HB1887 – Loosening the cap & invest program’s requirements, expanding its biofuels exemption, providing refunds for exempted fuel purchases, & temporarily lowering license fees.
Prime Sponsor – Representative Chapman (D; 24th District; Olympic Peninsula)
Current status – Referred to the House Committee on Environment & Energy.
Next step would be – Action by the committee.
Legislative tracking page for the bill.
SB5783 is a companion bill in the Senate.

Summary –

The bill would exempt all biomass fuels from coverage under the Climate Commitment Act, dropping the current requirement that exempted biofuels have to have lifecycle greenhouse gas emissions at least 40% lower than those of the fossil fuels for which they’re substituted.

It would replace the current requirement for future reductions in the cap sufficient to achieve the covered entities’ share of what’s necessary to achieve the state’s climate targets with annual 3.6% reductions for 2024 through 2040, and 3.1% reductions for 2041 through 2049.

It would require the Department of Ecology to put an additional 5% of the allowance budgets for the twelve years from 2031 through 2042 into the price containment reserve account and to auction all of those additional allowances in separate auctions during 2024.

The bill would use any revenue above the October 2022 estimates from the cap and trade auctions in 2024 and 2025 that was not otherwise appropriated by the Legislature to reduce or replace the license fees for light and heavy vehicles in fiscal 2025 and 2026.

It would create a work group to examine consumer fuel pricing in the state including members of the transportation committees; academic experts; and the representatives of various agencies, industry stakeholders, and consumer advocacy organizations. The group would review:
a) Issues including previous studies and evaluations of fuel pricing, trends in that, factors causing Washington prices to be higher than the national average and how those factors have changed over time; and margins and profits at the fuel production, distribution, and retail levels,
b) State tax policies, environmental protections, and regulatory factors that may impact fuel pricing and make the state’s marketplace more or less competitive,
c) Supply dynamics affecting the fuel markets in the state, and,
d) Potential reporting and audit requirements that would make fuel pricing more transparent to consumers.
This work group would provide a report and recommendations to the Governor and appropriate committees of the Legislature.

The bill would require Ecology to create an on-line portal allowing the farm fuel users and freight haulers of agricultural products that are exempted from the bill’s coverage to submit documentation each quarter applying for a remittance based on any covered fuels they purchased during that quarter. (If they chose to use it, this would offer an alternative to the current system, which provides them with exemption certificates to be used when purchasing fuel.) The remittance would be equal to 0.008% of the auction price for that quarter for each gallon. (To illustrate roughly how this is supposed to work, as I understand it – since covered fuels emit something like 21 pounds of CO2e/gal, 100 gallons of fuel would emit about a metric ton of CO2e. Suppose the auction price were $50/metric ton, and all the cost for the credits to cover the emissions were passed on to the exempted buyer; they’d pay an extra $50. However, 0.008% of $50 is $0.40; and the rebate for the 100 gallons of fuel would be about $40. It’s not going to be exact, since various fuels with different emissions per gallon are getting lumped together and there will be various lags between the auction prices and whatever their effects on consumer prices turn out to be.)

The bill would provide $25 million for remittances in 2024; in fiscal 2025 and 2026 it would provide what was appropriated, and specifies that the climate investment account and the air quality and health disparities improvement account that get the money for investments from the Climate Commitment Act have to be appropriated at least as much as they were expected to get in the 2022 estimate. In subsequent years those would get the remaining revenue after specified funding for the carbon emissions reduction fund, which is dedicated to reducing transportation emissions, and whatever was appropriated for remittances.)

Those exempted users might choose to have remittances held by the department as credits based on the auction settlement price instead, and would be able to trade them with covered entities that needed credits to meet obligations under the bill through a mechanism the department would create and manage . The department would be allowed to develop other alternatives for handling these exemptions as well. Ecology would also be required to convene a work group with a variety of stakeholders to review the rules and process for handling these exemptions and to develop recommendations for the Legislature to ensure their full use and benefit.