On January 9, Carbon Washington board member (and former UTC Commissioner) Philip Jones testified on CarbonWA’s behalf in support of HB 2338, the Low Carbon Fuel Standard (LCFS) bill introduced by Representative Joe Fitzgibbon. He joined representatives from Audubon Washington, Climate Solutions and the Washington Environmental Council, who also testified in support.
Carbon Washington is strongly supports carbon pricing, the most economically efficient policy mechanism for reducing carbon pollution, but putting a price on carbon isn’t the only strategy for reducing it. We also support legislative action, and initiatives to create other carbon reduction policies that align with our mission. The three most common policy options for reducing carbon pollution are pricing mechanisms, subsidies, and regulations. A low carbon fuel standard is a regulation designed to reduce carbon emissions from the transportation sector which accounts for the majority of Washington’s emissions.
HB 2338 would require the Department of Ecology to develop a regulatory program to reduce the carbon intensity of transportation fuels to 10% below 2017 levels by 2028. The carbon intensity of each transportation fuel type would be calculated by completing a full life-cycle analysis of the emissions associated with the production and distribution of the fuel, in addition to its use in a motor vehicle. Importantly, that analysis would take into account the carbon emissions associated with any changes in land-use, an important factor for biofuels.
Functionally, this bill grants Ecology the authority to reduce greenhouse gas emissions in the transportation sector by requiring fuel switching. The climate benefits come from increasing the use of electricity and natural gas for transportation, and from blending low carbon alternative fuels, like biodiesel, into conventional transportation fuels.
Often, when people think of LCFS, they think of ethanol, a dubious federal experiment in biofuels. But, this LCFS is more focused on electrification of transportation, requiring 25% of credit revenues to be invested in EV infrastructure, and on other verified carbon reduction fuel options. By requiring a life cycle analysis, this bill will also sort out the biofuel options that are beneficial for the climate from those that aren’t. It also creates a tradeable credit system that will allow regulated entities to monetize going “above and beyond” if they are able to reduce carbon beyond the established targets.
California, Oregon, and British Columbia, in addition to many countries, already have Low Carbon Fuel Standards in place. California has the oldest LCFS, which has successfully reduced the carbon intensity of their transportation fuels with nominal impacts on retail prices. The price impacts are expected to increase some as reduction targets increase; however, compliance flexibility, including a system for trading reductions, makes the economic efficiency of a well-designed LCFS quite high.
Hopefully, HB 2338 can pass in the Legislature this year, but if not, it may be feasible as an initiative since a majority of voters from both parties support a transition to cleaner fuels in polling.
A LCFS is also potentially a very good complement to a carbon tax in Washington. In a perfect world we would have a strong economy-wide carbon tax with a relatively high price. That price would encourage lots of households and businesses to buy dramatically more efficient vehicles, particularly electric ones, while motivating deep carbon reductions in many other sectors. But realistically, when Washington does enact its first carbon tax, it is likely to start at a relatively low price. A low carbon price still motivates a lot of carbon reductions by targeting low hanging fruit in the electric sector, industrial sector, and built environment while encouraging better vehicle purchasing decisions. However, fuel switching is typically considered a higher hanging fruit and may not be significantly motivated by a relatively low price on carbon.
Combining these two policies would allow the carbon tax to efficiently reduce carbon emissions across the economy without having to design multiple sector-specific programs. Later, as the carbon price grows, the costs of the two policies do not become additive, because normal market forces gradually achieve the regulatory requirements of the Low Carbon Fuel Standard, and it eventually just becomes redundant, adding no additional cost. To summarize, a LCFS can begin reducing carbon in the transportation sector until a robust carbon price kicks in.
We hope the Washington Legislature will adopt HB 2338 during this session. But if lawmakers don’t act, an LCFS could be a good subject for a ballot initiative. Polling consistently shows that a majority of voters from both parties support a transition to cleaner fuels. One way or the other, we will succeed in reducing the carbon emissions that drive climate change, by accelerating Washington’s transition to a prosperous clean energy future.