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House, Senate face off on low-carbon fuel standard
Inslee climate priority currently a hostage in push for big transportation spending
There’s a saying in Olympia about where the real fights are: While the other party is your opposition, the other chamber is the enemy.
That adage is playing over the proposed low-carbon fuel standard, as a group of five Democratic state Senators is demanding the Democratic House swallow major changes to the proposal. This is Democrats vs. Democrats; all the Republicans in both chambers voted against the bill.
Here’s how this drama typically plays out: Representative A spends a year — sometimes multiple years — crafting a bill. This lawmaker studies the policy, weighs support and opposition among his colleagues and important players on the issue, considers — and frequently rejects — options that might make the proposed law more popular, or cheaper, and ultimately settles on something that can earn votes from more than half the House. Then, Senator B, usually of the same party but operating from a slightly different set of values, looking to please a somewhat different set of players, and dealing with a different set of colleagues, significantly rewrites the bill and lobs it across the rotunda back to Representative A.
If you work for Representative A, this is when you start hiding the throwable objects so the boss doesn’t shatter the framed picture with the president of these United States. Representative A then has to figure out whether to live with the amendments, tell Senator B to pound sand — a dicey maneuver that could kill the bill entirely — or work out a compromise.
In this case, Representative A is House Environment and Energy Chair Joe Fitzgibbon, D-Burien, who’s been grinding away on this issue for years. He got versions of the low-carbon fuel standard out of the House in 2019 and 2020, only to see them killed by Senate Transportation Chairman Steve Hobbs.
This year, Fitzgibbon’s House Bill 1091, part of Gov. Jay Inslee’s centerpiece climate agenda, passed the Senate thanks to a subtle shift in the Democratic majority that made Hobbs’ opposition less potent. But it’s significantly changed. The House version 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. That looks like 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.
As we reported in the April 4 edition, the most significant Senate changes came in a sweeping amendment in the Ways and Means Committee by Senator B, aka Sen. Mark Mullet, the business-friendly Democrat about whom we’ve written many times: The bill’s now harnessed to the passage of a major new transportation spending package — billions of dollars for highways, bridges, ferries, and other projects. The carbon reduction goals phase in more gently, and the second stage of reductions — from 10 percent to 20 percent — would require reauthorization by the Legislature late this decade, a kind of ripcord should lawmakers decide the program is driving the price of fuel too high. File that under “elections have consequences.” Inslee and mainstream environmentalists came after Mullet hard in last year’s election but came up just short.
The bill also picked up some interesting new bells and whistles on its way out of the full Senate on a 27-20 vote on April 8. The carbon reduction mandate would pause in 2026 if Washington was not by then producing 25 percent more liquid biofuel and agricultural biofuel feedstocks, and if a new biofuel refinery capable of producing 60 million gallons was not fully permitted. Those came in a floor amendment from Sen. Kevin Van De Wege, D-Sequim, who’d like to see another biofuel refinery built in Grays Harbor at the southern end of his district.
For background, two of the major knocks against the low-carbon fuel standard are that it would drive up the price of fuel — especially as the carbon reduction requirements become more stringent — and that it would mostly profit out-of-state biofuel producers rather than sparking a job-creating boom in the industry here.
Along with all these amendments, the five Democratic Senators sent an ultimatum in the form of a highly unusual letter to Fitzgibbon.
“Our five votes represent more than the margin of passage and it is crucial that you know the changes made to the legislation in the Senate were integral to our support for the bill,” Mullet, D-Issaquah, wrote in a letter signed by fellow Democrats Van De Wege, Bob Hasegawa of Seattle, Annette Cleveland of Vancouver, and Steve Conway of Tacoma. “Addressing our climate impacts doesn’t have to be just a bitter pill. With the Senate amendments, we can show Washington residents that they benefit directly from doing the hard work of reducing our carbon footprint.”
The letter also featured the logos of five major labor groups.
