For years, lawmakers in Olympia have considered whether Washington should implement its own cap-and-trade program on carbon emissions or require transportation fuels to be less polluting.
This session, they decided the state should do both.
The two major policies, the Clean Fuel Standard and a program putting a cap on greenhouse gas emissions and requiring clean energy investments called the Climate Commitment Act, will act in concert with one another. They'll reduce greenhouse gas emissions, reduce air pollution, and require investments in cleaner buildings, electric vehicle infrastructure, and more.
Both bills need to be signed by Gov. Jay Inslee to become law. In the meantime, here are answers to some of the common questions about each.
CLEAN FUEL STANDARD
The state Department of Ecology will determine how to implement the clean fuel standard by Jan. 1, 2023, so exact details aren't set yet. However, some of the basics are clear.
How does it work?
A clean fuel standard requires that in-state oil refiners and those who import oil into the state reduce the carbon intensity of their fuels by 20 percent below 2017 levels by 2038.
To get there, they can sell cleaner fuel by changing parts of the refining process, or invest in cleaner fuels like electricity and biofuels. The legislation is "technology neutral," with the requirement focusing on overall greenhouse gas emission reductions.
Electric utilities, in turn, can generate credits as suppliers of electric vehicle fuel, and then sell those credits to companies not meeting reductions. The utilities then need to reinvest most of the money earned from credits into electric vehicle infrastructure and in communities overburdened by pollution.
Several fuels are exempt from the rule, including fuels used for airplanes, boats, trains and military vehicles. Special fuel used for off-road transport of logs and mining materials, as well as that used for agriculture, won't be subject to reductions until 2028.
Who pays?
Polluters pay for the shift, says Vlad Gutman-Britten, the Washington director for Climate Solutions, a nonprofit that works to implement cleaner economic and environmental policies in the Pacific Northwest.
"It requires the oil industry to subsidize its replacements," he says.
But won't gas prices go up?
If the low carbon fuel programs in California and Oregon are any indication, no. If there are increases, it may be just a few cents per gallon.
A study commissioned by Consumer Reports found that California's cap-and-trade program, low carbon fuel standard, and several other clean transportation requirements (all of which also exist in Washington now) are actually expected to save people money. The study found that by 2030 California households will save between $1,210 and $1,530 in annual fuel costs even if fuel prices rise due to the policies.
That's partly because vehicles (even older ones) will become more efficient, electric vehicles will be cheaper and more accessible, and vehicles will spend less time in traffic because of better public transportation and community design.
In Oregon, which doesn't have a cap-and-trade program, the clean fuels program was estimated to add an average of 3.71 to 4.24 cents per gallon in 2020, according to the state's Department of Environmental Quality.
Still worried about that price difference? For what it's worth, larger differences already happen on a daily basis without the clean fuel standard in effect. A Gas Buddy search of the 10 lowest fuel prices in Spokane on Monday, May 3, found that gas at the Newport Highway Costco was $2.93 while a Texaco on N. Ash was at $3.05 a gallon. Go to the Valley and you find gas prices of $3.15 on the same day. Deer Park? You're talking $3.35.
"The oil industry bases its prices based on what it thinks it can sell things to you for," Gutman-Britten says. "It's not because there's a clean fuel standard down the road."
Does it work?
Yes. California, which started its program in 2011, has seen overcompliance, with more than 14 million metric tons of carbon pollution reduced in 2019.
Who wanted this?
This was the third year the clean fuel standard was promoted by the Environmental Priorities Coalition, a group of more than 20 environmental organizations that work to pass legislation in Washington each year.
CAP AND TRADE INVEST
While that environmental coalition typically chooses one to three major priorities to work toward each session, the Climate Commitment Act, which creates a new "cap-and-invest" program, was not one of the major priorities they planned to push this year. The new rule requires greenhouse gas emission reductions and will use money spent on allowances – basically credit bought at auction by those who don't reach their required reductions – to invest in projects that will further reduce emissions and transition the state to a clean energy economy.However, the policy requested by Gov. Inslee aligned with the goal of multiple groups to pass some sort of price on carbon, says Rebecca Ponzio, the climate and fossil fuel program director for Washington Environmental Council.
Who does it affect?
The clean fuel standard and the cap-and-invest programs will complement each other.
"[The clean fuel standard] addresses the fuel piece of transportation, which is an important source of not only greenhouse gas emissions, but air pollution as well," Ponzio says. "The Climate Commitment Act establishes an economy-wide cap-and-trade program to reduce greenhouse gas emissions."
While the fuel standard will largely affect oil companies, the cap-and-invest program will affect large polluters of all kinds across the state. At a minimum, those who emit more than 25,000 metric tons of carbon dioxide (or the equivalent level of greenhouse gases) each year have to comply, but others can voluntarily participate.
How does it work?
Ecology will need to set up program rules and design a marketplace for credits and allowances, as well as establish limits that will need to be met by polluters once the program starts Jan. 1, 2023.
As a state, lawmakers have required greenhouse gas emissions be reduced 95 percent from 1990 levels by 2050.
Companies that can't reduce their emissions fast enough will be allowed to bid on allowances built up from savings elsewhere in the state. That auction will get smaller and more competitive each year, forcing reductions.
What does it reduce?
Carbon dioxide isn't the only pollutant regulated under the Clean Air Act, and others will be reduced as air quality improvements are made.
This new rule requires less particulate matter from other pollutants, and provides investments in communities that bear the brunt of air pollution, which are often those closest to refineries and major transportation hubs. Low-income people and communities of color are disproportionately affected.
"One thing that we worked really hard on in that bill was to learn lessons from California's program," Ponzio says. "Something I think is really important about the Climate Commitment Act is it includes specific provisions to reduce airborne pollutants in overburdened communities."
The bill creates and pays for an air monitoring network enabling regional air agencies to better find the sources of the worst air issues in their area and increasing their authority to address those problems.
Where does the money go?
The proceeds from the state's auction of allowances go into three major accounts.
First, the Carbon Emissions Reductions Account will receive up to $5.2 billion over the first 16 years of the program to fund transportation projects that reduce carbon emissions.
Second, the Air Quality and Health Disparities Improvement Account will get at least $20 million per biennium to pay for the air monitoring network and pollution reduction.
The rest of the money goes into the Climate Investment account. At least 35 percent of this account's investments need to benefit vulnerable populations, while at least 10 percent of investments need to be for projects, activities or programs formally supported by a tribal government. This account will help invest in things like growth management, land management, low carbon building, fossil fuel worker career transition, renewable energy sources, restoring watersheds and fisheries, carbon sequestration, healthy forests and more. ♦
