Commentary: Clean fuels standard too costly and not effective

By Kris Johnson / For The Herald

The Herald’s Editorial Board recently wrote in favor of including a low-carbon fuel standard (LCFS) in state transportation package negotiations to help get the costly policy through the Legislature, after it failed to advance last session.

Whether part of a transportation package, or passed on its own, an LCFS should be rejected.

An LCFS would be costly, provide negligible reductions in greenhouse gas emissions, and it would do nothing to improve our state’s crumbling transportation infrastructure. In fact, an LCFS would actually threaten transportation funding by adding to fuel costs without directing any funds toward road improvements or highway maintenance.

If enacted, an LCFS would require fuel suppliers to reduce the carbon “intensity” of gasoline and diesel fuels by either blending them with increasing amounts of biofuels or by purchasing compliance credits from suppliers of lower carbon fuels such as electricity or natural gas. Only two states have this fuel policy: California and more recently Oregon.

The California experience provides evidence that an LCFS would be costly and ineffective. The California Energy Commission reports the LCFS in California is currently adding about 19 cents per gallon to the cost of gasoline, not 9 cents as reported by the Herald. That was the added cost two years ago.

Costs escalate dramatically as the LCFS becomes more stringent over time. A recent study conducted for the Puget Sound Clean Air Agency (PSCAA) found that an LCFS imposed here could raise the cost of gasoline in our region by up to 57 cents per gallon by 2030.

So far, Oregon’s LCFS is in its early stage of implementation, but it is on track to duplicate or even exceed California’s fuel price impacts.

Despite these substantially higher fuel costs, not one dollar would fund much needed transportation infrastructure or help fund the billions needed for highway maintenance and preservation. This is a region that understands the need to invest in critical transportation infrastructure.

That’s why Sen. Steve Hobbs, D-Lake Stevens, chairman of the Senate Transportation Committee, and other lawmakers have rightfully opposed LCFS legislation. We applaud them for working toward more cost-effective solutions to better balance transportation infrastructure needs with environmental concerns to lessen cost impacts on Washington families and businesses.

Given the high cost of the LCFS, it’s not surprising there would be negative impacts on the economy, placing Washington businesses at a serious competitive disadvantage.

The study conducted on the Puget Sound regional LCFS proposal found that it would reduce the Gross Regional Product by an amount that adds up to $1.4 billion by 2030 when adjusted for inflation. It would stand to reason that a statewide policy would have even greater negative economic impacts.

The high cost of an LCFS would provide minimal environmental benefits. The California Legislative Analyst’s Office (LAO) has reported that California’s LCFS has reduced greenhouse gas emissions by less than 1 percent per year.

This high cost and negligible benefit has led the California agency to recommend its legislature amend or eliminate the low carbon fuel standard all together.

The premise that an LCFS would result in cleaner air is also overstated. The California Air Resources Board estimates the LCFS reduces fine particulate matter (known for causing health problems) by only about 1 percent per year and that it has even less impact on pollutants that contribute to smog and ozone.

And contrary to the claims of LCFS proponents, an LCFS will not drive innovation for alternative fuels. Advanced biofuels needed for long-term compliance are not market ready, and while sales of alternative-fueled vehicles such as electric cars have increased, cost and infrastructure barriers remain.

After eight years, 86 precent of liquid biofuels required for LCFS compliance in California are imported from other states or countries. The Oregon LCFS has been in place for less than four years, but like California, it has not led to significant local production of low-carbon fuels. This means a substantial amount of LCFS compliance costs paid by consumers, businesses, and municipalities would be shipped to out-of-state companies.

While we can agree action needs to be taken to combat climate change, effective policies that work are needed; not costly mandates with minimal environmental impact.

Sen. Hobbs is right. A statewide transportation package that reduces traffic and fully funds fish culverts would provide far greater benefits.

The LCFS is a flawed, costly, and ineffective carbon reduction policy opposed by thousands of Washington families, consumers, and businesses, and it should be rejected.

Kris Johnson is president of the Association of Washington Business, Washington’s oldest and largest statewide business association, with nearly 7,000 member companies.