OLYMPIA — The state isn’t going to reach its goal next month of making biodiesel a significant portion of the fuel pumped into its fleet of cars, trucks and ferries.

No state agency will be complying with a June 1 requirement for biodiesel to make up at least 20 percent of its fuel use

Collectively, use of biofuel by departments from transportation to corrections to the Washington State Patrol reached just 2.1 percent at the end of 2008 — which is the best combined showing since the target was written into law three years ago.

Gov. Chris Gregoire, who could have pushed back the deadline and didn’t, said members of her staff will meet with department leaders next month to figure out how to accelerate the process.

“I don’t want to lose the momentum that we’ve built up,” Gregoire said. “We’re going to get there but it’s going to take more time than what was originally projected

Switching the state’s fuel diet will curb emission of air pollutants scientists consider unhealthy for residents and an instigator of damaging climate changes.

It also carries a potential economic payoff by stimulating a new statewide industry for turning renewable resources such as vegetable oils, animal fats, and recycled cooking oils into diesel fuel for the state’s fleet of cars, trucks and ferries.

In January 2005, Gary Locke, in one of his last acts as governor, set a goal for state agencies to be using at least 20 percent biofuel by Sept. 1, 2009.

A 2006 law signed by Gregoire put a tighter timeline into law. It required using a blend of not less than 2 percent beginning June 1, 2006 and reaching a 20 percent blend — or 20 percent of total fuel use — by June 1 of this year.

The law, which contained no penalties for noncompliance, mandates the Department of General Administration report on the government’s biofuel usage.

Its latest report shows in the second half of 2008, the state burned 10.2 million gallons of fuel of which 211,500 gallons, or 2.07 percent, was biofuel.

Removing ferries, which account for the vast majority of the usage, improves the performance though state government remains far from compliance.

Agencies and institutions of higher education used 1.5 million gallons of diesel, of which 73,392 gallons, or 4.8 percent, was biofuel. That’s up from 3.9 percent in the first half of 2008.

High pump prices and limited supplies proved the biggest hurdles, the study found.

On average, a blend of 20 percent biofuel with 80 percent petroleum-based diesel costs 33 cents a gallon more than regular diesel — a margin that was a disincentive for cash-strapped agencies to pay.

Availability proved another confounding factor with limited suppliers in Eastern Washington and irregular supplies on the west side of the state, the report found.

Lawmakers and the governor acknowledged these challenges but said if it is clear the state will be a longtime buyer, then industry will ramp up production, confident its product will get sold.

“We’ve got to figure a way to get the price down and the only way to get the price down is to get the demand up,” said Rep. John McCoy, D-Tulalip.

Secretary of Transportation Paula Hammond said farmers have told her they don’t want to plant crops used in making biofuel if the state is going to be buying less.

“They’re watching very closely,” she said. “For the market to adjust you have to say we’re going to do this. Everybody is trying to make this work because it is a good goal. It’s achievable.”

Frustrating farmers, some lawmakers and the governor was the Legislature’s decision to grant a two-year exemption to Washington State Ferries, the single largest consumer of fuel at roughly 17 million gallons a year.

Haugen tucked the provision into the final transportation budget in a way it could not be removed by legislators or vetoed by the governor. She has said compliance would have cost an extra $8 million in the next two years, money better spent on road projects.

Sen. Janea Holmquist, R-Moses Lake, was among a number of Democratic and Republican senators opposed to the move.

“We needed the state to fulfill its commitment. We’ve had plenty of time to get ready for this,” she said. “It’s pulling the rug out from underneath all the citizens who invested in the promise of a biodiesel market.”

Gregoire didn’t like exempting ferries, either.

“I know (legislators) wanted to save some money,” she said. “We need to be the stable force for this to be able to develop into a profitable enterprise. If we abandon it in the tough times, we’ll never get to it in the affordable times.”

Reporter Jerry Cornfield: 360-352-8623, jcornfield@heraldnet.com.