aimed at the widespread concern that the mandate would translate to big increases in gasoline prices, particularly as the carbon limits become more stringent.
“If there is a big impact on price at the pump, that gives the Legislature a chance to decide what they want to do,” Mullet said at Thursday’s hearing.
The new version would also put more limitations on the proposed market for credits that producers of clean fuels — including electricity for cars — could sell to producers of higher-carbon fuels. Here’s how that works: Puget Sound Energy could generate credits through electric-car recharging stations, and sell the credits to the Phillips 66 refinery in Whatcom County so it could go on producing regular gasoline.
One of the criticisms of the low-carbon fuel standards is that the credits under the system can be ruinously expensive compared to the larger market for carbon offsets. Credits in California’s LCFS frequently top $200 per ton of carbon, compared to around $10 per ton for regular offsets.
Mullet’s amendment caps the credit price at $200 and puts some other limits on the market.The committee also adopted a separate amendment by Sen. Kevin Van de Wege, D-Sequim, designed to ensure that promised boom in homegrown biofuel production actually comes to pass. His change would effectively pause the phase-in of the standard in 2026 and 2028 if the state were not producing 25 percent of the feedstock — typically vegetable oil crops — required to make the biofuels necessary to meet the standard. It’s essentially a backdoor way to incentivize producers to use raw materials grown in Washington.
“We’re going to want to make sure a portion of the feedstock and the portion of the industry surrounding it is going to be in Washington State,” Van de Wege said before the committee adopted the amendment.
Some of these changes — especially the link to the transportation package — have environmental advocates grinding their teeth. But the bill’s path through the Senate was always considered rocky and narrow, so look for all this stuff to stay in the bill when it comes to the Senate floor. A final version would get hashed out down the road when the House and the Senate negotiate a compromise version — assuming it doesn’t get dragged down by a tangle of transportation politics.
Your visual metaphor of the day
Your correspondent’s 79-year-old father reports that he was the target of ads for this campaign on Saturday, urging him to contact his lawmakers. This seems goofy given that he lives in the 34th District, where he is represented by Fitzgibbon, the sponsor, Rep. Eileen Cody, a safe yes vote, and Sen. Joe Nguyen, who is not where the obstacles lie in the Senate. Might want to recalibrate your robots, folks.
Open market carbon offsets are often generated by things like reforesting clear-cuts, which is easier and cheaper than reducing carbon in fuels.