SB5412 – Creates a low carbon fuel standard.
Prime Sponsor – Senator Saldaña (D; 37th District; Seattle)
Current status – Had a hearing on a proposed substitute in the Senate Committee on Environment, Energy & Technology January 16th. Failed to make it out of committee by 2020 cutoff; dead bill.
Next step would be –
Legislative tracking page for the bill.
(HB1110 began as an identical companion bill in the House last session; it passed out of the House with amendments, and out of the Senate Environment Committee with further amendments, but didn’t get out of the Transportation Committee there before cutoff.)

2109 Legislative History
Had a hearing in the Senate Committee on Environment, Energy & Technology January 30th, 2019. Still in committee at the 2019 cutoff date; reintroduced and retained in present status for 2020 session.

Summary –
Requires the Department of Ecology to create rules to reduce the greenhouse gas emissions from transportation fuels used in Washington to 10% below 2017 levels by 2028 and to 20% below 2017 levels by 2035. (Fuels for aviation, shipping, and locomotives are exempted.)

Comments –
Governor Inslee’s 2020 budget proposal would provide $1.5 million for the Department of Ecology to implement the program.

Rep. Fitzgibbon’s LCFS bill, HB 2338, which passed out of the House Environment and House Transportation committees in 2018, would have created a standard at the same level. Carbon Wa’s testimony in support of that bill included quite a bit of useful analysis.

Climate Solutions has produced a flyer supporting the bill in 2019.

Details :

Standards –

• Must be based on a full lifecycle analysis of the emissions associated with each fuel, including its production, storage, transportation, and combustion, as well as associated changes in land use.
• Must measure the emissions from electricity for each electric utility based on its mix of power sources.
• Ecology can require additional reporting from fuel distributors and utilities if it’s needed.
• The department may create additional exemptions to avoid mismatched incentives among programs, fuel shifting among markets, or other unintended consequences.
• It must decide whether or not emissions reductions under the clean fuels program will count toward meeting the requirements of the clean air rule, and vice versa.

– Credits and trading

Ecology must create a system for generating, banking, trading, and verifying credits for emissions reductions. Participation in this system is voluntary, and it’s also open to suppliers and users of aviation, shipping, and locomotive fuels who make reductions in their associated emissions. Credits may be awarded for producing, importing, or dispensing fuels for use in the state, and for other activities that reduce the emissions associated with transportation fuels. They may not be awarded for any fuels with emissions above 80% of the standard.

The bill extends the penalties for violations of the Clean Air Act to violations of this act. Ecology may charge a fee to cover the costs of the program; these and any penalties collected under the program go into a new clean fuels fund account, which can only be spent through appropriations.

– Cost containment mechanisms

These may include creating a credit clearance market to put a ceiling on prices by making credits available at a level Ecology sets, and/or some similar method to provide credits to participants who have not been able to attain them. (These mechanisms must be designed to financially discourage people from relying on them instead of reducing emissions.)

Ecology can create an entity to aggregate and use credits for emissions reductions made by parties that choose not to participate in the credit market.

– Relations with other states

Ecology should seek to adopt rules that work well with the systems in other jurisdictions that have adopted clean fuels standards (such as Oregon, California, and British Columbia), and in ones we import fuels from or export fuels to.

– Electric utility reinvestments

Half the revenue from credits earned by an electric utility must be reinvested in transportation electrification projects, and 60% of that (30% of the total) must be spent on projects in places where air pollution is bad enough so they’ve been identified as non-attainment or maintenance areas under the National Air Quality Act. Ecology may adopt requirements for the reinvestment of the other half of this revenue, in consultation with the utilities.

– Reporting
Requires an annual report about the program on Ecology’s website, and an annual report to appropriate committees of the Legislature, starting in 2022, including draft legislation for any recommended changes to achieve the program’s goals more efficiently.

Requires a fuel supply forecast by Commerce, in consultation with Ecology and the Department of Agriculture, at least 90 days in advance of each compliance period; this must include a prediction about whether sufficient credits from low carbon fuels (and banked credits) will be available to meet the program’s requirements.

The Joint Legislative Audit Committee must report to the Legislature on the impacts, costs and benefits of the first five years of the program before the end of 2027.

– Removes “poison pill” provisions

In 2015, Republicans inserted provisions into the transportation package to transfer the state’s funds for bicycling and transit to highway projects if a clean fuel standard was created; the bill removes those.