If those logos look familiar, dear readers, it’s because a similar display of union solidarity helped kill another piece of Inslee’s climate agenda, a proposal to reduce emissions from buildings by shifting away from natural gas to electricity, earlier this session. This labor coalition has lobbied against the low-carbon fuel standard hard this year, arguing that it might torpedo any new transportation spending package and the many union jobs associated with it.
So you might ask, why not have all those sideboards on the bill? Transportation spending is good, right? Why not make sure the jobs and the money stay in Washington? After all, loyal readers of the Observer know that one of the major players on this issue is Neste, also known as the state oil company of Finland, which is looking for markets for the renewable diesel it makes in Singapore.
The problem for backers of the low-carbon fuel standard is that all those sideboards add up to uncertainty, a thing investors generally hate. The transportation package may not pass this year. The standard creates a market for biofuel, but if the market’s going to dry up in 2026, who would invest in a new refinery? Who would plant biofuel feedstock crops if the mandate that would make them valuable is going away in less than 10 years?
“I wish that these senators had not chosen an adversarial approach by issuing a list of demands on these difficult issues,” Fitzgibbon told the Observer, although he made clear he was ready to work on a compromise. “I share some of their goals, but the language they drafted is recognized as unworkable by biofuel producers as well as oil companies.”
Van De Wege’s motivation is clear. He wants business to flow to the existing Renewable Energy Group biodiesel refinery in Hoquiam and he’s eager for an early-stage proposal for another biofuel refinery there to become reality. Let’s dig a little deeper into incentives for the other four signers, and consider the barely unseen hand of Hobbs.
Linking the bill to Hobbs’ transportation package makes it a hostage for passing that measure, along with its long list of tax increases, which are laid out in this piece by Mike Lindblom of The Seattle Times, the big dog among transportation reporters. That would spread a thick layer of cash — $18.7 billion in all — around the state, including $1.8 billion to replace the U.S. Highway 2 trestle in Hobbs’ Snohomish County district.
Cleveland, who last appeared in the Observer in our piece on the death of rent control, has perhaps more at stake there than any member of the Legislature. Her constituents use the rickety and perpetually jammed Interstate 5 bridge over the Columbia River, which might collapse if a server drops a tray of glassware on the patio of one of the riverside restaurants.There’s more than $3 billion toward replacing it in Hobbs’ plan.
For Mullet’s east King County district, there’s $500 million to widen frequently congested State Route 18, which cuts diagonally from Interstate 5 in Federal Way to Interstate 90 near Issaquah.
Conway is a longtime champion of organized labor, likely on the letter to protect the union jobs implied in the transportation package and to guard against offshoring jobs in the energy sector.
Hasegawa, who occupies the leftward end of the political spectrum in the Senate, has been generally dubious about Inslee’s climate package, which will likely be experienced by working people as an increase in the price of fuel. He was among a small group of Democrats who voted against Senate Bill 5126, the cap-and-trade bill that represents the final piece of Inslee’s climate agenda.
The five Senators are essentially making a pressure play, hoping enthusiasm for the basic idea of the low-carbon fuel standard helps Hobbs reach agreement with House Transportation Chair Jake Fey, D-Tacoma, and carries all those billions across the finish line. But Fey’s transportation proposal is markedly different, and the Observer hears negotiations are barely happening.
It’ll be interesting to watch this play out. If transportation spending stalls, can Fitzgibbon sand down some of these edges and peel off three of the five votes on the letter? Or will the whole thing collapse, leaving this oil industry campaign against the low-carbon fuel standard victorious for a third straight year?
The Legislature is set to adjourn April 25, a week from this Sunday.
Our canine correspondent bids you happy spring
Hobbs didn’t sign the letter; he voted no on the bill. But he looms large here.
We kid, of course. But an earthquake of any real magnitude would be another story. Seriously, the thing is built on rotting wooden pilings. The tangled politics of replacing is a story for another day.