The low carbon fuel standard (LCFS) bill, HB 1091, could be headed to the House floor in a couple weeks.
On Tuesday the bill cleared the House Appropriations Committee by a narrow margin, with 17 members voting aye and 16 voting naw. The vote largely fell along party lines, though Kirkland's road-loving Larry Springer voted no, and House Majority Leader Pat Sullivan (D-Covington) voted no without recommendation.
Regardless of the narrow vote margin, this development could be a positive sign for Washington's economy.
If passed, the LCFS will limit gas and diesel emissions to 10% below 2017 levels by 2028 and 20% by 2035. The law would also create a credit system where big emitters could buy credits from small emitters to offset carbon-intense emissions. In other words, it would become less sexy and more expensive to spew carbon-intense fuels, which would make alternative fuels sexier and cheaper. That's just economics.
You'd think every lawmaker would want to invest in something like this considering the COVID-19 recession and considering how much Republicans love the free market. As of December, unemployment in Washington was up 7.1%, and the state reported a loss of 9,900 jobs. An LCFS could help put some of those people to work by spurring the creation of an alternative fuels industry in Washington, which would allow small, clean fuel producers to be competitive in an industry historically dominated by oil.
Right now, Washington has untapped potential in the clean fuels sector. As it stands, there is no incentive to beef up a biofuel industry here. In fact, Washington's lost out on huge biofuel infrastructure projects and thousands of jobs in the past.
One example of this is last year, when Phillips 66 ditched its $800 million plans for a biofuel refinery in Ferndale and chose to move it to San Francisco. The company cited permitting issues for the reason, but a clean fuels program manager working with Phillips 66 on the project told the Bellingham Herald that the excuse "didn't add up."
Tim Zenk, CEO of public affairs company Molecule and Washington representative for Neste, the Finnish biofuel company, chalked the decision up to the LCFS-shaped hole in Washington.
"They have no incentives to build the factory here," Zenk said, "Phillips 66 took it to a market where there’s a high demand for that fuel."
British Petroleum spokesperson Tim Wolf backed up that idea in a committee meeting last month. BP’s refinery at Cherry Point, WA has a renewable diesel unit, but it only sells that fuel to Oregon and California. When asked by a legislator whether BP would invest in more renewable diesel in Washington, Wolf said BP would only expand that program if Washington passed an LCFS, which would force BP to become cleaner.
Currently, there’s “no incentive for us to sell that fuel in Washington state,” Wolf said.
"If we open up an LCFS in Washington, there’s an in-state benefit,” Dan Evans, the president of Promus Energy said.
Washington would also be able to directly produce the low-carbon fuels that its vehicles run on, Evans said. He’s currently overseeing the creation of a dairy digester that turns the methane from cow waste at DeRuyter Dairies in the Yakima Valley into renewable natural gas (RNG). While those sales mostly go to California, a Washington LCFS would give Evans another market to sell to.
This benefits the dairy industry, which has been hampered by low milk prices and high labor costs, by allowing them to sell off what’s really just a waste product (shit) of their main source of revenue (cows). If an LCFS passes, dairies will benefit even more from claiming credits for getting rid of the methane gas from their cows’ shit. The rest of the agriculture sector could see similar benefits by producing feedstock for ethanol production.
Naysayers argue that gas prices will rise if Washington passes an LCFS, but Evans said the bill would end up reducing transportation costs. According to a 2020 op-ed from the bill's prime sponsor, Rep. Joe Fitzgibbon, "California’s gas prices are 40 cents lower now than before their standard was implemented." However, according to Crosscut, California's fuel prices had increased by around 8 cents as of 2018. And the Oil Price Information Service shows that California's fuel prices increased by around 20 cents as of 2020. Another industry site said LCFS increased gas prices in CA by 5 cents. These figures, Crosscut reported, are "estimates" that are based on the "'upper limit' for how much prices could potentially rise."
A House floor vote will decide the next steps for this bill and Washington's clean energy future, but the Senate companion bill still has a ways to go, and it could run into some speed bumps if that way is through Sen. Steve Hobbs's transportation committee.